FAIR Canada/PIAC Response to Joint CSA Staff Notice 31-351; IIROC Notice 17-0229, MFDA Bulletin #0736-M
FAIR Canada and PIAC welcome the CSA, IIROC and MFDA taking a step in the right direction to improve compliance with the OBSI dispute resolution process for securities complaints.
We are pleased to see that the CSA, IIROC and MFDA will:
- Make registered firms comply with their regulatory obligation to notify clients of their right to utilize OBSI’s services upon the earlier of being provided with the firm’s substantive response or after 90 days.
- Not permit registered firms to mislead clients into thinking that they must exercise the option of using an internal “ombudsman” before they can access OBSI’s services.
- Require registered firms to disclose clearly to clients that any internal “ombudsman” is employed by the firm and, unlike OBSI, is not an independent dispute resolution provider.
- Require registered firms to disclose clearly to clients that they may submit a complaint to OBSI without using an internal “ombudsman” – if either no substantive response is received from the registered firm within 90 days or the client is not satisfied with the response received within 90 days.
- Require registered firms to disclose clearly to clients that OBSI is a free service.
- Require registered firms to disclose clearly to clients that the use of an internal “ombudsman” is voluntary, that statutory limitation periods continue to run while using that process which may impact a client’s ability to commence a civil action (and therefore harm their legal rights).
We are also pleased to see that the CSA, IIROC and MFDA may view refusals or low ball offers as an indication of problems with a registered firm’s complaint handling practices including their obligation to deal fairly, honestly and in good faith with clients, act within the applicable standard of care, or have implemented and maintained effective complaint handling procedures.
Going forward, we urge the CSA, IIROC and the MFDA to:
- Take immediate action against registered firms that have repeatedly ignored their complaint handling obligations and refused to comply with OBSI’s recommendations, from the beginning of the OBSI complaint process. The CSA, MFDA and IIROC should also not simply make refusals and low-ball offers one aspect of what they will consider during their normal risk-based reviews on a going forward basis but review refusals and low ball offers in as close to real time as possible and practicable.
- Require registered firms to cease using the term “ombudsman” as part of their internal complaint handling process.
- Require registered firms to provide a prominent link to OBSI’s complaint handling process on their websites.
- Implement binding decision-making for OBSI to prevent low-ball offers and refusals from being a systemic issue so that Canada’s dispute resolution process complies with our international obligations to be “accessible, affordable, independent, fair, accountable, timely and efficient”. Canadians deserve to have a resolution of their complaints when they utilize OBSI’s services.