Securities regulators say that they are monitoring firms’ refusals to follow compensation recommendations from the Ombudsman for Banking Services and Investments (OBSI), but they aren’t promising any action to address the issue.
In a notice from the regulators that oversee OBSI — which includes the Canadian Securities Administrators (CSA), the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA), and is known as the Joint Regulators Committee (JRC) — published on Thursday, the regulators indicate that they have reviewed the refusals that have been published by OBSI so far, and that they will “continue to monitor compensation refusal cases and consider patterns and issues they raise.”
Firms are expected to participate in the OBSI process in “good faith”, the notes says, but the JRC doesn’t make any pledges to address the recent refusals.
The dispute resolution service doesn’t have the power to impose its compensation decisions on firms, and instead relies on moral suasion and the threat of “naming and shaming” firms that don’t agree to follow its decisions. Historically, that hasn’t been an issue, but in recent years, firms have proven more willing to defy OBSI’s recommendations.
See: Opposition to OBSI
Additionally, the JRC has created a process for OBSI to report possible “systemic issues” to the regulators, since it no longer has the power to investigate these sorts of issues itself. They have beefed up the quarterly reporting from the ombudservice, allowing better monitoring of complaint trends.
OBSI is also currently undergoing an independent review of its handling of investment complaints, as required under its oversight arrangements with the regulators. The review is expected to produce a final report, including any reform recommendations, by mid-May.
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