​OSC advisor compensation face-off continues

​OSC advisor compensation face-off continues

​OSC advisor compensation face-off continues By Jeff Sanford

The Ontario Securities Commission's and its independent investor advisory panel seem to be at odds over the issue of advisor compensation to wronged clients.

The OSC’s Investor Advisory Panel, this week, sent a letter to OSC chair Howard Wetston commenting on the lack of powers at the body that oversees compensation paid from advisors firms to clients in the case of negligence.

Recently, the Ombudsman for Banking Services and Investments (OBSI) adopted rule changes that require registered firms to belong to the OBSI. The new OBSI regulation would see an ombudsman resolve disputes and firms incented to pay compensation to wronged clients. August 1 Over 1,600 firms are about to become part of the oversight regime. But the OSC elected to not give OBSI the power to compel firms to award compensation to their clients. Instead clients can only rely on the cooperation and goodwill of the firms to comply with the Ombudsman's recommendations, a so-called “name and shame” regulatory regime. 

The rules have been controversial. Those in the industry argue the regulations would handcuff portfolio managers. On the other hand, recent reports in the financial media have focussed on cases of seeming negligence by advisors that have left clients without compensation as firms. The financial media has also been documenting cases in which firms have elected not to comply with the regulations. As well, a recent consultant’s report found that naming and shaming wasn't working. According to Navigent: “Between 2007 and 2011 there was "significant deterioration of goodwill from member firms". 

The letter from the investment advisor panel takes the dispute to the next level: "We call on the Ontario Securities Commission to act now to ensure Ontario investors have access to independent, timely and binding compensation services," write the authors.
 
 
3 Comments
  • DWK 2014-05-23 12:23:58 PM
    Name and shame does not work becuause OBSI does not provide fair and balanced judgements. If a claim gets to them it always comes down in favour of the client. (dont forget their apeal has been rejected at other levels already). No wonder firms are ingoring them, they are biased.
    Post a reply
  • Jeff Sanford 2014-05-23 3:41:12 PM
    DWK...I like that you've pointed out the industry perspective on this issue. Do you feel like expanding on these points and writing a blog post for us on this issue? Email me at jeff.sanford@kmimedia.ca if you are interested.
    Post a reply
  • PeUU 2014-08-27 4:31:52 PM
    To Jeff Sanford - DWK ignorantly perpetuates the falsity when stating that "If a claim gets to them (OBSI) it always comes down in favour of the client" (don't forget their (the client) ap_eal has been rejected at other levels already). No wonder firms are ignoring them, they are biased.
    DWK should be sued for deformation by OBSI. Where is the evidential proof of these claimed facts that OBSI always comes down in favour of the investor-client ?
    DWK says that OBSI are biased. DWK should get a hearing aid. Where does the client-investor turn to when the Investment dealer rejects the investor's complaint that shows evidence that the investor has been fraudulently mislead by the investment performance claims of the Dealers' Representative Financial Advisor, before the investments are consummated ?
    Jeff Stafford, make sure when you are looking for the "industry's perspective you get the facts and not some tainted propaganda.

    To DWK, most appeals will be unsuccessful when you spell the word appeal with only one "p".
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