Open letter to CSA highlights urgency of decision-making mandate to address investor complaints
The president of Kenmar Associates, an Ontario-based group that advocates for the rights of Canadian retail investors, reiterated previous calls to strengthen Canada’s Ombudsman for Banking Services and Investments (OBSI).
In an open letter to Louis Morisset dated April 28, President and Chair of the Canadian Securities Administrators (CSA), Kivenko urged the Canadian Securities Administrators to provide the Ombudsman for Banking Services and Investments (OBSI) a binding decision-making mandate as well as a mandate to investigate systemic issues.
“The wealth management services industry complaint-handling process is complex, adversarial and puts an unsophisticated investor against a firm’s highly sophisticated complaint-handling team,” Kivenko said in his letter. “The current framework for complaint-handling in the securities sector is not working for many investors and there is an urgent need for improvement.”
He pointed out how critical a fair and competent ombudsman agency is to the integrity and confidence of the capital markets in Canada, adding that inadequate authority to achieve redress for investors results in inefficient and unduly lengthy aided settlement processes. Unfair compensation in cases related to complaints can be a life-changing event for Canadians.
Furthermore, Kivenko wrote that he believes that now is the moment for the CSA to act responsibly and provide a world-class financial ombudsman service to retail investors as financial institutions and the government are losing their credibility.
“Since COVID-19, financial consumers in Canada are ever more fragile, and losses are felt ever more deeply,” Kivenko said, noting how OBSI is handling the largest number of cases in its history, including the 2008-2009 financial crisis. “Now is the time for the CSA to do the socially-responsible thing and provide a world- class retail investor financial ombudsman service.”
The call to give OBSI’s decisions binding authority and a mandate to look into systemic complaints, he emphasized, is a socially responsible objective that Kenmar and other investor and consumer advocates have been urging authorities to implement for more than a decade. Such calls, he added, have consistently been supported by independent third-party reviews and international standards.
To strengthen investor protection, increase access to justice, and foster fairness and confidence in Canada's investment market, Kenmar said OBSI must be granted the authority to make binding decisions on dealers.
Coupled with a systemic issues investigation mandate, he said binding decision authority for OBSI would offer several benefits. He said it would reduce investor apprehension about filing valid complaints based on a perception that the system is biased against them; remove dealers' ability to ignore OBSI's compensation recommendations or provide low-ball settlements, leaving investors disappointed at the end of a protracted, stressful process; and improve investor satisfaction and confidence in the financial services business, among other positive outcomes.
“We encourage the CSA to act expeditiously on this long-delayed investor protection initiative,” Kivenko said.