On August 27, 2020, the Canadian Securities Administrators, IIROC and the MFDA released a report highlighting the major activities conducted by the Joint Regulators Committee (JRC) of the Ombudsman for Banking Services and Investments (OBSI) for 2019.
As we discussed in an earlier post, changes to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations were adopted in 2014 to require registered dealers and advisers outside Quebec to make OBSI services available to clients in order to satisfy their obligations to offer independent dispute resolution services. Since then, the CSA, IIROC and the MFDA have released regular reports setting out the activities undertaken by the JRC, which meets regularly with OBSI to consider operational and governance issues.
Of particular interest in this latest report, the regulators note that for the fiscal years 2018 and 2019, about 7% of investment-related complaints were settled for less than OBSI recommendations. These settlements resulted in clients receiving $1.04 million less than OBSI recommended. According to the report, this is an area of concern, as it may suggest firms have failed to adopt effective complaint handling procedures. As such, the JRC intends to continue monitoring complaint trends, “including refusals to compensate clients consistent with OBSI recommendations, or repeatedly settling for lower amounts than recommended by OBSI.” According to the report, this may ultimately result in further regulatory action.