First Canadian Seniors’ Complaints Report: OBSI
July 31, 2019
BY Valerie Le Blanc
On July 18, 2019, the Ombudsman for Banking Services and Investments (OBSI) issued its first 2019 Seniors Report. Survey data gathered between 2017 and 2018 from over 1,400 case files highlights some of the unique challenges faced by seniors when accessing financial services and products. According to its news release, “Older Canadians experience different challenges with the financial services they use than younger Canadians.” Raising awareness of seniors’ issues is considered by OBSI to be an important step forward in strengthening Canada’s financial services sector.
Key findings from the report show the following:
- Banking Products and Issues: Fraud is the most frequently reported banking issue for seniors.
- Credit cards: Credit card chargebacks generated the most complaints under the bank product and issue category.
- Investments: Seniors’ investment-related complaints relate mostly to mutual funds and common shares. Primary issues raised in complaints filed include concerns about advice received, investment suitability, and fee disclosure.
OBSI’s report also summarizes results for combined banking and investment products and services issues by age demographic (ranging from under 60 to 70+ consumer populations). This is helpful to demonstrate how banking and investment challenges change over the investor’s lifecycle.
The report also includes several case studies that outline common issues raised by investors, including complaints about high-risk investments with unexpected fees, inability to liquidate investments, estate planning in crisis, fraud, and issues with joint accounts and powers of attorney.
According to its news release, key observations from the report data include:
- Barriers to effective access to financial services—including, but not limited to, information barriers, emotional and social barriers, physical barriers, and economic barriers.
- Communication challenges—seniors often report being overwhelmed by lengthy disclosure documents that contain too much information and require extended periods of attention and focus.
- Technology challenges—while technology offers some innovative solutions, the report data highlights that generally, seniors are less likely to take advantage of newer technologies. Even seniors who report being comfortable with technologies, such as online banking, are nevertheless more vulnerable than younger clients because they may not be as aware of the security measures they need to protect their interests.
OBSI notes the following policy and practical solutions that financial service providers and regulators could consider to reduce the challenges faced by seniors:
- Encouraging financial service providers to identify and use “trusted person” procedures
- Providing protection for providers of financial services who act in what they reasonably believe to be the best interests of the consumer
- Ensuring that employees of financial services firms have the right incentives to provide appropriate services to seniors
- Using shorter, simpler documents that may also be taken away to share with trusted family members or advisors before making decisions
- Increasing the number of specific warnings to senior clients at key junctures or moments of risk
- Training for employees who deal with senior consumers and clients should encourage them to recognize vulnerabilities, perform basic assessments of capacity and adjust the delivery of information to the needs of the individual
The OBSI 2019 Seniors Report and FAIR Canada and CCEL’s 2017 Report on Vulnerable Investors
Among the list of helpful resources provided at the end of OBSI’s Seniors Report is CCEL and FAIR Canada’s 2017 Report on Vulnerable Investors: Elder Abuse, Financial Exploitation, Undue Influence, and Diminished Mental Capacity. One of the key findings of the CCEL/FAIR Canada Report was that “[Canadian] investment firms and their representatives lack guidance on how to recognize, respond, and/or report elder abuse and neglect, undue influence, or diminished mental capacity issues.” The focus was to identify how the financial services industry can better protect and support vulnerable investor populations, which include older adult investors.
Among the six recommendations made in the CCEL/FAIR Canada report included implementation of the trusted contact, and a legal safe harbour for investment firms and advisors from regulatory and civil liability if representatives act in good faith and exercise reasonable care in deciding to disclose information to a trusted contact, or when placing a temporary hold on trades and disbursements. The results of the OBSI Seniors Report further supports the need for implementation and enhanced use of these tools to foster adequate protection for both financial service providers and older adult investor populations.
The OBSI 2019 Seniors Report and CCEL’s Current Project on Vulnerable Investors
The CCEL continues its work on the issue of vulnerable investors with its current project, Respecting the Rights of Vulnerable Investors through Supported Decision Making. Building on the findings from the 2017 Vulnerable Investor Report, the Inclusive Investing project examines how individuals living with Alzheimer’s or other forms of dementia, and persons identified as living with intellectual or developmental disabilities, are using, or attempting to use, supported decision making in the investment context.
Research for this project includes consultation with key informants and stakeholders who are people with lived experience, investment professionals and financial service providers, lawyers, academics and community agencies in British Columbia, Ontario, the United States and internationally. The goal of the project is to help identify how Canadian investment advisors, adults with cognitive and decision-making challenges, and supporters can incorporate supported decision making into the investment decision-making process while guarding against undue influence and financial abuse.
The data from OBSI’s 2019 Seniors Report will help to inform the ongoing research and findings for the CCEL’s Inclusive Investing project. For more information, please visit our project page.