Draft Changes in CSD Policies Simplified: Overview of OSBI Implications
In a significant move to strengthen investor protection, the Canadian Securities Administrators (CSA) have proposed a framework that would allow the Ombudsman for Banking Services and Investments (OBSI) to make binding decisions in investment-related disputes. This shift, announced in July 2025, is part of a series of measures aimed at bolstering protections and rights to restitution for aggrieved investors.
The proposed framework introduces a two-step dispute resolution mechanism. In the first step, OBSI investigates the complaint and makes a recommendation. If the compensation recommendation is 75,000 $ or more, an external decision-maker would be appointed for the review to ensure impartiality and address concerns about fairness and the lack of an appeal process. If the recommendation is less than 75,000 $, OBSI has the discretion to designate the step 2 decision-maker, who could be an internal or external decision-maker or a panel consisting of both.
In Step 2, if either party objects to the recommendation, the complaint proceeds to a review, and a final, binding decision is made. This change is designed to provide investors with more definitive redress mechanisms for investment-related disputes in Canada, reducing reliance on lengthy and costly court or regulatory proceedings.
Currently, OBSI acts as an independent dispute resolution service for complaints related to banking and investment services, but its recommendations are not binding. The Taskforce noted that, without the power to make enforceable decisions, the OSBI left aggrieved investors with limited recourse.
The CSA's proposal follows the Ontario's Capital Markets Modernization Taskforce's recommendation in 2020 that Ontario create a legislative framework enabling the establishment of a dispute resolution service empowered to make enforceable decisions. The consultation period for the CSA's proposal ends on September 15, 2025.
This transformation in the Canadian landscape of investment services is set to bring a more formalized, independent dispute resolution system with binding decisions under the CSA's proposed framework. The key difference between the current and proposed dispute resolution mechanisms under the Canadian Securities Administrators' (CSA) framework for the Ombudsman for Banking Services and Investments (OBSI) is that the proposed framework introduces an independent dispute resolution service with binding authority, whereas the current OBSI process is generally non-binding and voluntary.
The proposed framework seeks to revolutionize personal-finance and business by introducing a formalized dispute resolution system for investment-related issues. This includes the option for an external decision-maker to review any compensation recommendations over 75,000$ from the Ombudsman for Banking Services and Investments (OBSI), ensuring impartiality and fairness. Furthermore, the proposed mechanism allows OBSI to make binding decisions if either party objects to the initial recommendation during Step 2, enhancing investors' rights to restitution in Canada.
