The Canadian Investment Regulatory Organization’s (CIRO) arbitration program, an often forgotten option for aggrieved investors, is set for an overhaul that would extend the program to the mutual fund dealer sector and boost the ceiling on claims.
CIRO unveiled a set of proposed reforms to its investment dealer arbitration program, which is designed as an alternative to litigation and as an option for larger, more complex disputes than the Ombudsman for Banking Services and Investments (OBSI) typically handles.
“[T]he proposed changes are designed to enhance the accessibility, efficiency and transparency of the arbitration process for both investors and dealers,” CIRO said in a notice outlining its proposals.
Under the proposals, published on Thursday, CIRO would extend the arbitration program to fund dealers and their clients, and introduce a $350,000 floor for claims (reflecting the upper limit for OBSI claims) while raising the upper limit from $500,000 to $1 million. The self-regulatory organization (SRO) would also fund some of its administrative costs out of its restricted fund (the fund that collects the proceeds of enforcement sanctions) in an effort to make the program more accessible.
The program would also encourage mediation — but not mandate it — and help to fund that option.
“To create settlement incentives and alleviate costs, we propose to fund reasonable costs of mediation, for example, up to a half-day mediation session, if recommended through case management,” it said.
CIRO is also consulting on possibly extending the limitation period for cases that can be brought to arbitration.
“The requirement for all dealers to participate in the program will offer more dispute resolution options for clients, while the introduction of case management aims to streamline and expedite proceedings,” the SRO said. It added that positioning the program to deal with disputes involving amounts between $350,000 and $1 million “will provide investors with more comprehensive and flexible avenues for seeking complaint resolution.”
CIRO also said, “Clearly enabling for electronic arbitration proceedings and publishing anonymized case studies will increase accessibility and transparency.”
The proposals follow a consultation on reforming the arbitration program that was conducted in 2022, before CIRO was officially created, along with CIRO’s own review of the program, and consultations with its Investor Advisory Panel.
The new consultation is out for comment until Jan. 31.