Fraud, banking and investment complaints in Canada increased in 2022
Canada’s Ombudsman for Banking Services and Investments (OBSI) said it responded to a record high of more than 10,000 public inquiries in 2022, and the number of fraud complaints has risen dramatically year-on-year.
OBSI is a national and independent non-profit organization that deals with disputes between people and financial services. In its 2022 annual report, OBSI saw a 40 percent year-over-year increase in public inquiries. According to OBSI, the increase was mainly due to bank complaints, which increased by 56 percent compared to 2021, while investment complaints increased by eight percent.
OBSI says it opened 1,151 cases last year, also a new record high and a six percent increase from the last record set in 2021.
“These higher volumes continued a trend we have observed throughout the pandemic as Canadians, small businesses and financial services firms continue to cope with unprecedented economic challenges, increasing financial stress and rising rates of financial fraud,” said Sarah Bradley, Ombudsman and CEO at OBSI, in a press release accompanying the report.
BANK CASES
People who complained about their bank accounted for 686 cases handled by OBSI in 2022 – a 33 percent increase from the 514 cases in 2021.
Bradley says in addition to the economic pressures caused by the COVID-19 pandemic, changes to financial consumer protection laws over the past year have also resulted in more complaints being filed and processed about the system.
More consumers than ever are using Canadian banks’ in-house complaints handling services to resolve their concerns, and a record number are escalating their concerns to us to have their case reviewed by an independent expert,” said Bradley.
According to the report, fraud was the main subject for complaints against banks in 2022. Wire transfers, credit cards and wire transfers.
Nineteen percent of all bank complaints involved service issues, while credit card chargebacks accounted for seven percent of all bank cases. OBSI adds complaints about interest rates rising from nine cases in 2021 to 26 cases last year.
Credit cards, personal checking and savings accounts, and electronic transfers were the top banking products about which complaints were filed with the OBSI in 2022. Complaints about credit cards accounted for 32 percent of all banking cases, and complaints about savings and checking accounts accounted for 15 percent. while complaints about electronic funds transfers accounted for 14 percent.
INVESTMENT CASES
Cases involving investments fell about 18 percent in 2022 compared to 2021.
“Investment cases began the year with some moderation to near pre-pandemic levels, but rose sharply later in the year, mainly due to investor concerns about ongoing market downturns and volatility, as well as increasing problems related to fraud and service issues” said Bradley called.
According to the report, fraud cases rose sharply to 11 percent of all investment cases in 2022, up from 1 percent in 2021.
A breakdown of investment cases includes:
- Mutual funds – 37 percent
- Common stock (shares) – 33 percent
- Service issues – 21 percent
- Investment suitability – 15 percent
- Fee Disclosure – Eight percent
The newest category of complaints — crypto assets — was the third most common complaint for investors in 2022, accounting for 11 percent of all investment cases.
“The rise in complaints about crypto assets is related to increasing regulatory oversight of cryptocurrency traders, leading to a number of traders joining OBSI as participating companies in 2022,” OBSI said in a press release.
With files from The Canadian Press
