Bank staff logged 371 client complaints in the wrong system for nearly two years
Scotia Securities Inc. agreed to pay a $275,000 fine and $10,000 in costs over complaint reporting and handling failures spanning June 2022 to June 2024.
A Canadian Investment Regulatory Organization hearing panel accepted the settlement on August 6 at a videoconference hearing in Toronto, Ontario.
Written reasons released on September 15, came from a panel chaired by Thomas J. Lockwood, K.C., sitting with industry representatives Guenther Kleberg and Colleen Wright.
The reasons for decision in 2026 CIRO 29 record two admitted contraventions.
From June 2022 to May 2024, the dealer lacked adequate policies, procedures and supervisory controls for reporting and complaint handling, contrary to Mutual Fund Dealer Rules 1.4(a), 2.5.1, 2.11, 300 and 600.
From July 2023 to June 2024, it lacked adequate controls for complaint handling and supervisory investigations, contrary to Rules 2.5.1, 2.11 and 300.
In or around June 2022, according to the settlement agreement dated June 30, the bank affiliated with Scotia Securities implemented its own complaints system.
Branch and contact centre staff, some of them dealing representatives registered with the dealer and some not registered in the securities industry, recorded client complaints about accounts and about the conduct of the dealer's Approved Persons onto that bank system.
Those complaints were handled under the bank's process rather than the dealer's and were not reported on the Member Event Tracking System.
Scotia Securities had no supervisory procedures or reviews in place at the material time to catch the misrouting.
The bank identified the problem in April 2024 during an evaluation of how complaints were being received.
Scotia Securities opened an investigation in May 2024 and reported the failures to CIRO in June 2024.
The dealer identified 371 misrouted complaints, retained external counsel to reassess them, and reported them on CIRO's Complaints and Settlement Reporting System.
The settlement agreement lists 13 categories of alleged conduct behind those complaints, including unsuitable investments, misrepresentation, discretionary trading, breach of client confidentiality, and pressure to buy mutual funds.
Scotia Securities compensated 105 clients a total of $58,780.17 and offered a further 10 clients a total of $15,395.11.
On the second contravention, the dealer found it had failed to contact clients, in accordance with its own policies and procedures, during investigations of 128 complaints between July 2023 and June 2024.
It reassessed those files, determined 67 required client contact, and reached 44 clients. It compensated 10 clients a total of $70,613 and offered two clients a total of $4,500.
Failing to report and handle 371 complaints for nearly two years amounts to “serious misconduct,” the panel wrote, adding that the failure to contact clients during the investigation of 128 complaints “fails investors and is inconsistent with the public interest.”
Scotia Securities received a 30 percent reduction on the fine enforcement staff would otherwise have sought, credited for self-identifying the failures, investigating them, and providing CIRO with the results of its internal investigation.
The panel noted a prior settlement accepted in December 2022 concerning unrelated misconduct, and applied the CIRO Sanction Guidelines in effect since February 1, 2024.
The settlement agreement states that as of April 2026 the affiliated bank had changed its complaints system to automatically reroute complaints from the dealer's clients to the dealer's complaints department.
All substantive written responses to clients, other than those on transfer delay complaints, now require review by the dealer's chief compliance officer.
