The Ontario Securities Commission has approved amendments to by-law 1 of Mutual Fund Dealers Association regarding the ombudservice for Banking Services and Investments.

The purpose of the amendments is to mandate the MFDA members to participate in, to co-operate with, and to provide their clients with information on the Ombudsman for Banking Services and Investments. These amendments were published on Nov. 15, 2002, and the MFDA received public comments from BMO Mutual Funds and Manulife Financial.

One commentator expressed concern about the proposed new requirement that new clients also be provided with a copy of the written material that describes the ombudservice, suggesting that this duplication of disclosure would result in increased financial and administrative costs for MFDA members. The commentator suggested that the disclosure requirement should be simplified by requiring disclosure of the ombudservice only on the occurrence of a written complaint.

The MFDA disagreed, saying that the ombudservice will enhance public confidence in the integrity of the capital market by transparently assuring clients, at the commencement of their relationship with a registered mutual fund dealer, that there is an independent body that may be called upon if some unforeseen or unexpected problem or difficulty arises in the future.

The other commentator questioned whether the ombudservice offered by the Canadian Life and Health Insurance Association is to be approved by the MFDA board. The MFDA said that it is not expected that it will approve industry ombudservices in addition to OBSI. However, it said this issue may be addressed in OBSI’s terms of reference, “as we understand that OBSI is considering providing for cooperation with other industry ombudservices and the ability to make joint recommendations”.