Securities regulators say they will be monitoring the ongoing trend of firms refusing compensation recommendations from the Ombudsman for Banking Services and Investments (OBSI), and that they expect firms to act in good faith when dealing with the OBSI.

A notice published Thursday by the Canadian Securities Administrators (CSA), the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) — which comprises the new Joint Regulators Committee (JRC) that now oversees OBSI — indicates that the JRC met four times last year, in what was the new committee’s first year of operation. In those meetings, the JRC reports that it discussed compensation refusals published by OBSI — it pledges to monitor these refusals, and “consider patterns or issues raised by them.”

“While OBSI recommendations are not binding, the JRC expects firms to act in good faith when participating in OBSI processes,” it adds.

Additionally, the notice indicates that the JRC is in the process of establishing a protocol that would enable it define potential systemic issues that come to OBSI’s attention; and, would set out a regulatory approach to address these issues. Changes in the dispute resolution service’s terms of reference have eliminated its ability to address systemic issues directly.

The report also indicates that the JRC discussed the next independent review of OBSI’s operations and practices, which is required to take place by 2016. The review will be undertaken by an evaluator acceptable to the CSA in consultation with the JRC, it says.

OBSI’s most recent independent review recommended sweeping changes in order to shore up confidence in the ombudservice, which it found was facing unjustified resistance from the industry. While many of those recommendations were not taken up, one of the reforms that did come out of that process is the creation of the JRC to provide greater regulatory oversight of, and support for, OBSI.