CSA Staff Notice 31-338 Guidance on Dispute Resolution Services
Client Disclosure for Registered Dealers and Advisers that are not
members of a Self-Regulatory Organization
May 1, 2014
Introduction
The Canadian Securities Administrators (the CSA or we) are implementing amendments to
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant
Obligations (NI 31-103) as well as Companion Policy 31-103CP Registration Requirements,
Exemptions and Ongoing Registrant Obligations (31-103CP) relating to the provision of
independent dispute resolution or mediation services to clients of all registered dealers and
registered advisers (collectively, the Amendments). The Amendments provide that, outside
Québec, a firm must take reasonable steps to ensure that the Ombudsman for Banking Services
and Investments (OBSI) will be the independent dispute resolution or mediation service that is
made available to a client that has an eligible complaint. The Amendments also include the
requirement to inform clients in writing about the firm’s obligation and to set out the steps a
client must take in order to be able to make use of OBSI’s services.
In Québec, the Autorité des marchés financiers (the AMF) already provides a mediation service
to clients residing in Québec of all registered dealers and registered advisers. The Québec
regime will remain unchanged and firms registered in Québec should continue to inform clients
residing in Québec of the availability of the AMF mediation services. In this Notice, all
references to OBSI are made by CSA members excluding the AMF.
Purpose
Our purpose in requiring the use of OBSI as the dispute resolution service is to provide investors
with the following benefits:
•
access to a free, independent, consistent dispute resolution service,
•
uniform handling of investor complaints, and
•
clarity on who investors should contact if complaints are not resolved.
Registered firms that are members of a self-regulatory organization (SRO), including those that
are registered in Québec, should continue to comply with their SRO’s requirements with respect
to the provision of independent dispute resolution or mediation services.
For the purposes of this notice, a registered firm refers to registered dealers and registered
advisers that are not members of an SRO and does not include a registered investment fund
manager.
Substance
At three points in time, a registered firm must provide its clients with information about the
availability of independent dispute resolution or mediation services and the steps the client must
take in order to make use of those services at account opening, as soon as possible after a client
makes a complaint (for example, when a firm sends its acknowledgement), and again when the
registered firm informs the client of its decision in respect of the complaint.
This staff notice is intended to provide guidance to registered firms in preparing and delivering
client disclosure that meets their obligations under section 13.16 and paragraph 14.2(2)(j) of NI
31-103. To assist registered firms with establishing clear and meaningful client disclosure, we
have provided a sample client disclosure in Appendix A. While the sample client disclosure
document is intended to serve as an example of an acceptable method for registered firms to
meet their disclosure obligations, it is not the only acceptable method. Registered firms may use
alternative methods, provided those methods adequately demonstrate that the firm has met its
disclosure obligations. We encourage registered firms to use this Notice to improve their
understanding of, and compliance with, their client disclosure obligations.
This staff notice also provides sample text and best practices for how a firm might meet their
requirement regarding internal complaint handling procedures.
When do you have to provide client disclosure?
(1) At Account Opening
Under paragraph 14.2(2)(j) of NI 31-103, registered firms must disclose to their client the firm’s
obligations if a client has a complaint contemplated under section 13.16 and the steps that the
client must take in order for an independent dispute resolution or mediation service to be made
available to the client at the firm’s expense. A registered firm may provide this information in a
single document (together with other required relationship disclosure information) or in a
separate document. This disclosure must be provided in writing to the client and should be
communicated in a manner consistent with the guidance on client communications under section
1.1 of 31-103CP. We encourage registered firms to avoid the use of technical terms and
acronyms when communicating with clients.
The sample client disclosure in Appendix A is designed to provide an example of clear and
meaningful disclosure to a client about the firm’s obligations with respect to independent dispute
resolution services, including the requirement that a client must first file their complaint with the
registered firm. While many registered firms already have in place a method of communicating
to a client about their internal complaint handling processes, the sample client disclosure
provides additional guidance and best practices in this area.
(2) At the time of the Complaint
Under subsection 13.16(2), if a registered firm receives a complaint from a client, the firm must,
as soon as possible, provide the client with a written acknowledgement of the complaint that
includes the following:
(a) a description of the firm’s obligations under section 13.16;
(b) the steps that the client must take in order for an independent dispute resolution or
mediation service to be made available to the client under subsection 13.16(4);
(c) the name of the independent dispute resolution or mediation service that will be made
available to the client under subsection 13.16(4) and contact information for the service.
The registered firm must send a written acknowledgement letter to the client as soon as possible,
typically within 5 business days of receipt of a complaint. The following is a list of the types of
information the firm should include in the acknowledgement letter:
•
information about the firm’s complaint process, including timelines for responding to
client complaints,
•
when and how to take their complaint to an independent dispute resolution or mediation
service,
•
contact information for the independent dispute resolution or mediation service, and
•
any other options available to the client to resolve their complaint.
