The Investment Funds Institute of Canada warns that proposed revisions to the mandate of the Ombudsman for Banking Services and Investments (OBSI) could effectively create yet another new regulator and undermine OBSI.

In its comment letter on OBSI’s proposed new terms of reference, IFIC highlights the increased potential for overlap with regulators’ mandates, duplication and conflicts that would result if the proposed revisions are implemented.

“We note that the changes you propose for OBSI’s mandate create a high degree of overlap with the mandates of regulatory organizations. In effect, the result will be that investment funds gain an additional regulator with the ability to audit firm practices, make findings and direct restitution, without the procedural safeguards and due process required of statutory agencies,” it says.

“The success of OBSI’s role derives from its ability to provide an impartial, non-legalistic avenue for disputes between [firms] and their customers. The proposed revisions will have a significant and detrimental impact on this role,” IFIC warns.

Instead, IFIC argues that more harmonized policy setting and oversight of complaint handling will lead to more efficient complaint resolution, and increased confidence in the ombudservice framework.

It urges improved coordination between the Joint Forum of Financial Market Regulators, the self-regulatory organizations (the Mutual Fund Dealers Association of Canada and the Investment Dealers Association of Canada) and OBSI.

“A harmonized, coordinated approach to policy development in the various agencies and regulatory bodies that oversee complaint resolution will be important in achieving our shared objectives,” stated Joanne De Laurentiis, IFIC president & CEO, in a release.

IFIC adds that the investment funds industry supports the role of OBSI as an independent and impartial arbiter of consumer complaints and encourages OBSI to focus on its success in this role.