Clients facing hardship should turn to dealers, advisors: CSA

Investors facing financial hardship amid the Covid-19 pandemic should look to their dealers and advisors for relief, securities regulators say.

Investor advocates, such as the Canadian Foundation for Advancement of Investor Rights (FAIR Canada), have called on regulators and the financial industry to take action to help investors facing hardship from the economic damage, job losses, and market turmoil caused by the pandemic.

FAIR Canada has called on firms to provide relief to investors who face redemption charges in deferred sales charge (DSC) investment funds and margin loans, and demanded that regulators protect participants in group RESPs.

On Thursday, the Canadian Securities Administrators (CSA) issued a release setting out regulators’ efforts on behalf of investors during the pandemic.

Among other things, it recommends that investors under financial pressure consider asking their dealers to waive fees, such as DSCs.

It also reminds investors to consider the impact of fees and charges on their investments, to review their financial goals, and to consider seeking regulated advice.

For investors with complaints about firms, the CSA reiterated its pledge to boost the role of the industry dispute resolution service, the Ombudsman for Banking Services and Investments (OBSI).

“The CSA is renewing its focus on strengthening OBSI as an independent dispute resolution service, in order to secure fair, efficient and conclusive redress for investor losses where warranted,” the regulator said.

Investor advocates have long called for regulators to take action to make OBSI’s investor compensation recommendations binding on industry firms; an independent review has also recommended that OBSI have binding powers.

Yet, to date, the regulators that oversee OBSI have not taken action on those recommendations.

On the policy front, the CSA noted that it continues to work on a proposed framework to enhance the protection of older and vulnerable clients. Despite delaying implementation of certain provisions of the Client Focused Reforms (CFRs), it has not put off their final implementation, it said.

The CSA also highlighted its efforts to combat the rise in investment fraud that has accompanied the pandemic, including investor education and participating in the NASAA COVID-19 Enforcement Task Force.

“We understand this is a very difficult time for many Canadians who depend on their investments to meet their current and future financial needs,” said Louis Morisset, chair of the CSA and president and CEO of the Autorité des marchés financiers (AMF), in a statement.

“The CSA is committed to protecting investors during Covid-19 through enforcement, education and policy.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.