The Mutual Fund Dealers Association of Canada is proposing policy amendments designed to clarify firms’ obligations when handling client complaints.

The proposed amendments to the MFDA’s current policy aim to, “provide guidance with respect to the standards that members should have in place regarding complaint handling and supervisory investigations.”

The current policy requires members to establish policies and procedures to deal effectively with client complaints and address issues that include client communications, record keeping and internal escalation of serious complaints.

The MFDA indicates that its staff has become aware of, “a number of procedural issues identified by clients that have filed complaints against members and their approved persons.” It notes that the Ontario Securities Commission’s Town Hall meeting in May 2005 revealed that the, “lack of clarity and openness of complaint processes in the securities industry” was an issue.

These issues were then discussed in meetings between the MFDA, OSC, Investment Dealers Association of Canada and the Ombudsman for Banking Services and Investments. Following these meetings, MFDA staff issued a notice that provided guidance on improving the clarity and consistency of communications with investors who have filed a complaints and on the expectations of MFDA staff regarding members’ complaint handling processes. Much of that guidance is to be incorporated into the proposed amended policy.

“In order to improve upon the complaint process, further guidance is required with respect to the fair and prompt handling of complaints by members,” it says, adding that, “MFDA staff has also noted that further guidance is required regarding supervisory investigations to be conducted by members following the receipt of a complaint.”

“The effect of the proposed amendments will be to clarify the obligations of members and provide guidance as to the minimum standards members must meet with respect to the fair and prompt handling of client complaints. The proposed amendments are also intended facilitate clarity and enhance access for clients seeking to file a complaint with a member,” it says.

The MFDA says it does not expect that the proposed amendments will have other significant effects on members, other market participants, market structure or competition or that the proposed amendments will result in significant additional costs.

The proposed policy has been reviewed by the Policy Advisory Committee of the MFDA and the Regulatory Issues Committee of the board. The MFDA board approved the proposed amendments on June 15. It is now out for a 30-day comment period.