Registered firms may refer to the sample client disclosure to assist with the content of the
acknowledgment letter.
Registered firms may also want to consider including a request for any information reasonably
required to investigate the complaint, if such information can be identified within the 5 business
days of receipt of the complaint. Where possible, such as with less complex complaints, it may
be possible to also provide the firm’s decision at the same time as acknowledging the complaint.
(3) At the time of the Decision
If a registered firm decides to reject a complaint or to make an offer to resolve a complaint, the
firm must, as soon as possible, provide the client with written notice of the decision including:
•
the decision on the complaint, and
•
information about dispute resolution services, including the timelines applicable for use
of the dispute resolution services, the monetary limits associated with the dispute
resolution services and the contact information for those services.
As a best practice, a firm may consider including the following in their written notice to the
client:
•
a summary of the complaint, and
•
the reasons for the firm’s decision.
A registered firm is expected to provide a decision to the client complaint within 90 days of
receipt of the complaint. At the time of the decision, a registered firm may opt to provide
information about independent dispute resolution services to clients in a separate document, or
insert the information in the firm’s written decision to the client.
We recommend including the disclosure in the body of the firm’s decision letter, or referencing
that it is being included, as this would:
•
assist with providing evidence that the client received the required information, and
•
may protect the registered firm in the event a client later claims they did not receive
information about independent dispute resolution services.
When do you need to offer OBSI?
Subsection 13.16(4) requires a registered firm to ensure that independent dispute resolution or
mediation service is available to a client if either of the following apply:
(a) after 90 days of the firm’s receipt of the complaint, the firm has not given the client
written notice of a decision, and the client has notified the independent dispute resolution
or mediation service that it wants to use the service;
(b) within 180 days of the client’s receipt of written notice of the firm’s decision, the client
has notified the independent dispute resolution or mediation services that it wants to use
the service.
Subsection 13.16(6) requires the firm to take reasonable steps to ensure that OBSI will be the
independent dispute resolution and mediation service made available to clients.
When do you need to update Relationship Disclosure Information?
Under subsection 14.2(4) of NI 31-103 registered firms are required to take reasonable steps to
notify clients, in a timely manner, of significant changes in respect of the relationship disclosure
information delivered to a client. The Amendments include an amendment to paragraph 14.2(2)
(j) with respect to the availability of independent dispute resolution services. As the amendment
to paragraph 14.2(2) (j) is considered a significant change to the relationship disclosure
information, registered firms will be expected to take reasonable steps to notify clients, in a
timely manner, of the change to the relationship disclosure information. Sending it separately or
including it with an upcoming client communication, such as their next monthly or quarterly
statement, or before doing a transaction, would satisfy this obligation.
Membership in OBSI
We expect firms to maintain ongoing membership in OBSI as a “Participating Firm” and
participate in OBSI’s services in a manner consistent with the firm’s obligation to deal fairly,
honestly and in good faith with its clients.
Coming into force and transition
The Amendments subject to necessary approvals in each CSA jurisdiction come into force May
1, 2014. The Amendments provide for a transition period for firms registered by May 1, 2014 of
3 months after the Amendments come into effect with the exception of Québec, by reason of the
existing regime in that jurisdiction. The transition period will end on August 1, 2014. Please
refer to the Amendments for specific terms associated with the transition period.
For more information on how to register as a Participating Firm, visit www.obsi.ca.
Questions
Please refer your questions to any of the following:
Denise Morris
Legal Counsel
Compliance and Registrant Regulation
Ontario Securities Commission
Tel: 416-595-8785
dmorris@osc.gov.on.ca
Gérard Chagnon
Analyste expert en réglementation
Direction des pratiques de distribution et des OAR
Autorité des marchés financiers
418-525-0337, ext 4815 and
1-877-525-0337 (Toll-free)
gerard.chagnon@lautorite.qc.ca
Martha Kane
Senior Advisor, Capital Markets Regulation
British Columbia Securities Commission
Tel: 604-899-6563
mkane@bcsc.bc.ca
Chris Besko
Deputy Director, Legal Counsel
The Manitoba Securities Commission
Tel: 204-945-2561
Toll Free (Manitoba only) 1-800-655-5244
chris.besko@gov.mb.ca
Brian W. Murphy
Deputy Director, Capital Markets
Nova Scotia Securities Commission
Tel: 902-424-4592
murphybw@gov.ns.ca
Jason Alcorn
Legal Counsel, Securities
Financial and Consumer Services Commission
(NB)
Tel: 506-643-7857
jason.alcorn@fcnb.ca
Navdeep Gill
Manager, Registration
Alberta Securities Commission
Tel: 403-355-9043
navdeep.gill@asc.ca
Liz Kutarna
Deputy Director, Capital Markets
Financial and Consumer Affairs Authority of
Saskatchewan
Tel: 306-787-5871
liz.kutarna@gov.sk.ca
Louis Arki
Director, Legal Registries
Department of Justice, Government of Nunavut
Tel: 867-975-6587
larki@gov.nu.ca
Rhonda Horte
Deputy Superintendent
Office of the Yukon Superintendent
of Securities
867-667-5466
rhonda.horte@gov.yk.ca
Katharine Tummon
Superintendent of Securities
Prince Edward Island Securities Office
Tel: 902-368-4542
kptummon@gov.pe.ca
Craig Whalen
Manager of Licensing, Registration and
Compliance
Office of the Superintendent of Securities
Newfoundland and Labrador
Tel: 709-729-5661
cwhalen@gov.nl.ca
Gary MacDougall
Superintendent of Securities
Office of the Superintendent of Securities
Government of the Northwest Territories
Tel: 867-873-7490
Gary_macdougall@gov.nt.ca
Appendix A
[Name of firm]
What to do if you have a complaint
Our complaint process
Filing a complaint with us
If you have a complaint about our services or a product, contact us at:
[Firm contact information]
You may want to consider using a method other than email for sensitive information.
