The Investment Funds Institute of Canada (IFIC) would like to see more transparency from the Ombudsman for Banking Services and Investments (OBSI) in the way it handles complaints and charges fees.
Earlier this year, OBSI requested comments from the industry as part of an independent evaluation of how its handles investment-related disputes. IFIC made its submission on March 11 and says OBSI deserves credit for clearing its backlog of cases and implementing governance reforms. However, IFIC is concerned about transparency when it comes to both dispute resolution and OBSI's fee model.
Some IFIC members say they have provided case materials to OBSI as requested, and then hear nothing back until they are suddenly presented with a compensation recommendation.
Transparency and ongoing dialogue
"Just as complainants need to know the status of their case as it proceeds, so too do OBSI’s participating firms. OBSI should strive to communicate with firms throughout the dispute resolution process. Such transparency and ongoing dialogue will increase the likelihood that firms and complainants can resolve the dispute fairly and quickly," reads the submission from IFIC.
OBSI is supposed to have a fair, transparent and appropriate process for setting fees and allocating costs across its membership. However, IFIC suggests that the OBSI fee structure remains opaque because it uses two different fee calculation methods. Exempt market dealers and portfolio managers are charged $165 per registered dealing or advising representative, but OBSI fees for members of the Mutual Fund Dealers Association are charged according to their assets under administration.
Two different fee models
"It is not clear why OBSI applies two different fee models, especially in light of its commitment to 'the principle that no sector or registrant category should subsidize another'," concludes IFIC. "OBSI should therefore provide further clarity regarding its fee structure and ensure that fees are levied fairly and transparently upon all participating firms."