Following its first year of dealing with aggrieved investors, Canada’s first free, legal advice clinic devoted to investors recommends that the Ombudsman for Banking Services and Investments (OBSI) be given the authority to make binding compensation recommendations.
The Investor Protection Clinic (IPC) at Osgoode Hall Law School, York University in Toronto, has issued its 2018 annual report. Among other things, the report calls for policy-makers to provide OBSI with binding authority.
“With rising demand for [the Investor Protection Clinic’s] services and limited free and effective mechanisms for seeking redress and compensation, retail investors need an ombudsman service that can issue binding decisions,” the report says. “This would protect harmed investors in a cost-effective way and hopefully prevent future harm.”
A recent independent review of OBSI also recommended that the industry ombudservice be given the power to make investor compensation rulings that are binding on investment firms.
Additionally, the IPC annual report suggests that OBSI consider establishing a fraud compensation fund, and Investment Industry Regulatory Organization of Canada arbitration be provided for free to retail investors below certain financial thresholds.
The IPC, which is staffed by law students, reviewed 40 applications for assistance in its first year, according to the report. More than two-thirds of the files involved investors over 50 years of age, most with relatively little investment knowledge. The clinic provided assistance by preparing letters to firms on behalf of investors, submitted complaints to OBSI, helped prepare several civil climax, and assisted with settlement discussions.
Alongside its call for binding authority at OBSI, the IPC report recommends policy-makers do more to increase public awareness of the importance of performing due diligence prior to investing.
It also urges regulators to “provide a single, centralized resource for checking an advisor’s registration status, proficiency and disciplinary records,” which “would help make it easier for ordinary Canadians to conduct adequate research before investing their money.”