TD's Office of the Ombudsman commenced operation in November 1995 with the initial focus on small and medium sized business (SME) customers. This SME focus was in accordance with the commitment given by the Canadian Bankers Association to the House of Commons Standing Committee on Finance. However, because of the close relationship between small business customers and their personal banking needs TD's Ombudsman office has dealt with complaints from all customers from the outset. Close to 90% of all contacts with the Ombudsman office related to Personal Banking issues in the last two years.

The Canadian Banking Ombudsman (CBO) commenced operation in June 1996. The CBO, an external independent Ombudsman service funded by the participating financial institutions, was initially available to SME customers whose concerns had not been resolved after having dealt with the internal Bank Ombudsman. On March 1, 1997, the CBO's mandate was expanded to include Personal Banking customers as well.

The CBO reports to Parliament as well as publicly each quarter on the aggregate number of complaints received from all the participating financial institutions and the number resolved to the customer's satisfaction. The CBO will also report the number of recommendations made to the Banks and whether the Banks acted in accordance with the recommendation. The individual Bank will be named if the recommendation is not followed.

The new policy framework for Canada's financial services sector, which was announced on June 25, 1999, proposed the establishment of a Canadian Financial Services Ombudsman (CFSO). The CFSO is expected to be created in 2000. It is proposed that member financial institutions of the CFSO fund the organization.

Overall contact has increased and is attributed to better awareness of the availability of the Ombudsman service resulting from a variety of efforts in this regard such as publishing the complaint handling process on the Bank's Web site and mailing statement stuffers, over the past two years.

Overall tracked contacts with the Ombudsman office (1802) increased 28% over last year (1405). 92% of the contacts were referred to the appropriate Business unit and there continued to be good success in resolving the matter to the customer's satisfaction at this level. The number of cases investigated by the Ombudsman to a totaled 148, down 17% from the 178 cases reviewed last year.

760 general inquiries were also received during the year compared to 683 inquiries in 1998.

		Small Business		Personal
		No.	%	No.	%
Contacts with TD Ombudsman
Investigated by TD Ombudsman Directed to Business Units Total Contacts		32 204 236	14% 86% 100%	116 1450 1156	74% 93% 100%
Nature of New Complaints
Credit Non Credit		15 17	47% 53%	20 96	17% 83%
Outcome of Resolved Files
Agreement Reached Partial Resolution No Agreement Reached		10 3 11	42% 12% 46%	51 22 45	43% 19% 38%
Time to Resolve Files
Up to and including 20 days More than 20 days		8 16	33% 67%	51 67	43% 57%

One of the Small Business files we dealt with this year involved a Company that had experienced cash flow problems, which eventually led to a Proposal to Creditors. The Company eventually discharged all its debts to TD, including legal and accounting fees. The principals of the company later claimed that the legal and auditors fees that were charged were excessive and included charges for services and work that were not necessary given the secured position of the Bank. The company asked to be reimbursed for a portion of the costs.

After reviewing the Bank's files, we concluded that the Bank was entitled to collect fees from the customer under the terms of the loan agreements. However, evidence was found that the amount charged to the customer had included fees that should have been for the Bank's account. Our recommendation resulted in a payment being made to the company in return for a full and final release.

We also reviewed the case of a senior citizen with limited investment knowledge, who had opened an investment account. After discussion with the Investment Advisor, the customer agreed to the purchase of a foreign currency bond. Soon after, the Asian collapse had a negative impact on the foreign exchange rate, which resulted in a loss of principal on the investment. The customer asked to be reimbursed for the amount of the loss, claiming the investment had been unsuitable, had not been properly explained and should not have been offered.

We concluded that based on the customer profile, the investment was unsuitable for this customer. While it had offered a better rate of return, it was not the most suitable investment for a customer who up until then had only ever invested in Guaranteed Investment Certificates. However, since the customer had authorized the transaction, our recommendation resulted in a partial settlement of the amount involved in return for a full and final release.

The Ombudsman office was receiving numerous telephone and letter contacts from customers who were dissatisfied with the Bank's focus on decreasing hours of service in the Branches, the reduced availability of teller service and with claims of longer teller lineups. The feedback we passed along to the Executive was monitored by the Divisional offices and was a significant factor in the reintroduction of expanded hours of service in a number branches. As a result, the frequency of these contacts reduced significantly during the final quarter of 1999.

While the number of contacts with the Ombudsman office has increased during the fourth year of operation, the number remains minor relative to the number of TD customers and the millions of transactions processed by the TD Bank Financial Group. The majority of customer concerns continue to be resolved by the management of the business where the customer deals.

As in past years, we have once again asked all Business Heads to take whatever steps are necessary to further improve this trend. Dealing with a complaint promptly is the key to successful complaint resolution. Where an error has been made, or a customer has been inconvenienced, an apology together with a reversal of fees or charges, and in some cases compensation for out-of-pocket expenses, can quickly restore a relationship and "make it easier" for customers and staff alike.

We encourage all customers to review their records carefully and on a regular basis. As well, they should inform themselves fully and be aware of the terms of their banking agreements before making any major decisions.

Fairness and reasonableness are the guidelines used in all of our reviews. During the past year our roles in resolving disputes continued to include advocacy, negotiation, mediation, facilitation as well as arbitration. Our objective is to encourage the resolution of disputes internally whenever possible and to limit the files appealed to the CBO to those where, after sufficient time and effort have been spent, no mutually acceptable solution can be found. For those files escalated to the CBO, we aim to demonstrate that our approach and actions have been both fair and reasonable.

Doug King
Senior Vice President and Ombudsman, TD Bank Financial Group
December 1999