On November 15, 2012, the Canadian Securities Administrators
("CSA") published proposed amendments to National
Instrument 31-103 – Registration Requirements, Exemptions and
Ongoing Registrant Obligations ("NI 31-103") and the
associated companion policy requiring a mandatory dispute
The proposed amendments, if adopted, require all registered
dealers and registered advisers outside of Québec to use the
Ombudsman for Banking Services and Investments ("OBSI")
as a service provider for their dispute resolution or mediation
services obligations under section 13.16 (dispute resolution
service) of NI 31-103. A complaint is defined as one that relates
to the trading or advising activity of a registrant, raised within
six years of the date when the client knew or reasonably ought to
have known of the trading or advising activity, and involves a
maximum claim of $350,000.
Dealers and advisers would be required to make the services of
OBSI available to their clients for any complaint that falls within
OBSI's mandate. If OBSI is unwilling or unable to consider the
complaint, the firm would have to make another service provider
available to the client. All client complaints are expected to be
addressed under a registered firm's internal complaint handling
policy. In circumstances where the firm's complaint handling
policy does not produce an outcome satisfactory to the client, they
may use an independent dispute resolution or mediation service. The
proposed amendments clarify that a registered firm is only required
to make one dispute resolution or mediation service available at
its expense for each complaint.
The proposed amendments do not change that registered firms must
pay for dispute resolution services. Under the current funding
model, all participating firms pay a levy to OBSI based on their
size or volume of business. The CSA has been working with OBSI to
develop a fee model that will be fair to all registrants required
to use OBSI's services for dispute resolution.
Firms that would be most directly affected by the proposed
amendments are dealers and advisers registered outside
Québec who are not members of either the Investment Industry
Regulatory Organization of Canada or the Mutual Fund Dealers
Association of Canada. Investment fund managers are only subject to
section 13.16 if they operate under a dealer or adviser
registration. The current Québec regime will remain
unchanged following the consultation.
The proposed amendments are open for comment until
February 15, 2013.
Click here to download the full notice and request for comments
on the proposed amendments.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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