Canada: OBSI – Mandatory ADR For All Canadian Securities Registrants – Coming May 1, 2014

Last Updated: December 30 2013
Article by Brian P. Koscak

Effective May 1, 2014 (the Effective Date), the Canadian Securities Administrators (the CSA) has announced that the Ombudsman for Banking Services and Investments (OBSI) will become the independent and common dispute resolution and mediation service provider that will be required to be used by all registered firms under NI 31-1031 in all jurisdictions in Canada, other than in Québec. This is subject to final rule making and/or legislative approvals in all applicable jurisdictions. IIROC and the MFDA already mandate the use of OBSI as the dispute resolution service provider for their member firms.

In Ontario, the proposed amendments to NI 31-103 have been sent to the Ontario Minister of Finance and, if the Minister approves the amendments or does not take any further action by February 18, 2014, the amendments will come into force on the Effective Date.


In November 2012, the CSA published a proposal (the 2012 Proposal) which, if adopted, would require all registered firms outside of Québec to utilize OBSI as a service provider in respect of their dispute resolution or mediation services obligations under Section 13.16 [dispute resolution service] of NI 31-103 (Section 13.16). The CSA received a number of comment letters and has now published final amendments to NI 31-103 regarding such dispute resolution requirements.

Except for Québec, the CSA has previously published temporary relief orders from the application of Section 13.16 for firms that were registered on September 28, 2009, the date when NI 31-103 came into effect. 

It is contemplated that the temporary relief under the orders will expire on May 1, 2014 and transition provisions in the amending instrument to NI 31-103 will preserve the temporary relief until August 1, 2014.

Who is OBSI?

OBSI is a not-for-profit organization that provides dispute resolution services to the banking sector and investment industry. It is an independent agency headed by an ombudsman and governed by a board of directors. OBSI does not charge any fees to clients of its participating firms. Instead, OBSI requires all participating firms to pay a levy based on their size or volume of business.

OBSI's mandate is to make recommendations for the resolution of disputes between participating firms and their clients about banking or investment products and services. It is not an arbitrator that makes binding decisions for the parties to a dispute. OBSI conducts its dispute resolution activities in an informal, non-legalistic manner. (Source: 2012 Proposal)

Section 13.16 of NI 31-103 – the dispute resolution requirement

Section 13.16 requires a registered firm to ensure that an independent dispute resolution or mediation service is made available at the registered firm's expense to any of its clients that has a complaint about any trading or advising activity of the registered firm or one of its representatives. The amendments to NI 31-103 provide that, outside of Québec, a registered firm must take reasonable steps to ensure that OBSI will be the independent dispute resolution and mediation service that is made available to a client that has an eligible complaint.

An complaint means a complaint that: (a) relates to trading or advising activity of a registered firm or a representative of the firm; and (b) is received by the firm within 6 years of the day when the client first knew or reasonably ought to have known of an act or omission that is a cause of or contributed to the complaint.  An eligible complaint is a complaint that has been referred to OBSI and subject to the terms and conditions of its authority.

Section 13.16 does not apply to investment fund managers2, Québec registrants who are subject to certain dispute resolution requirements within their own jurisdiction,3 or permitted clients who are not individuals.4

A.        Registered firms

Below is a discussion of what registered firms need to know about the new Section 13.16 dispute resolution requirements.

#1.      Actions a registered firm must take if it receives a complaint - If a registered firm receives a complaint from a client, the registered firm must, as soon as possible, provide the client with a written acknowledgement of the complaint that includes: (a) a description of the registered firm's dispute resolution obligations under Section 13.16; (b) the steps the client must take in order for OBSI's services to be made available to the client; and (c) the name and contact information for OBSI.

#2.      A registered firm has 90-days to respond to a complaintWithin 90 days of receiving the complaint, a registered firm may: (a) reject a complaint; or (b) make an offer to resolve a complaint, and if so, the registered firm must, as soon as possible, provide the client with written notice of its decision and include certain prescribed information.

#3.      Registered firms must pay for the dispute resolution services – A registered firm pays for OBSI's services and not the complainant (defined below).