Tell us:
•
what went wrong
•
when it happened
•
what you expect, for example, money back, an apology, account correction
We will acknowledge your complaint
Help us resolve your complaint sooner
We will acknowledge your complaint in writing, as soon as
•
Make your complaint as soon as possible.
possible, typically within 5 business days of receiving your
•
Reply promptly if we ask you for more
complaint.
information.
•
Keep copies of all relevant documents, such as
We may ask you to provide clarification or more information to
letters, emails and notes of conversations with
help us resolve your complaint.
us.
We will provide our decision
We normally provide our decision in writing, within 90 days of receiving a complaint.
It will include:
•
a summary of the complaint
•
the results of our investigation
•
our decision to make an offer to resolve the complaint or deny it, and
an explanation of our decision
If our decision is delayed
If we cannot provide you with our decision within 90 days, we will:
•
inform you of the delay
•
explain why our decision is delayed, and
•
give you a new date for our decision
You may be eligible for the independent dispute resolution
A word about legal advice
service offered by the Ombudsman for Banking Services and
You always have the right to go to a lawyer or
Investments (OBSI).
seek other ways of resolving your dispute at any
time. A lawyer can advise you of your options.
If you are not satisfied with our decision
There are time limits for taking legal action.
You may be eligible for OBSI’s dispute resolution service.
Delays could limit your options and legal rights
later on.
If you are a Québec resident
You may consider the free mediation service offered by the
Autorité des marchés financiers.
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Taking your complaint to OBSI
You may be eligible for OBSI’s free and independent dispute resolution service if:
•
we do not provide our decision within 90 days after you made your complaint, or
•
you are not satisfied with our decision
OBSI can recommend compensation of up to $350,000.
OBSI’s service is available to clients of our firm. This does not restrict your ability to take a complaint to a dispute
resolution service of your choosing at your own expense, or to bring an action in court. Keep in mind there are time
limits for taking legal action.
Who can use OBSI
You have the right to use OBSI’s service if:
•
your complaint relates to a trading or advising activity of our firm or by one of our representatives
•
you brought your complaint to us within 6 years from the time that you first knew, or ought to have known,
about the event that caused the complaint, and
•
you file your complaint with OBSI according to its time limits below
Time limits apply
•
If we do not provide you with our decision within 90 days, you can take your complaint to OBSI any time after
the 90-day period has ended.
•
If you are not satisfied with our decision, you have up to 180 days after we provide you with our decision to
take your complaint to OBSI.
Filing a complaint with OBSI
Contact OBSI
Information OBSI needs to help you
Email: ombudsman@obsi.ca
OBSI can help you best if you promptly provide
Telephone: 1-888-451-4519 or 416-287-2877 in Toronto
all relevant information, including:
•
your name and contact information
OBSI will investigate
•
our firm’s name and contact information
OBSI works confidentially and in an informal manner. It is not
•
the names and contact information of any of
like going to court, and you do not need a lawyer.
our representatives who have been involved
in your complaint
During its investigation, OBSI may interview you and
•
details of your complaint
representatives of our firm. We are required to cooperate in
•
all relevant documents, including any
OBSI’s investigations.
correspondence and notes of discussions with
us
OBSI will provide its recommendations
Once OBSI has completed its investigation, it will provide its recommendations to you and us. OBSI’s
recommendations are not binding on you or us.
OBSI can recommend compensation of up to $350,000. If your claim is higher, you will have to agree to that limit
on any compensation you seek through OBSI. If you want to recover more than $350,000, you may want to consider
another option, such as legal action, to resolve your complaint.
For more information about OBSI, visit www.obsi.ca
2
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.