The watchdog Canadians go to if they feel they've been wronged by their financial services provider can't really do its job because it can't force companies to pay up, an independent evaluator says.

The Ombudsman for Banking Services and Investments (OBSI) released the results of an independent evaluation of its operations and practices for investment-related complaints today.

The evaluation was led by Deborah Battell, a former banking ombudsman and former regulator with the New Zealand Commerce Commission. Battell has conducted evaluations of more than 30 organizations in a wide range of industries, most recently New Zealand's Financial Services Federation.

Battell found that the OBSI "performed well within its current mandate: its decisions are fair and consistent with those made internationally; and with its loss calculation tools, its ability to determine fair amounts of compensation is world leading."

But Battell found that unlike other comparable financial ombudsmen in other countries around the world, OBSI has no power to enforce any of its decisions.

"[OBSI] does not have the authority to bind firms to comply with its compensation recommendations. This drives its operating model and prevents it from fulfilling the fundamental role of an ombudsman, securing redress for all consumers who have been wronged."

Calls for change

The evaluation was ordered in the wake of amendments written by Canadian Securities Administrators (CSA), which took effect in May, 2014, that required all registered financial dealers and advisers outside Quebec to use OBSI as their external provider of dispute resolution services.

Previously, OBSI's dispute resolution services were only required for members of the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA).

OBSI's lack of authority has long been an issue for both consumers and the organization itself.

Witness the story of Shirley and Ken Irons fom Hamilton, Ont., as first reported by CBC News In November 2012.

The Irons had spent decades running their own business, raising four children, and saving for what was supposed to be a comfortable retirement.

But the Irons say their financial adviser, someone they had trusted for 30 years, put their RRSPs into high risk investments and even a pyramid scheme.

The CBC's Aaron Saltzman with the story of a Hamilton couple who were swindled by their financial advisor, but regulators are powerless to do anything about it besides publicly shaming the company into paying them compensation. 2:39

They lost all their savings, about $400,000, and had so little money left that they couldn't afford to sue.

OBSI determined that W.H. Stuart, the Markham, Ont., company for which their adviser worked, "… could have prevented this whole mess if it had simply fulfilled its supervisory responsibilities …."

OBSI ordered W.H. Stuart to pay the Irons back for a portion of their losses, about $40,000.

But W.H. Stuart refused to pay even that amount.

OBSI's only recourse at the point was to go public with the story in an effort to "name and shame" the company into paying back the money.

Contacted at the time by CBC News, W.H. Stuart refused to comment.

The Irons had to sell their home and ended up renting a condo for $800 per month.

OBSI is the tasked with resolving disputes between banks and customers who feel like they have been wronged. (CBC)

The findings of the evaluation of OBSI were presented separately to OBSI's board of directors and to the Joint Regulators Committee (JRC), which includes representatives from the Canadian Securities Administrators (CSA), the Investment Industry Regulatory Organization of Canada, and the Mutual Fund Dealers Association of Canada.

In a statement, the JRC said its members "strongly support OBSI as the dispute resolution service, and expect registrants to abide by their obligations by participating in OBSI's services in a manner consistent with their obligations to deal fairly, honestly and in good faith with their clients."

"We will begin analyzing the findings and recommendations, along with other stakeholder input, in considering next steps in response to the report." the JRC said.