Another firm has refused a compensation recommendation from the Ombudsman for Banking Services and Investments (OBSI), the dispute resolution service announced Tuesday.

OBSI says Thornhill, Ont.-based mutual fund dealer De Thomas Financial Corp. has refused its recommendation that the firm compensate a retired retail investor, $254,323, after OBSI found that the firm “is responsible for the significant losses incurred by [the investor] as a result of the unsuitable investments and leverage strategy.”

According to OBSI’s investigation report, the investor in question was a widow with no investment experience, and that she relied heavily on her advisor for financial decisions. It says that she was put into a leveraged investing strategy and that certain investments were unsuitable relative to her investment objectives and risk tolerance. And, that she “did not understand the characteristics and risks of the investments she held.”

It concludes that the firm “is responsible for the significant losses incurred by [the investor] as a result of the unsuitable investments and leverage strategy. And, it says she should compensate her for the losses she incurred.

The report says that the firm indicated that the leverage strategy was introduced to address her concerns about high taxes and Old Age Security (OAS) clawbacks; that her RRIF withdrawals were used to make investment loan payments; that she had sufficient pension income to meet her needs; and that her advisor cautioned her against selling investments for gifts and to meet other expenses, noting that withdrawals were not part of her original plans. It maintained that the leverage strategy was suitable for her long-term growth, tax reduction, and estate planning objectives.

OBSI’s recommendation was based on calculating the capital losses associated with the leverage strategy and then adding the interest she paid on her unsuitable investment loan. It also calculated the difference between the amount that her RRIF account would have been worth had she been suitably invested and the actual value of her investments when they were transferred away from the firm. Its recommended compensation is the sum of these two amounts.