The Ombudsman for Banking Services and Investments has announced that De Thomas Financial is refusing to compensate retired retail investor $254,323, despite an OBSI recommendation, the watchdog says.

De Thomas Financial is a mutual fund dealer based in the Greater Toronto Area, with branch offices in British Columbia, Quebec and other parts of Ontario. The investor, Mrs. R, had no previous investment experience and almost completely relied on her advisor at De Thomas Financial, says OBSI, which investigated her complaint.

OBSI says Mrs. R’s advisor recommended an unsuitable strategy of borrowing money to invest in her non-registered account. He also recommended unsuitable investments for Mrs. R’s RRIF. Mrs. R was forced to use her RRIF withdrawals to cover the investment loan, even though she needed the money to meet day-to-day expenses. It wasn’t until after Mrs. R’s children found unpaid bills in her home that the strategy and investments were discovered and unwound.

OBSI finds that De Thomas Financial is responsible for the significant losses incurred by Mrs. R as a result of the unsuitable investments and leverage strategy. It has chosen not to fulfill its responsibilities to Mrs. R by providing the compensation she is owed based on the facts of the case, says the ombudsman.

The compensation recommended by OBSI was determined by first calculating Mrs. R’s capital losses associated with the leverage strategy and then adding the interest she paid on her unsuitable investment loan. OBSI then calculated the difference between the amount Mrs. R’s RRIF account would have been worth had she been suitably invested and the actual value as of the date her investments were moved away from De Thomas Financial. OBSI’s recommended compensation is the sum of these two amounts.

A copy of OBSI’s investigation report for Mrs. R’s complaint is available here.