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Regulators concerned about complaint handling

By The IJ Staff | December 07 2017 01:30PM

Photo: Freepik

The Canadian Securities Administrators (CSA), Investment Industry Regulatory Organization of Canada (IIROC) and Mutual Fund Dealers Association of Canada (MFDA) released a joint notice on Dec. 7 that highlights concerns about some registered firms' complaint handling systems and their participation in Ombudsman for Banking Services and Investment’s (OBSI) dispute resolution process.

The joint notice sets out potential regulatory responses and outlines staff's concerns regarding the use of an internal "ombudsman" as part of complaint handling systems.

Compensation recommendations

The notice also points out that while OBSI’s compensation recommendations are not decisions that are binding on firms or clients, the regulators are of the view that “refusals to compensate clients consistent with OBSI recommendations, or repeatedly settling for lower amounts than recommended by OBSI can sometimes be a risk-based indication of problems with a firm’s complaint handling practices.”

The regulators add that as part of their risk-based reviews, they “will particularly take note of patterns involving these activities. Such activities could suggest the possibility that the firm may not have: participated in the OBSI process in good faith, complied with the applicable standard of care, or implemented and maintained effective complaint handling procedures.”

Dealing fairly, honestly and in good faith

"We expect firms to participate in OBSI's dispute resolution process in a manner consistent with their obligation to deal fairly, honestly and in good faith with their clients and to respond to each customer complaint in a manner that a reasonable investor would consider fair and effective," said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers.

The regulators say they are continuing to consider options for strengthening OBSI's ability to secure redress for investors, a key recommendation made by an independent evaluator in its 2016 report.

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