Regulators continue to review best practices relating to complaint-handling procedures. On January 13, the Investment Industry Regulatory Organization of Canada (IIROC) released proposed amendments respecting reporting, internal investigations and client complaint requirements. Many of these amendments impact IIROC’s current ComSet reporting, and some requirements under the Universal Market Integrity Rules, which are meant to clarify regulatory expectations, reflect best practices and reduce duplicative reporting. The amendments would introduce a definition for “serious misconduct”, and among other prescriptive reportable actions (such as material breaches of client personal information,  suspected fraud or theft), dealers would be required to report actions if there is a reasonable risk of material harm to clients or the capital markets, or material non-compliance with IIROC requirements, securities laws, or other applicable laws. If the proposed amendments proceed, dealers would be required to conduct internal investigations and report to IIROC if they become aware the dealer, an Approved Person or an employee may have engaged in serious misconduct within prescribed time frames. Some of the best practices IIROC wishes to adopt include removing the distinction between verbal and written complaints, setting time limits for internal dispute resolution, as well as prohibiting the use of the term “ombudsman” for internal dispute resolution services to help avoid client confusion with external dispute resolution services. If a dealer discovers systemic issues, they will have to consider whether it is fair and reasonable to proactively conduct any redress or remediation. IIROC believes the proposals will allow it to better prevent and address material harm to investors and clients. Amendments are also proposed to Rule 9500, to remove the restrictions on information IIROC can receive from the Ombudsman for Banking Services and Investments (OBSI). The comment period will end on April 14, 2022.

In addition, the Financial Services Regulatory Authority of Ontario (FSRA) released a Complaints Resolution Policy Framework and Best Practices, which is intended to guide its future policy work on complaints resolution while staff reviews the current ecosystem. The guideline runs through FSRA’s research on how other jurisdictions deal with complaints resolution, and summarizes its conclusions regarding some best practices. These practices include financial entities having both an internal and external dispute resolution process, with only one external dispute resolution body for any one particular financial service sector. Another best practice noted is the ability of external dispute resolution mechanisms to secure redress for consumers. While the guideline itself was not the subject of consultation, FSRA has asked a number of specific discussion questions with respect to suggestions for any additional best practices, or issues FSRA should explore in future in the context of its work on complaints resolution. If you have any questions, please reach out to us. Comments are due by February 15.

January 31, 2022