For the last eighteen months the Ombudsman for Banking Services and Investments (OBSI) has been publishing the names of investments firms that have refused to compensate clients when OBSI believed they had a legitimate complaint.
In a statement issued on June 6, OBSI acknowledged investors' concerns about its inability to extract funds from transgressors, but said its "principal tool to incent cooperation" will continue to be this so-called “name and shame” program.
OBSI also noted that some professional liability insurance policies only cover decisions reached in court and not the type of voluntary settlements achieved by OBSI's process. When there is some doubt as to whether insurance will pay, OBSI says that negotiations "tend to be more drawn out and/or more likely to end in a compensation refusal".
OBSI points out that the last few years have not been kind to small and mid-sized investment firms, and says smaller investment firms tend to be less likely to pay. While not all of the smaller firms in question were experiencing financial difficulties, OBSI says several were in the process of deregistering or winding down operations.