New proposed framework and a new consultation period launched this week
The ongoing question of whether the Ombudsman for Banking Services and Investments (OBSI) should have greater scope to deal with investment-related complaints has entered a new phase.
This week, the Canadian Securities Administrators (CSA) has launched a public consultation outlining a revised and detailed framework to enhance its oversight of OBSI, including granting it binding authority in specified cases.
At the heart of the CSA proposal is the transition of OBSI into an adjudicative body whose decisions would become binding within prescribed parameters.
“Introducing binding authority for investment complaints is important to ensure investors have the ability to seek access to an impartial, fair and efficient dispute resolution process,” said Stan Magidson, Chair of the CSA. “The CSA’s proposal will help modernize the structure of Canada’s capital markets and simplify the complaints process for investors and businesses alike.”
The initiative builds on CSA’s 2023 consultation and incorporates public feedback aimed at enhancing investor protection, procedural fairness, and accountability. It also follows OBSI being granted binding authority in banking-related complaints in November 2024.
Under the new framework, OBSI would have authority to issue final, binding decisions requiring a firm to compensate an investor for losses of up to $350,000. This proposed change aims to address a longstanding regulatory gap, where firms could reject OBSI’s recommendations with no legal obligation to comply.
To support this authority, the CSA proposes a new oversight regime, consisting of two core components:
- a designation order issued under local securities legislation
- a memorandum of understanding among CSA members outlining expectations and regulatory oversight processes.
Together, these instruments are intended to balance OBSI’s independence with stronger accountability mechanisms.
In response to concerns raised during the 2023 consultation, the CSA has also refined the process to include a safeguard for higher-value complaints.
Specifically, where OBSI recommends compensation of $75,000 or more, either party may request a review by an external decision-maker before the recommendation becomes binding. This process would not require legal representation and is designed to be more accessible than a formal appeal to a court or tribunal.
According to the CSA, this external review mechanism “responds to stakeholder feedback requesting an avenue for reviewing compensation decisions,” while avoiding the complexity and cost of a statutory right of appeal. The external decision-maker would be required to meet established qualification criteria and operate under a clear mandate set by OBSI in alignment with CSA requirements.
The CSA also confirmed that OBSI’s six-year limitation period for complaints will be maintained. Despite suggestions during the consultation to reduce this period, CSA stated that retaining the six-year timeframe “promotes consistency and accessibility for investors,” especially considering varying limitation periods across Canadian jurisdictions.
The proposed framework preserves the existing $350,000 compensation cap, with no changes to OBSI’s eligibility criteria or core mandate. It also introduces enhanced transparency and performance standards, including public reporting requirements and oversight by a committee of CSA members.
Stakeholders are invited to submit comments in writing by September 15, 2025. The full notice and instructions for comment submission are available on the CSA website.
