Overview
The Investment Products and Wealth Management team at Fasken Martineau LLP wishes to remind registered dealers and advisors (Registered Firms) of a recent amendment (Amendment) to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registration Obligations (NI 31-103) coming into force on May 1st, 2014.
The Amendment concerns the handling of complaints by Registered Firms and establishes a new procedure by which Registered Firms must make available to clients a dispute resolution service.
For complaints made by clients residing in Quebec, the new procedure will not have any impact and the handling of complaints will continue to apply as it has in the past. The Autorité des marchés financiers remains the dispute resolution or mediation service provider.
The Amendment
The Amendment amends Sections 13.16 and 14.2(2)(j) of NI 31-103 and Companion Policy 31-103CP Registration Requirements, Exemptions and Ongoing Registrant Obligations (CP 31-103) by adding a definition of the term "complaint" and setting forth the procedure required of Registered Firms upon receipt of a complaint. The procedure set forth in the Amendment does not apply in respect of permitted clients that are not individuals.
Under the new procedure, Registered Firms must, as soon as possible (typically within 5 business days), after the receipt of a complaint, provide a written acknowledgment of such complaint to the client. This acknowledgement must include the following:
- a description of the firm's obligations under Section 13.16 of NI 31-103 regarding the handling of complaints;
- 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 (4) of Section 13.16 of NI 31-103;
- the name of the independent dispute resolution or mediation service that will be made available to the client under subsection (4) of Section 13.16 of NI 31-103 and contact information for the service.
The Amendment provides that Registered Firms must take reasonable steps to ensure that the Ombudsman for Banking Services and Investments (OBSI) is the independent dispute resolution or mediation service made available to the client. As noted above, this obligation does not apply in Québec as the Autorité des marchés financiers already offers dispute resolution services.
Registered Firms may also decide to reject a complaint or to make an offer to resolve a complaint. In such instances, the Registered Firm must, as soon as possible, provide the client with a written notice to this effect, including the information required in the ackowledgement.
Good practices would be for a Registered Firm to provide the client with its decision within 90 days from the receipt of the complaint. After the expiry of this delay, the services of OBSI are accesible to clients, regardless of whether a written notice of decision was sent to the client by the Registered Firm. The services are also available within 180 days of receipt by the client of the Registered Firms written decision.
It should be noted that the independent dispute resolution or mediation service is made available at the Registered Firm's expense, but only to clients who agree that the amount claimed under this service will be no greater than $350,000.
OBSI Registration
The reasonable steps required to be taken by Registered Firms to ensure that the services of OBSI are made available to Clients mean that the Registered Firms must maintain an ongoing membership in OBSI as a "Participating Firm". To be registered with OBSI, Registered Firms must file a completed Company Information Form and pay their OBSI membership fees by August 1, 2014 at the latest.
The current membership fees are set at $165 per registered dealing or advising representative per year.
For a copy of the Company Information Form and for more information on registration with OBSI please visit www.obsi.ca.
Disclosure
Registered Firms are required to disclose the new dispute resolution procedure to their client at the time of account opening (as part of the relationship disclosure information required to be be given at that time), at the time of a complaint and at the time of a decision on a complaint.
We understand that the Canadian Securities Administrators believe it reasonable for Registered Firms to send an update on the changes contained in the Amendment in their next quarterly or monthly account statements provided that these account statements are sent before August 1, 2014 (as per transition period described below).
Transition Period
The Amendment provides for two different transition periods based on whether the Registered Firm was registered prior to or after September 29, 2009.
The Amendment does not apply to Registered Firms if (i) the firm registered before September 29, 2009, and (ii) the complaint was received by the firm on or before August 1, 2014.
For firms first registered between September 28, 2009 and April 30, 2014, the Amendment does not apply if the (i) the complaint was received by the firm on or before August 1, 2014, and (ii) the firm complies with Section 13.16 of NI 31-103 as in effect on April 30, 2014.
