Presentation on theme: "Canadian Seniors and Their Financial Service Providers Tales from the Confidential Files of OBSI Canadian Council on Elder Law 2012 Conference Vancouver,"— Presentation transcript:
Canadian Seniors and Their Financial Service Providers Tales from the Confidential Files of OBSI Canadian Council on Elder Law 2012 Conference Vancouver, British Columbia November 16-17, 2012 Douglas Melville Ombudsman and Chief Executive Officer
Canadian Seniors and Their Financial Service Providers An independent national dispute resolution service An alternative to the legal system for banking services and investment firms customers with an unresolved complaint Started in 1996 covering major chartered banks; in 2002 became the Ombudsman for Banking Services and Investments when the mandate expanded to all members of the: Investment Dealers Association (IDA), now IIROC Mutual Fund Dealers Association (MFDA) Investment Funds Institute of Canada (IFIC) 2 Who we are at OBSI
Canadian Seniors and Their Financial Service Providers Informal, confidential and independent review of complaints not resolved to the satisfaction of consumer We look primarily at cases of direct financial loss as a result of error, misleading information or bad advice Review industry standards, firm policies, regulations, laws … and decide what would be fair under the circumstances Goal is to make the client whole where maladministration is found to have occurred 3 What we do at OBSI
Canadian Seniors and Their Financial Service Providers Liability for unauthorized debit, credit card, and on-line transactions (fraud) Credit Offers (cards and lines of credit) for those with no/limited income and/or credit history Home equity credit deals (eats into equity, cash flow hit to make payments) Reverse mortgages (cost, fees, restrictions) 4 Banking Issues Affecting Canadian Seniors
Canadian Seniors and Their Financial Service Providers Joint accounts Powers of attorney Scams targeting seniors Lack of regulatory clarity in consumer protection: No banker duty of care No fair dealing regime as in the UK Banking Issues Affecting Canadian Seniors (cont'd) 5
Canadian Seniors and Their Financial Service Providers Cases illustrate a variety of issues and challenges seniors face in todays financial services market We know that a great many complaints never find their way to our office and remain unresolved causing tragic loss and hardship for seniors Research shows that seniors suffering financial crises have a significantly elevated rate of death within a short period 6 Case Studies – Seniors Banking Issues
Canadian Seniors and Their Financial Service Providers An elderly client with mobility impairments and diagnosed with dementia applies for a secured line of credit at a bank accompanied by her grandson The loan is granted even though the client has a limited, fixed income and does not seem to have the ability to repay the loan The client is not asked to seek independent legal advice nor is she spoken to privately without her grandson present The client is not asked why she needs the loan; the loan is secured by her house Part of the proceeds from the loan are paid out to the womans grandson and the grandson later makes withdrawals on behalf of his grandmother. The bank does not inquire into the situation 7 Case Study #1 - Policy Failure?
Canadian Seniors and Their Financial Service Providers OBSIs Key Conclusions: Question of insufficient cash flow to service the loan is outside of OBSIs mandate to review (banks credit decision) There is no evidence that client was coerced or pressured into applying for the Line of Credit (LOC) There is no evidence that grandson and banks loan officer conspired to place the LOC in clients name for grandsons benefit Grandson informed the bank that he intends to repay the LOC balance No applicable bank policy or requirement for independent legal advice; No failure of bank loan process OBSI did not recommend compensation 8 Case Study #1 - Policy Failure?
Canadian Seniors and Their Financial Service Providers A client held a continuing Power of Attorney for his dying father As his fathers health was deteriorating he needed to pay bills on his fathers behalf He asked his fathers bank to allow him to write cheques on his fathers account or transfer funds from his fathers account to another account to be held jointly by him and his father; the bank refused Banks refusal to allow client to withdraw funds while his father was alive cost the estate $2,025 in probate fees ($135,000 x 1.5%) 9 Case Study #2 - Power of Attorney
Canadian Seniors and Their Financial Service Providers OBSIs Key conclusions: Power of Attorney held by the client was limited to looking after his fathers legal obligations such as day-to-day expenses; tax planning was not considered looking after his legal obligations There was also no evidence the bank paid bills without permission from power of attorney or executors as claimed Payments made by the bank was supported by information provided to the bank by the client or the lawyers for the estate OBSI did not recommend compensation 10 Case Study # 2 - Power of Attorney (cont.)
Canadian Seniors and Their Financial Service Providers An elderly woman added her daughter as a co-client on her account The day of the elderly womans death, the son of the deceased transferred $178, to his own account; elderly womens son had been added as a co-client a few weeks after his sister The sum of the transferred funds was returned to the estate after a year pursuant to a court order Deceased womans daughter questioned how the bank had added her brother as a co-client without all the account holders consent, how he was allowed to make such a transfer 11 Case Study #3 - Co-client
Canadian Seniors and Their Financial Service Providers OBSIs Key conclusions: No evidence to support the claim that the elderly woman did not authorize her son to be added as a co-client; there were witnesses to a meeting held in-branch Banks branch personnel did not strictly follow established bank procedures when their client added each of her children as co-clients to her accounts. This did not cause any loss as OBSI concluded that the elderly woman intended to add both of her children as co-clients No question of her mental capacity prompting requirement for ILA OBSI did not recommend compensation 12 Case Study #3 - Co-client (contd)
Canadian Seniors and Their Financial Service Providers Bank customer met a woman at a bar After several hours of drinking and conversation, he headed home with her Discovered his wallet was missing the next morning, checked at the bar, then notified his bank Thief had made point of sale purchases of $2,000 and $1,400 in cash advances on the Visa account overnight; ABM withdrawals from several accounts at different banks Case Study #4 – Negligent PIN Selection? 13
Canadian Seniors and Their Financial Service Providers Client claimed he was not responsible for all the losses Crook tried various PINs; hit the right combination after 6 tries; discovered PIN to withdraw cash from the other cards Should the customer have been reimbursed for the amounts taken? Show of hands please.... Does your answer change when you learn that... Case Study #4 – Negligent PIN Selection? 14
Canadian Seniors and Their Financial Service Providers The woman was a prostitute The man had been drinking heavily The woman was also a professional thief with prior convictions; she was convicted but the money was gone The man had used the same PIN on all his cards and chose an easy one to remember Case Study #4 – Negligent PIN Selection? 15
Canadian Seniors and Their Financial Service Providers The man did not read or understand English or French The man was 71 years old The man had used the same easily remembered PIN for all his cards because, unlike his libido, his cognitive abilities were failing 16 Case Study #4 – Negligent PIN Selection?
17 FURTHER INFORMATION Ombudsman for Banking Services and Investments (OBSI) Please refer individuals or small businesses with complaints to: or