Harmed investors usually want one thing from regulators: help getting their money back. Unfortunately, regulators habitually fail at that task.
On Oct. 7, 2022, the Canadian Securities Administrators (CSA) announced they were working on a proposal to give the Ombudsman for Banking Services and Investments (OBSI) binding authority to order compensation for investors’ losses resulting from industry misconduct. That proposal would be issued for comment within the coming year, the CSA promised.
The pledge came after an independent review of OBSI that recommended the ombudsman be given binding authority. The same recommendation was made after a 2016 independent review that came amid concerns that OBSI’s “name-and-shame” model was ineffective.
A year after making its pledge, the CSA has yet to deliver.
This summer, the Ontario government proposed spending more of the enforcement sanctions money collected by the Ontario Securities Commission — money currently earmarked for repaying harmed investors or benefiting investors generally.
That proposal came less than two years after the province’s auditor general flagged the OSC’s poor record of returning money to victims of misconduct and made recommendations for improving that performance.
But instead of heeding those recommendations, the provincial government wants to expand the ways sanctions money can be spent to areas unrelated to investor protection.
At the beginning of this year, the new industry self-regulatory organization launched a consultation on ways to return disgorgement money to investors harmed by misconduct. Only five months have passed since that consultation wrapped up, so the results remain to be seen.
In the meantime, the CSA must deliver on its promise to propose binding authority for OBSI. And the Ontario government should heed the concerns of both industry and investor advocates to prioritize improving investor compensation.