Lawyers representing dealers and advisors say they are not in favour of giving the Ombudsman for Banking Services and Investments (OBSI) binding decision-making authority – at least not as it is currently constructed.
Dave Di Paolo, a partner with Borden Ladner Gervais, told the Federation of Mutual Fund Dealers (FMFD) annual conference Tuesday that OBSI and investor advocates have been bringing pressure on regulators to give OBSI binding authority powers for some time.
Redress for wronged consumers
About two years ago an outside recommendation suggested OBSI must change its mandate to include enforcement. To do otherwise, said the report, would be to prevent OBSI from fulfilling its role of getting redress for wronged consumers.
But Di Paolo said there could be many problems ahead if giving enforcement responsibilities aren’t set up properly.
No chance to see the other side
“If they have the power to take a recommendation and enforce it as if it is a court order and it’s binding and you are required to accept it, then there’s a real problem,” Di Paolo said. “That’s because right now they don’t have the trappings of decision making, they don’t have an exchange of documents, they don’t get the chance to see the other side’s case, you don’t get to cross examine witnesses… I foresee lots of opportunities to challenge that process.”
Ellen Bessner, a partner at Babin Bessner Spry LLP, also said advisors have to learn how to be good at being responsive to questions from OBSI or any other regulator.
Retain counsel for advisors
Bessner said dealers aren’t retaining counsel early enough to properly prepare advisors for regulators’ questions and “are letting their advisor go loose.” Not preparing an advisor beforehand could make any regulator think the advisor is not telling the truth.