On November 15, 2012, the Canadian Securities Administrators (CSA), published for comment proposed amendments to National Instrument 31-103 Registrant Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) and Companion Policy 31-103CP Registrant Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103CP). The proposed amendments would require all registered dealers and registered advisers outside of Québec to utilize the Ombudsman for Banking Services and Investments (OBSI) as the common dispute resolution service for the discharge of their obligations under section 13.16 Dispute Resolution Services of NI 31-103 in response to a client complaint. A complaint for these purposes would be defined as one that is raised within six years of the date when the client knew or reasonably ought to have known of the trading or advising activity that it relates to, and involves a claim of no more than $350,000.
The firms that would be most directly affected by the proposed amendments are dealers and advisers registered outside of Québec that are not members of either the Investment Industry Regulatory Organization of Canada (IIROC) or the Mutual Fund Dealers Association of Canada (the MFDA). IIROC and the MFDA already mandate the use of OBSI as the dispute resolution services provider for their member firms. Section 13.16 of NI 31-103 does not apply to Investment Fund Managers. Registered firms in Québec that comply with sections 168.1.1 to 168.1.3 of the Securities Act (Québec) are deemed to comply with section 13.16 since these provisions set out a complaint handling regime whereby the Autorité des marchés financiers (the AMF) may act as a mediator.
The proposed amendments would not restrict a client’s ability to take a complaint to a dispute resolution service of their own choosing at their own expense, or to bring an action in court.
Issues for Comment
- Would the time limit on complaints be more appropriate if it was counted from the time when the trading or advising activity that it relates to occurred, rather than from the time when the client knew or reasonably ought to have known of the trading or advising activity?
- OBSI’s current terms of reference require a complaint to be made to the ombudsman within 180 days of the client’s notice of the firm’s rejection of their complaint or recommended resolution of the complaint, subject to the ombudsman’s authority to receive and investigate a complaint in other circumstances if the ombudsman considers it fair to do so. Should NI 31-103 include a deadline for clients to bring complaints to it? If so, is 180 days the appropriate period?
Comments should be submitted in writing via email or a CD (in Microsoft Word format) to all of the CSA, and such comments may be published. The comment period expires on February 15, 2013.