Global regulators set guidance on addressing investor complaints

In an effort to enhance investment industry complaint handling and retail investor protection, the International Organization of Securities Commissions (IOSCO) issued guidance setting out principles for dealing with aggrieved investors.

The umbrella group of global regulators published a report that provided a comparative analysis of the complaint handling and redress mechanisms available in jurisdictions around the world, ranging from internal complaint resolution to investor class-action suits.

“When an investor or financial consumer is harmed by misconduct or illegal practices, the existence of effective mechanisms for addressing the issue is important not only for the aggrieved individual, but also for producing positive externalities such as improving market discipline and promoting investor confidence in financial markets,” the report said.

The report noted that IOSCO’s basic principles stipulate that regulators “should have adequate power to impose credible and effective corrective measures,” including investor redress and enforcement.

“Access to independent, affordable, fair, accountable, timely and efficient redress mechanisms becomes therefore critical,” it said.

To provide guidance to regulators, the report set out a series of sound practices for enhancing their complaint handling procedures and mechanisms for retail investors.

Among other things, it recommended that regulators should ensure that retail investors have “as many channels as possible” to submit complaints; make dispute resolution more accessible to investors; and use complaints data to inform both regulation and enhanced investor education.

It also suggested that regulators should seek input from retail investors about their experiences with complaint handling systems.

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.