IIROC publishes proposed amendments to protect Canadian investors

Amendments aim to provide clearer and more consistent handling of client complaints

IIROC publishes proposed amendments to protect Canadian investors

In its push to better protect Canadian investors, the Investment Industry Regulatory Organization of Canada (IIROC) released proposed amendments to regulatory requirements for reporting, internal investigations, and client complaints.

IIROC adopted industry best practices as it floated changes aimed at making the rules clearer and more consistent with existing regulatory expectations, creating a more uniform reporting process, and improving complaint requirements.

The proposed amendments encourage enhanced communications with investors through written responses to complaints that prioritize accessibility and plain language, with languages other than English and French used whenever necessary.

In addition, the proposals would set explicit requirements for dealers to report on activities that may harm clients or the capital markets, such as data breaches, serious violations of IIROC requirements, and client complaints, including serious account-related misconduct.

Aside from setting clearer expectations around how firms conduct an internal investigation, the proposals would prevent dealers from using the word "ombudsman" or similar designations for their internal dispute resolution services.

Last year in a joint staff notice, securities regulators and self-regulatory organizations issued guidance on not allowing the use of an internal ombudsman to address client complaints.

“In some cases, it appears that clients are not being given the clear option of using OBSI’s services in the timeframes contemplated by NI 31-103 … [T]hey are [effectively] being diverted to an internal ombudsman while the time limits for submitting the complaint to Ombudsman for Banking Services and Investments (OBSI) or commencing a civil action continue to run,” the notice said.

It stressed that an internal ombudsman should not be held out as an “alternative” to OBSI, and OBSI must be made available even if a client has pursued their complaint with the internal entity.

IIROC has also republished proposed amendments to IIROC Rule 9500, which would remove restrictions on information IIROC can receive from OBSI.

According to Irene Winel, Senior Vice-President, Member Regulation and Strategy at IIROC: " Our proposed rule amendments are intended to make the requirements for reporting, internal investigations, and client complaints clearer and more consistent and accessible. In alignment with IIROC's mandate, these proposed changes will ensure investors continue to be protected."

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