Regarding the first part of your question, that it would put in jeopardy the ombudsman function, that has not been our experience in B.C. The commissioner has a multi-faceted role, proactively advising the government about things they are doing that might cause problems for information or privacy, and he has been able to carry out all those functions perfectly well.
In respect of penalties in B.C., the penalties are not monetary, but the orders of the commissioner are enforceable as orders of the Supreme Court. Failure to obey a court order can result in contempt proceedings.