Investor advocates are applauding Saskatchewan’s move to pass legislation that would give the Ombudsman for Banking Services and Investments (OBSI) binding authority to make compensation recommendations on behalf of harmed investors.
Earlier this month, Saskatchewan’s Bill 150 received royal assent. The bill provides for industry dispute resolution services with binding authority, raises maximum penalties for securities violations to $1 million from $100,000, and expands the enforcement powers of the the Financial and Consumer Affairs Authority.
“This landmark legislation represents a significant step forward in protecting the rights and interests of investors across Saskatchewan,” said Jean-Paul Bureaud, executive director of FAIR Canada, in an open letter.
“By introducing measures that grant … OBSI binding authority, the act ensures that investors have a more robust mechanism for dispute resolution, thereby enhancing the integrity and trust in the financial markets,” he said.
Earlier this year, the Canadian Securities Administrators (CSA) carried out a consultation on the long-standing recommendation, from both investor advocates and OBSI’s independent reviewers, that OBSI be given binding authority. Saskatchewan is the first province to follow through with enabling legislation.
In its latest budget, the Ontario government expressed its support for regulators’ efforts to reform the dispute resolution system.
The CSA consultation has yet to result in final rules, and its proposed framework would also require changes to provincial legislation.
Some industry groups have pushed back on the idea of granting OBSI binding authority, saying it risks making the dispute resolution more costly and adversarial.
Yet, investor advocates have worried that OBSI’s name-and-shame powers are ineffective, as a number of firms have refused its recommendations over the years, and that harmed investors have been more willing to accept low-ball settlement offers from firms for fear they otherwise risk being left with nothing.
In its letter, FAIR Canada said it sees the passage of Bill 150 as a “pivotal moment for investor rights in Canada.”
“It sends a clear message that investors’ financial well-being is a priority and that the government is willing to take decisive action to protect those investing within its borders,” it said. Along with other consumer advocacy groups, it will push for other provinces to follow suit, the organization said.