Few investors give much thought to securities regulators. And when they do, it’s typically because a dispute has arisen, and they want one question answered: “How do I get my money back?” Now, regulators are also contemplating that question.

In the past several years, regulators have devoted some attention to improving complaint-handling among securities firms. For the disputes that can’t be solved informally, investors have a few options: take their claim to court, avail themselves of the industry ombudsman service or opt for arbitration.

None of these is entirely satisfactory. The courts are too slow and too expensive for many claims. Both firms and investors gripe about the ombudsman service. But the arbitration option has become the least useful (just eight cases took that route in 2009, down from a high of 96 in 2002), which is why the Investment Industry Regulatory Organization of Canada is looking at possible changes to the system.

Late last year, IIROC initiated con-sultations on a review of the system (which the regulator began internally in the autumn of 2008), seeking input on ways to improve it. The comment period closed in mid-March, with IIROC receiving a variety of recommendations. Connie Craddock, IIROC’s vice president of public affairs, says the regulator will be reviewing the comments and contemplating changes to the arbitration system in response.

There is no shortage of possible reforms proposed in the comments. They range from a simple change, such as raising the limit on arbitration awards, to entirely new models for dispute resolution.

The existing award limit of $100,000 was identified by IIROC in its own review as one of the system’s major flaws. When you consider that the industry’s Om-buds-man for Banking Services and In-vest-ments can recommend awards of up to $350,000 and that OBSI is free for investors (whereas the arbitration route involves fees on both sides, and possibly legal costs), it’s hardly surprising that arbitration has become increasingly irrelevant. As a result, IIROC has proposed to increase the award limit to $350,000, while suggesting it would be open to higher or lower limits.

None of the industry members’ submissions suggest that a lower limit makes sense. Some support moving to a $350,000 limit, while others recommend an even higher number or no limit at all.

For example, OBSI recommends that IIROC consider adopting a limit of $500,000 or $750,000 to “better position the arbitration option between the current free and informal dispute resolution option provided by OBSI and the more formal and costly dispute resolution option provided by the courts.”

The Investment Industry Asso-ciation of Canada also favours a continuum from OBSI, through arbitration, to the court system, but imagines a different model. The IIAC recommends OBSI be used only for disputes worth less than $100,000, and that arbitration become the industry’s dispute-resolution process for handling claims worth between $100,000 and $500,000.

Says the IIAC’s submission: “This model has the advantages of retaining the informality and cost advantages of OBSI for smaller claims, ensuring that potential compensation received by clients is not significantly diminished by administrative and outside legal costs. For more significant claims, it ensures that a measure of due process is injected into the resolution of the dispute.”

Reducing access to OBSI won’t be popular with inves-tors, though. OBSI has only recently expanded its mandate to do a better job of dealing with consumer disputes.

Among the changes OBSI adopted was taking on the job of helping investors articulate their complaints, and one submission suggests a similar change needs to take place within the ar-bi-tration system. The Toronto-based Canadian Foundation for Advancement of Investor Rights (FAIR Canada) recommends that IIROC create a free or low-cost service to help investors with their arbitration claims. FAIR Canada points out that many investors may have a hard time understanding the nature of their claim, the extent of damages and the evidence they need to provide to substantiate the claim. FAIR Canada proposes that this service could be funded out of the enforcement penalties IIROC collects, and that investor advocacy groups could be among those contracted to provide help to investors.

Additionally, FAIR Canada recommends that the arbitration system should not have any award limit; or, if it does, it should be at least $1 million. The consumer advocate also calls for IIROC to scrap arbitrators’ ability to award costs (a feature of the program that several individual investors complained about in submissions to IIROC) and that the system’s transparency be improved by publishing arbitration decisions and awards (without naming names).