#4.      Registered firms should document all complaints – Registered firms should document and respond to all complaints received from a client, a former client or a prospective client who has dealt with the registered firm (each being a complainant).

#5.      Registered firms should handle all complaints fairly – In order to handle complaints fairly, a registered firm's complaint system should include standards allowing for objective factual investigation and analysis of the matters specific to the complaint. The CSA believes that registered firms should take a balanced approach to the gathering of facts that objectively considers the interests of: (a) the complainant; (b) the registered representative; and (c) the firm. The CSA recommends that registered firms should not limit their consideration and handling of complaints to those relating to possible violations of securities legislation.

 #6.      No parallel proceedings – A registered firm cannot make an alternative independent dispute resolution or mediation service available to a client at the same time it makes OBSI available.Alternative service providers, other than OBSI, can only be used in exceptional circumstances.

B.       Investors or clients of registerd firms

Below is a discussion of what investors or clients of registered firms need to know about the new Section 13.16 dispute resolution requirements.

#1.      Applies to individuals only – The Section 13.16 requirements apply to individuals only and not legal entities. It also does not apply to a "permitted client" that is not an individual.

 #2.      Time limits for complainant to respond to a registered firm's decision – A complainant has within 180 days of the client's receipt of written notice of the registered firm's decision to notify OBSI that the client wishes to have the complaint considered by OBSI.

 #3.      OBSI's $350,000 maximum monetary claims threshold – A complainant can only use OBSI's services if the complainant agrees that any amount the complainant seeks to claim against a registered firm will not be greater than $350,000. This limit applies only to the maximum amount that can be recommended by OBSI. However, a complaint made to a registered firm may include a claim for a larger amount until it is escalated to OBSI.  A complainant also has redress with the courts if desired.

 #4.      Escalating a complaint from the registered firm to OBSI – A client may escalate an eligible complaint to OBSI if:

  • the registered firm fails to give the client notice of its decision within 90 days of receiving the complaint (telling the client that the firm plans to take more than 90 days to make its decision does not 'stop the clock'). The client is then entitled to escalate the complaint to OBSI immediately or at any later date until the registered firm has notified the client of its decision; or
  •  if the registered firm has given the client notice of its decision about the complaint (whether it does so within 90 days or after a longer period) and the client is not satisfied with the decision, the client then has 180 days to escalate the complaint to OBSI.

In either instance, the client may escalate the complaint by directly contacting OBSI.

#5.      Using a provider other than OBSI – A client is not restricted from taking a complaint to a dispute resolution service provider of their own choosing (i.e., other than OBSI) at their own expense or to bringing a court action.

Final Thoughts

The Section 13.16 dispute resolution amendments have been adopted by the CSA despite serious concerns expressed by various capital market participants.  Some of these concerns include, but are not limited to:

  • providing OBSI with a monopoly as the only dispute resolution provider;
  • failing to provide, in advance , a funding model explaining  how registered firms, such as exempt market dealers, will be assessed and the possible costs to their businesses; and
  • concerns over OBSI's expertise.

Registered firms should start considering now how these Section 13.16 dispute resolution amendments will impact their client forms, policies and procedures manual and other internal processes.


1 NI 31-103 means National Instrument 31-103 Registration Requirements, Exemption and Ongoing Registrant Obligations.

2  The Section 13.16 dispute resolution requirements do NOT apply to an IFM unless it also operates a registered dealer or adviser and, if so, only in connection with conduct under their dealer or advisor registration.

3 Section 168.1.3 of the Québec Securities Act, includes requirements with respect to dispute resolution or mediation services that are different than those set out in section 13.16 of NI 31-103. In Québec, registrants must inform each complainant, in writing and without delay, that if the complainant is dissatisfied with how the complaint is handled or with the outcome, they may request the registrant to forward a copy of the complaint file to the Autorité des marchés financiers (the AMF). The registrant must forward a copy of the complaint file to the AMF, which will examine the complaint. The AMF may act as a mediator if it considers it appropriate to do so and the parties agree.

 4 Section 13.16 of NI 31-103 does not apply in respect of a complaint made by a permitted client that is not an individual.  Accordingly, the CSA does not expect a firm that only has clients of that kind to maintain membership in OBSI.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions