The current system of complaint resolution in the financial services industry is under review. A number of regulators have opened healthy discussion of the future of complaint handling via requests for comment on some of their individual policies.
As it now stands, mutual fund dealers and manufacturers are subject to complaint-handling oversight from a number of regulatory bodies across Canada, including the Mutual Fund Dealers Association of Canada, the Investment Dealers Association of Canada, the Autorité des marchés financiers, the Ombudsman for Banking Services and Invest-ments and federal financial institution legislation. Complaint-resolution processes have emerged independently from each of these authorities; the result is inconsistencies and differences that do not serve the market well.
With “harmonization” the buzz- word of the investment fund industry, the timing is perfect for all regulators to take a look at complaint-handling processes and come up with a more efficient, streamlined system that will make complaint resolution faster for investors, and fair to consumers and firms alike. Above all, achieving consistency with respect to complaint handling will enhance the client experience and improve the ability of industry and regulators to respond appropriately.
One example of how consistency of experience would serve consumers well is the adoption by regulators of similar processes when they receive a complaint from an inves-tor. The Investment Funds Institute of Canada supports OBSI’s two-step policy, in which complaints are sent to OBSI only if they cannot be resolved at the dealer level. This tiered approach provides a more streamlined and more effective resolution of complaints and should be adopted across the board. The Joint Forum of Financial Market Regulators recently released a Framework for Collaboration for the OmbudsNetwork. IFIC supports their objectives and has given the forum some suggestions on how they might be executed.
We also need a consistent definition of a “complaint,” one that includes a provision that grievances settled in the ordinary course of business should not be considered complaints. Service complaints, such as an incorrect address, should be separated from substantive complaints, such as questions about suitability. Service complaints are more appropriately resolved between the consumer and service provider.
In a recent letter to the MFDA commenting on its proposed amendments to MFDA Policy 3 (Handling of Client Complaints), IFIC stated that the best way to create a more consistent experience for consumers is to adopt a principles-based framework rather than a prescriptive one. Specifically, IFIC encouraged the MFDA to adopt the principle that dealers be given full disclosure of what the complaint is all about when it is brought to them. This is not the case today, so dealers are left trying to figure out what the complaint may be about through generalized questions from the regulator. This inefficient approach means complaints take much longer to resolve and the process becomes more frustrating for all concerned. Complaints need to be specific to get to the heart of the issue quickly.
The IDA has also indicated that it is reviewing its complaint-handling rules and expects to release proposed revisions. IFIC has already told the Canadian Securities Administrators that it would like further discussion with the CSA on the complaint-handling issue as it pertains to the next iteration of proposed National Instrument 31-103.
Streamlining complaint-resolution processes will yield clear and measurable benefits to consumers and the industry alike, and we at IFIC look forward to working with all concerned to achieve this. IE
Joanne De Laurentiis is president and CEO of the Investment Funds Institute of Canada.