On March 15, 2022, OBSI released its annual report for 2021, declaring the year its busiest year on record, with 7,593 consumers reaching out to complain, a 33% increase from 2020. Of that record number, 568 were investment related, a 24% increase compared to the 459 complaints reported in 2020.
The investment related complaints resulted in $1.9 million in payouts to consumers, seven times more than the payouts on the banking services side. The average payout was $8,896, the highest payout was $156,635, the lowest $50. In six of the cases, the consumer accepted either a letter of apology or an explanatory letter to the consumer’s creditors to resolve the matter.
The highest number of complaints (16%) related to technical and non-technical service issues. Concerns about investment suitability, and misrepresented or inaccurate disclosure about a product, were tied at 14% of the complaints. Of note, investment suitability concerns were down from 19% in 2020. A look at complaints by product shows that common shares (equities) had the highest amount of complaints. The top three issues noted were transaction errors, investment suitability and margin issues. Mutual funds had the second highest number of complaints, and the top three issues identified in the report were instructions not being followed, investment suitability and transfer delays.
OBSI constantly gathers information, from day-to-day inquiries, or information gleaned during an investigation, that helps identify trends in the industry. Trends that affect multiple consumers in the financial services sector are known as “systemic issues” that impact a wider base of consumers. In 2021 OBSI reported on a few specific systemic issues, including understating and misrepresenting the risk of a fund and disregarding documented investor risk tolerance.
In addition to specific case related reports, OBSI provides trending data on products, outcomes, and complaint sources (phone, email, website) to the regulators, providing information to the regulators and the financial services industry as a whole.
March 31, 2022