“[I]It is our firm belief that dealing with trader complaints to investors is unfair and a systematic problem, ”the advocacy group said. “We also note that the AMF takes the problem of complaint processing seriously and are pleased to report that we had a very constructive dialogue with them.”
While the JRC report highlighted the Canadian Securities Administrators (CSA’s) renewed focus on strengthening OBSI’s authority as an independent dispute settlement service, Kenmar noted that the initiative has been going on for over a decade with no action or progress reported.
Kenmar stressed the need for greater OBSI powers, particularly in relation to securities disputes. Aside from potentially unfairly tarnishing the reputation of the investment industry as a whole in the eyes of the public, the current “name and shame” system enables the practice of low-ball settlements. The JRC report confirmed that low-balling was a problem and found that the amounts received
As of the 2018 fiscal year of the OBSI, the amounts received from complainants were approximately $ 1.3 million below recommendations. Although the JRC report recognized such a reduction in settlements as an “area of concern,” Kenmar noted that this has been said many times. The advocacy group also highlighted an earlier OBSI proposal to set up a compensation fund that would enable aggrieved investors to receive compensation even if the trader involved in a complaint is insolvent or no longer registered.
“Despite the fact that the CSA / SRO wrote letters to dealers, we continue to see complainants being referred to an internal ‘ombudsman’,” added Kenmar. “Perhaps it is time the CSA forced OBSI to change its rules to reject complaint responses from this ‘ombudsman’ as substantive response letters required by regulation or SRO rules.”