October 20, 2010
We would like to comment on Section 919D of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Our perspective derives from our combined 30+ years executive line experience, combined 8+ years executive staff experience and over 20 combined years in the Ombudsman profession including leading the American Express global Ombudsman program.
We believe that the Organizational Ombudsman model is the best to safeguard the confidentiality of communications between retail investors and the Ombudsman as per Section 919D.
An Organizational Ombudsman program is an independent, neutral, informal and confidential resource to provide information and guidance to people about how to report and resolve issues. It is a resource for communication and is not itself a reporting channel. Ombudsmen help the people who seek ombudsman services to generate options for getting issues to the most appropriate formal reporting channel, e.g., Legal, Audit, Compliance, Ethics. Confidentiality is the defining characteristic of the Organizational Ombudsman. Many people need to seek confidential guidance before they are comfortable or even willing to come forward to a formal channel with an issue. For example, people go an Ombudsman because they:
-Do not know where to take an issue
-Do not know how to take an issue forward and seek coaching
-Want to have an informal conversation with a neutral to help understand processes before taking formal action
-Do not understand the extent or implications of a problem
-Want confidentiality and anonymity
-Fear retaliation from management or co-worker
-Are concerned that no action will be taken
-Fear that they might be falsely implicated
Formal reporting channels, while necessary and important, are not enough to encourage people to raise their concerns. The 2009 Ethics Resource Centers survey results illustrate this fact it showed that 49% of employees observed unethical behavior, however, 37% did not report what they observed.
An Ombudsman program is an important organizational component that helps people raise issues without having to be whistleblowers, in the usual sense of that word. It has been shown in surveys of people using Ombudsman programs that rather than bring an issue forward, a range from 6% to 17% would have taken their issue outside the organization (to a lawyer, for example) if there were no Ombudsman office and 9% to 15% would have left the organization.
We urge the Investor Advocate to structure the ombudsman role in a way that provides users of the services a confidential resource for obtaining information and guidance on how to resolve disputes or raise questions.