Canadian securities regulators propose binding regime for investment-related disputes

On November 30, 2023 the CSA set out a proposed regulatory framework for an independent dispute resolution service whose decisions would be binding.

Under the proposed framework, it is expected that the Ombudsman for Banking Services and Investments (OBSI) would be the designated or recognized independent dispute resolution service for the investment industry. Most CSA members proposed rule amendments to complaint handling provisions as part of the proposed framework.

Benefits for investors and for the industry

  • The CSA is aiming to establish a binding dispute resolution mechanism that fairly addresses the fundamental elements of claims while avoiding unnecessary process – a mechanism that will be better for both firms and clients.
  • Under the proposed framework, OBSI would provide firms and investors with a more attractive avenue for resolving disputes than through litigation in court, which can be complicated, expensive and stressful for all parties.
  • The proposed framework would retain OBSI’s impartiality, its expertise in investment industry practices, and its practice of helping parties – especially those without lawyers – understand whether a credible claim exists, and determining what the nature of the claim is and what facts need to be evaluated to reach a fair resolution of the claim.
  • The proposed framework would add a new second stage to dispute resolution through OBSI during which OBSI could use additional processes – such as the examination of additional documents – that are necessary to achieve a fair outcome in an efficient, quick and understandable way.
  • With the proposed binding dispute resolution mechanism, complainants would have more certainty that they would receive fair redress that reflects the harm suffered, including potentially compensation where OBSI determines that financial redress is warranted to address a dispute.
  • If the mechanism is implemented, the CSA is anticipated to have enhanced regulatory oversight over OBSI.
  • Investor confidence is a crucial foundation for healthy, vibrant capital markets. To instill and maintain that confidence, investors need to know that there is fair, efficient, accessible and meaningful recourse for them if they can’t resolve a complaint of up to $350,000 directly with a firm. 

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Comment period ended February 28, 2024. Thank you for your comments.