Securities regulators have pushed back the deadline for providing feedback on a consultation to introduce binding authority at the industry dispute resolution service, the Ombudsman for Banking Services and Investments (OBSI).
In mid-July, the Canadian Securities Administrators (CSA) set out their latest plan for fundamental reforms at OBSI — including their proposed approach to providing the dispute resolution service with the power to make binding recommendations for investor compensation when resolving disputes between retail investors and industry firms.
Those plans detailed a proposed external review process for larger cases, and the regulators’ proposed approach to overseeing the service, and its beefed up enforcement powers.
The consultation was scheduled to close on Sept. 15, but the CSA has now extended the deadline by two weeks to Sept. 29.
“To give all stakeholders sufficient time to thoroughly review the proposal and provide meaningful input, the CSA is extending the comment period deadline by two weeks,” the CSA said in a release — adding that the new deadline “was selected to allow the CSA to make timely progress on this critical policy initiative.”
So far, only a couple of submissions to the consultation have been posted by the regulators — although it’s common for most responses to regulatory consultations to be delivered closer to the deadline.
In this case, the proposed reforms have long been controversial, so they’re expected to attract extensive feedback.
Investor advocate demands for regulators to give OBSI the power to enforce its compensation recommendations are not new. There have been long-standing concerns about the organization’s lack of authority, and evidence that this has led to investors accepting “low-ball” settlement offers from firms for fear that firms can simply walk away from OBSI’s recommendations.
At the same time, industry critics have resisted the idea of a more-powerful OBSI, arguing that reforms to give it greater authority will have to be accompanied by more costly, legalistic processes to preserve fairness — reducing its value as an alternative to litigation and a cost-effective way to deal with investor complaints.
To address these sorts of concerns, the CSA’s latest proposal would require OBSI to use external reviewers to assess potential compensation recommendations worth over $75,000 before issuing a final decision in cases involving larger amounts.
The proposals also set out the regulators’ plans for beefing up their oversight of OBSI, and their decision to maintain a six-year limitation period for investor complaints.