If you suspect you may have lost money because your advisor or firm acted improperly, you may be eligible for compensation. The first step is to make a complaint directly to your firm. If your efforts are unsuccessful or you are not satisfied with the response, you can then consider other options to recover your money.
There are several different ways for investors to seek compensation in the case of advisor or firm misconduct. Each option is different. Most require that you try to resolve your complaint with your firm first. Some options are free and time limits for using services or taking legal action may apply. Although IIROC is not directly involved in the compensation process, it requires all IIROC-regulated firms to participate in the ombudsman and arbitration programs if the client chooses this option. For Quebec investors, participation by firms in the AMF’s mediation program is optional.
Ombusdman for Banking Services and Investments
Ombudsman for Banking Services and Investments (OBSI) resolves disputes between participating investment firms and their customers if they can't solve them on their own. OBSI is independent and impartial, and its services are free to consumers. You must first complain to the firm involved, but if you remain unsatisfied you have a right to bring your case to OBSI and IIROC requires IIROC-regulated firms to take part in OBSI's process.
The limit for OBSI recommendations is $350,000, but many cases are for much smaller amounts. However, if your claim is for an amount higher than $350,000 you can voluntarily reduce it.
OBSI Joint Regulators Committee Annual Report
IIROC is a member of the Joint Regulators Committee (JRC), together with the
Mutual Fund Dealers Association and the
Canadian Securities Administrators jurisdictions. The JRC meets regularly with OBSI to discuss governance and operational matters and other significant issues that could influence the effectiveness of the dispute resolution system. The JRC publishes an Annual Report.
OBSI Independent Evaluation Report
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Autorité des marchés financiers
(for residents of Quebec only)
Quebec residents can use the free services of the
Autorité des marchés financiers (AMF). If you believe your firm or advisor handled your investments inappropriately, you must complain to your firm first. If afterwards you are not satisfied with how your complaint has been handled or with the firm's response, you can ask the firm to transfer the complaint to the AMF.
The AMF will assess the complaint and in some cases will offer mediation services. The firm is not required to participate; however, firms generally agree to take part. You do not need to have a lawyer and usually investors do not have a lawyer represent them in the AMF's mediation services.
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Arbitration is a legal proceeding in which a qualified person — selected with input from you and your investment firm — issues a final, legally binding decision with respect to your complaint.
Arbitration is private, confidential and less formal than a court. The Arbitrator can award up to $500,000 in compensation to the investor, plus interest and legal costs. When you file your case, you can decide whether the arbitrator should have the power to award legal costs to the successful party. The investor is not required to hire a lawyer, but arbitration is a legal proceeding and the investment firms are always represented by a lawyer.
An arbitrator has the power to award legal costs and may order either party to pay a share of the other's legal costs. This could result in your paying a share of the firm’s legal costs. Administrative fees and the arbitrator's fees are usually divided equally between you and your firm.
IIROC requires the firms it regulates to participate in arbitration proceedings should a client initiate them. IIROC has designated two independent arbitration organizations for resolution of disputes between regulated firms and clients. These arbitration organizations have established rules of procedure for handling disputes between investors and IIROC-regulated firms. The arbitration organizations are
ADR Chambers and, for Quebec residents, the
Canadian Commercial Arbitration Centre (CCAC).
It's up to you to decide whether to take your complaint to arbitration.
If you do, IIROC rules require Dealer Members to participate and comply with the arbitration program procedures.
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If you have a dispute with your investment firm and you think you have grounds for seeking compensation, you have the option of going to court. You are not required to try to resolve the dispute with the firm prior to taking legal action.
You should be aware there is a statute of limitations on legal action. This means that there are legal time limits for taking legal action, beyond which you could lose the right to pursue some or all of your claims.
While not always necessary, it is advisable to obtain legal advice before pursuing action in the courts. Depending on your situation, you may want to consult a lawyer for advice on your rights and options. Your provincial law society can help you find a lawyer. For a list of provincial law societies, go to
www.flsc.ca. There is no limit to the amount of compensation that can be claimed. However, this option involves legal costs that may not be recoverable and you could also find yourself responsible for the other party's legal costs in addition to your own.
If you have questions regarding any option, call IIROC’s Info/Complaint Line at 1-877-442-4322 or email us at
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