Canadian securities regulators are planning to extend mandatory participation in the industry ombudservice to all firms under their jurisdiction.

In his keynote address to OSC Dialogue 2012 in Tuesday in Toronto, Ontario Securities Commission (OSC) Chairman Howard Wetston announced that next month the Canadian Securities Administrators (CSA) will be proposing to require that all firms, including exempt market dealers, scholarship plan dealers, and portfolio managers, must use the services of the Ombudsman for Banking Services and Investments (OBSI) to resolve client complaints.

As it stands, participation in OBSI is only mandatory for investment dealers and mutual fund dealers that belong to the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA); and, in the past, they have sought permission to stop using OBSI. Now, it appears that not only will the regulators be giving those dealers latitude to use other dispute resolution mechanisms, they will be extending OBSI’s remit to all firms under their jurisdiction.

“In November, the CSA plans to publish proposals that would make OBSI the mandatory dispute resolution mechanism for all dealers,” said Wetston in his opening remarks. “This should create a common baseline and level playing field for investors.”

The CSA’s move stands in contrast to the banking side, where participation in OBSI has always been voluntary. And, in the past few years, two of the big banks have withdrawn from the service. Moreover, federal regulators have declined to adopt rules requiring the banks to use OBSI; instead, they have tried to set minimum standards for the services they do use to resolve customer complaints.

An independent report published last fall recommended sweeping reforms to OBSI, including mandating participation, giving it binding powers over firms, and creating an appeal process. OBSI made some changes to its own governance practices in response to that report, but most of the review’s other recommendations, which require the involvement of regulators and other policymakers, have yet to be acted upon.

In his speech, Wetston also noted that the CSA will soon be publishing a discussion paper on the cost of ownership of mutual funds in Canada “to determine whether regulatory reforms are needed to address investor protection and fairness issues.”