In an infrequent joint notice published by the Canadian Securities Administrators (CSA), the Investment Industry Regulatory Organization of Canada (IIROC), and the Mutual Fund Dealers Association of Canada (MFDA), staff indicated a number of concerns with practices that seem to be developing among a few registrants in relation to their obligations (outside of Quebec) to utilize the services of the Ombudsman for Banking Services and Investments (OBSI) as an independent dispute resolution service.
As a reminder, National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) requires registered firms to use OBSI to deal with client complaints, under a specific time frame and process. While OBSI’s compensation recommendations are not currently binding on a complainant or registrant, staff note that if a registrant does not pay the compensation recommended by OBSI, or settles for lower amounts on a frequent basis than the recommended amount, such decisions may indicate that the firm has issues with respect to its complaint handling practices. In addition, staff note that such practices may raise questions as to whether the registrant is complying consistently with its standard of care, or participating in OBSI’s services in good faith. Other examples of potential failures in complaint handling practices are described, including not fully assisting OBSI with its investigation.
Staff also note their concerns about potential confusion for clients if registrants make the services of an “internal” ombudsman available during the OBSI process without clear disclosure of the OBSI procedures.
It seems clear from the notice that staff of the CSA and the SROs are taking a close look at the public record for refusals to comply with OSBI recommendations, are speaking with OBSI closely through the Joint Regulators Committee and are looking at the number of settlements occurring. Staff may make further inquiries of a registrant, and/or take more serious action where warranted, up to and including referring files to enforcement.