The Investment Industry Regulatory Organization of Canada (IIROC) recently launched a new Whistleblower Service for reporting unethical behaviour and crimes such as securities fraud in the investment industry. The announcement piqued my curiosity about the best way to complain effectively when you have a problem with your financial advisor or firm. So, I set out to investigate. In this article, I'll report on what I discovered.
Where to start? To complain effectively about your financial advisor or firm, you should begin by doing four things:
1. Clearly define your complaint.
2. Do some basic research to determine if your complaint is justified. The and websites can help with this task. You may want to talk to a lawyer at this stage.
3. Assemble supporting documentation such as the New Account Application Form you signed when you became a client, account statements etc.
4. Remember this cardinal rule: always leave a paper trail. Keep written, dated records of all communications, including correspondence and details of any conversations.
Take the time to get your complaint in order but don't procrastinate too long: there are time limitations for most complaint handling processes. For example, in Ontario, you have only two years from the day you discovered (or should have discovered) a problem to file a civil law suit.
If you believe you have a valid complaint and you've marshalled your documentation, you are ready to complain. Steel yourself for what could be a difficult and lengthy process.
Your first line of attack is to try to resolve the complaint directly with your advisor. If you are not satisfied with your their response, complain to the advisor's supervisor. At the same time, contact the firm's customer relations department to make sure your complaint is on record with the firm.
If your complaint is not being addressed promptly or has been rejected, the next place to turn is the firm's ombudsman if it's a bank, or the compliance department if it's an investment firm.
While soldiering through the firm's internal complaint process, contact the regulatory organizations governing the advisor and firm to find out what help they can offer. The (MFDA), regulates companies which sell mutual funds to investors. regulates stockbrokers, companies which distribute stocks, bonds, mutual funds, etc. You'll need to know your advisor's professional designation in order to register a complaint with the right professional association. These organizations have complaint reporting facilities such as a telephone hotline and procedures for handling complaints filed against members. Expect to receive general information and assistance with your complaint but no specific legal or financial advice.
If you are expecting financial compensation and your advisor's firm does not oblige, your next step is to contact the . OBSI offers a free, independent service for resolving banking services and investment disputes. You have up to 180 days after receiving your firm's response to your complaint to contact OBSI. It can award compensation up to $350,000 and its recommendations are not binding, which means you can still pursue the matter in court.
If you or the firm decide not to accept OBSI's recommendation and the firm is an IIROC member, you could turn to IIROC's independently run Arbitration Program. The program can recommend compensation up to $100,000. However, you may need to hire representation and could be required to pay some of the arbitration costs. If you accept the arbitration result, you can not pursue the complaint in the courts.
Finally, investors always have the option of suing to recover their losses (if they have not signed away this right). Given the personal costs, legal expense and time involved, the decision to go to court should not be taken lightly. For losses up to $10,000 you can use Small Claims Court. To try to reclaim larger losses, the legal route is the more formal Superior Court of Justice. Court decisions are binding, but may be appealed by you or the financial firm.
Pursuing a complaint about your financial advisor or firm has all the trappings of the epic battle between David and Goliath. While David won that particular match, most investors aren't as fortunate and would be better off avoiding a battle in the first place. So, here is my prescription for a problem-free relationship with your financial advisor/firm:
1. Take the time to select a qualified financial advisor who meets your specific needs. 2. Educate yourself about investing basics. 3. Track news which could affect your investments. 4. Communicate with your advisor regularly. 5. Monitor your investment account on an ongoing basis.
Gail Bebee is a personal finance speaker and author of No Hype - The Straight Goods on Investing Your Money, .
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