Discussion Questions in FSRA Information Guidance – Complaints Resolution: Policy Framework and Best Practices

February 9, 2022

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Discussion Questions in FSRA Information Guidance – Complaints Resolution: Policy Framework and Best Practices 

Letter Summary:

The CSA has proposed to establish an Investor Advisory Panel (Panel), in order to better represent the views of retail investors through a pan-Canadian panel instead of just through ad hoc engagement with various CSA members or through comment letters. The Panel is intended to represent a diverse range of investor interests, be independent from the CSA yet have direct access to the CSA, and the CSA will invest resources to support the Panel. Its focus will be on providing feedback to proposed CSA rules and policies. The Panel will be able to use a number of methods to get input, including focus groups and surveys. Applications for membership will be solicited in early 2022 (5-9 members) and members will be remunerated for their work. The Panel is expected to meet at least quarterly, provide an annual report on its activities and attend the CSA Chairs’ meeting to report on matters specified by the CSA. The draft terms of reference sets out a number of operational items, including the membership selection process, the duration of Panel terms and expectations for disclosure of conflicts.

Overview of the Council’s Comments:

The CAC believes a fair and impartial dispute resolution mechanism that is easy to understand and accessible across different areas of financial services is critical to fostering consumer confidence and trust. Any complaint resolution rules put forth should not further complicate the existing array of complaint handling and dispute resolution mechanisms from the perspective of financial services consumers.

The CAC supports the process that is currently underway by various regulatory agencies examining the framework for dispute resolution services across areas of financial services regulation, including the Department of Finance Canada, the AMF, the FCAC and the current independent reviews occurring with respect to OBSI. The CAC encourages government agencies and regulatory organizations to review best practices across global financial ecosystems and work together towards greater systemic harmony and to help address any policy gaps that may be identified.

One of the primary concerns with contemplating the appropriate structure for complaint handling and dispute resolution is the fact that Canada’s complaint handling systems are fragmented and cannot be easily holistically understood from the perspective of a financial services consumer. The framework for Canada’s complaint handling system across financial services could be significantly simplified and premised on a wide and overriding public interest mandate.

Further, complaints can be a leading indicator of underlying policy issues and practical challenges that can often only be solved through rule-making activities and thus a complaints intelligence function and sharing of complaint data amongst regulators are important to facilitate.

With respect to the external dispute resolution (“EDR”) function, the CAC encourages FSRA to consider leveraging existing EDR mechanisms in Canada that are efficient, accessible, and transparent, as a foundational principle in the Policy Framework. The CAC strongly supports that there should only be one EDR body for a particular financial services sector. There should be further consolidation of EDRs amongst various sectors as it would be a net benefit to the industry, but most importantly alleviate financial consumer confusion. Competition amongst EDR bodies results in a race to the bottom and a net detriment to the financial services consumer/complainant and broader ecosystem. The CAC encourages FSRA and other organizations to further harmonize requirements and work in this area.