IIAC COMMENTS ON PROPOSED AMENDMENTS RESPECTING DISCLOSURE OF INFORMATION BY OMBUDSMAN SERVICE TO IIROC
On October 17, 2019, IIROC published Proposed Amendments that would eliminate restrictions on information IIROC can receive from the Ombudsman for Banking Services and Investments (OBSI). In our comment letter, the IIAC recognized the importance of information sharing in respect of facilitating IIROC’s mandate to govern and regulate its members to protect investors and foster appropriate business standards and practices. We noted that IIROC members are currently subject to robust compliance and enforcement rules and procedures, as IIROC has significant enforcement powers to compel disclosure from its members, as appropriate. Our submission expressed concern that the Proposed Amendments may have unintended consequences affecting OBSI’s mandate to provide an accessible, low cost and non-legalistic process to investors and firms.
If communication between firms, advisors and OBSI form the basis for regulatory action, OBSI could be seen as effectively undertaking an interview for the IIROC enforcement department. This would affect the tone of relations between advisors, firms and OBSI, as OBSI may be viewed as having a regulatory function. Consequently, it is likely that firms will require additional safeguards to ensure meetings are documented accurately, and questions and answers are confined strictly to issues under review. This will likely result in the involvement of legal counsel acting for the advisor, the firm, or both, and requests for transcripts would increase the costs for all participants, including OBSI.
In the event IIROC is able to request all documentation from OBSI, it is important that, at a minimum, firms and advisors have access to those materials provided to IIROC from OBSI. In this way, firms and advisors would be able to ensure the record accurately reflects their recollection of any interviews and also allows them to put these records in a proper context, if necessary.
If you have any question, please contact Susan Copland.