IFIC acknowledges OBSI’s improvements, notes additional measures are needed
Toronto, ON – March 11, 2016 – The Investment Funds Institute of Canada (IFIC) today acknowledged that the Ombudsman for Banking Services and Investments (OBSI) has improved several of its practices in recent years and suggested additional measures that would help OBSI to more effectively fulfill its mandate. IFIC expressed these views in its submission to the independent evaluator retained by the Canadian Securities Administrators to determine whether OBSI is successfully fulfilling its mission.
“OBSI deserves credit for successfully clearing its backlog of cases, improving its standards for the timely disposition of cases, and implementing significant governance reforms,” said Joanne De Laurentiis, president and CEO of IFIC. “There are further initiatives it can take to confirm its role as an independent, impartial and fair dispute resolution organization and thereby enable it to better serve all of its stakeholders.”
Among IFIC’s recommendations is the need for clarity on OBSI’s “fairness standard” and how application of the fairness standard intersects with regulatory requirements.
“A finding that a firm has fallen short of OBSI’s fairness standard can be particularly difficult to understand in cases where the firm has also been found to have complied fully with the relevant securities rules,” De Laurentiis noted. “Clarifying the fairness standard and how it differs from existing regulatory requirements would help the companies understand what is expected of them.”
The IFIC submission also raises some operational issues, such as the need for OBSI to provide members with regular status updates and the opportunity for input during the course of investigations. Some IFIC members report providing case materials to OBSI as requested, but hearing little until they are presented with a compensation recommendation.
“In a neutral process, information should be shared equally with both parties,” De Laurentiis notes.
The terms of reference for the independent review require the evaluator to conduct a high-level benchmarking exercise that compares OBSI to other financial ombudsman schemes. IFIC notes that, in Canada, the responsibility to regulate, enforce and oversee market conduct falls under the mandates of two self-regulatory organizations (SROs): the Mutual Fund Dealers Association of Canada and the Investment Industry Regulatory Organization of Canada. In other jurisdictions, these roles fall within the scope of the ombudsman.
“When comparing OBSI’s work to international benchmarks, it is important for the independent evaluator to recognize that the Canadian framework, particularly the oversight role of the SROs, is fairly unique,” De Laurentiis stated. “In order to properly assess whether OBSI is fulfilling its obligations to Canada’s securities regulators, the evaluation should focus on the operations and procedures applicable to the handling of consumer complaints, and not on areas that go beyond OBSI’s mandate.”
The Investment Funds Institute of Canada is the voice of Canada’s investment funds industry. IFIC brings together 150 organizations, including fund managers, distributors and industry service organizations, to foster a strong, stable investment sector where investors can realize their financial goals. By connecting Canada’s savers to Canada’s economy, our industry contributes significantly to Canadian economic growth and job creation. The organization is proud to have served Canada’s mutual fund industry and its investors for more than 50 years.
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