Securities regulators are stopping short of giving the Ombudsman for Banking Services and Investments (OBSI) the power to make binding investor compensation recommendations \u2014 instead, they are warning them that they may face increased regulatory scrutiny for resisting OBSI’s recommendations.<\/p>\n
In a joint notice published Thursday, the Canadian Securities Administrators (CSA), the Investment Industry Regulatory Organization of Canada (IIROC), and the Mutual Fund Dealers Association of Canada (MFDA), are highlighting their concerns with current industry complaint-handling practices.<\/p>\n
Firms that refuse OBSI recommendations, or provide clients with “low-ball” settlements, may face increased attention from the regulators themselves, the notice says. While not every instance of refusing an OBSI decision will necessarily attract regulators’ attention, they warn that a pattern of resistance may well.<\/p>\n
“The likelihood that staff would conclude that enquiries or a review is warranted will be significantly higher if a firm has shown a pattern of either refusing to compensate clients after recommendations by OBSI or settling matters at discounts from OBSI’s recommendations,” the joint notice says. A review by a provincial regulator or one of the self-regulatory organizations could lead to enforcement action, or conditions being sought on a firm’s registration, the notice adds.<\/p>\n
Regulators are also flagging the issue of firms using “internal ombudsmen” as an additional form of dispute resolution. Earlier this year, the investor advocacy group, the Canadian Foundation for Advancement of Investor Rights (FAIR Canada) and the consumer group, the Public Interest Advocacy Centre (PIAC), warned that this practice is potentially misleading and confusing to investors, and that it could be harming their access to redress.<\/p>\n