The Investment Industry Regulatory Organization of Canada has issued a notice summarizing public comments that call for a variety of improvements to the regulator’s arbitration program.

As part of IIROC’s ongoing review of its arbitration program, it published on Tuesday a summary of public comments on the viability of the program, a proposal to increase the award limit under the program, and suggestions to improve the program’s effectiveness.

IIROC found that most comments supported the continuation of the program, but suggested various improvements, including increasing the award limit.

Under the current program, IIROC Dealer Members are required to participate in binding arbitration proceedings to resolve disputes with clients, if requested by clients. Arbitrators can award up to $100,000 plus interest and costs.

During the public comment period, almost all submissions favoured an increase in the award limit, generally ranging from $350,000 to $1,000,000, according to IIROC.

As a result, the regulator is now proposing increasing the program’s award limit to $500,000, and is inviting further public comments on this proposal.

“IIROC believes that a $500,000 award limit is appropriate and reflects a balance between providing greater access to recourse that is expeditious and cost-effective, and ensuring adherence to principles of natural justice and legal process,” the notice says.

IIROC is also proposing changes to the program’s rules with respect to cost rewards. Under the current program, arbitrators may make awards of costs, typically related to legal fees.

During the public comment period, several investors and investor advocates supported elimination of these costs awards, which would result in each party bearing its own costs.

As a result, IIROC now proposes allowing a claimant to opt, at the start of a proceeding, to eliminate the arbitrator’s discretion to award costs against either party, unless that party has acted in a manner that can be characterized as “unfair, vexatious, improper, in bad faith or has unnecessarily and unreasonably prolonged proceedings.”

The 45-day comment period on these two proposals ends on Oct. 8, 2010. After considering comments, the IIROC board of directors will determine whether to implement the changes, and IIROC will issue another notice on the outcome of these matters.

Other comments that IIROC received on the arbitration program pertained to the length of the process, with submissions calling for quicker resolution of cases. IIROC said it agrees that the cases should be resolved more expeditiously, and pointed out that it has taken several steps to encourage this end.

Other comments advocated the publication of decisions, case summaries and statistical information. But IIROC noted that this could result in increased costs to parties and a longer resolution process, and argued that confidentiality should be preserved.

Lastly, a number of comments recommended improved education for investors, calling for guidance and assistance for investors in understanding and preparing claims and determining eligible losses.

IE