Making Investment Firms Pay


While I’m now happily married to husband No. 2, I began married life with another.

Like other couples comprising the four in 10 marriages that end in divorce, we struggled with finances and expectations, but we had another problem too. His “I’m sorry if what I said (did), offended you” only escalated our arguments.

Perhaps I’ve become a bit obsessive about apologies because I know what is at stake. (Of course, the best way to apologize is by not making a mistake in the first place but, even with the best of efforts and intentions, we all mess up.)

When I make a mistake, I have a formula I follow. I apologize like I mean it – and I do. (I am so sorry I missed our lunch date today.) Then I acknowledge the impact of my mistake. (I feel terrible that you took time out of your busy schedule to meet with me, and I didn’t come.) Then the kicker: How can I make amends and make sure it doesn’t happen again? (I’m really hoping we can reschedule and that you’ll let me pay for lunch. Please know that I have updated the alert system in my phone so I won’t miss important meetings again).

A sincere apology, coupled with amends where possible, often goes a fair way toward forgiveness. I also find my discomfort at putting the impact of my mistakes into words spurs me to avoid making new ones.

It’s a strategy our investment industry has yet to adopt.

Imagine that your financial advisor has recommended that you, an 82 year-old-widow, invest your small nest egg in companies on the Venture Exchange. He tells you no one is making money on blue chips these days and these small businesses will give you amazing results in no time. You take his advice and marvel at his prophetic acumen – the speed at which your money disappears is truly remarkable!

When you finally untangle from the stocks and the financial advisor, you’re left with pennies on the dollar.

When you turn to the investment firm where your advisor works in the hope of recovering your lost savings, you’re likely told that it was your decision to invest in these stocks, that you should have known better and that if you hadn’t been so greedy you wouldn’t have brought this on yourself.

Not exactly the outcome you hoped for.

But you have another option; you turn to the Office of the Ombudsman for Banking Services and Investments (OBSI). This is the Canadian body established to resolve disputes between investment firms and their customers if they can’t solve them on their own. OBSI staff review your case and find that the advisor did indeed make unsuitable recommendations. They conclude that he and his investment firm are at fault for the loss of your savings. And they recommend a settlement payment of $50,000. This won’t make you whole, but after thinking you’d lost everything, you’re happy to get something back.

Now you wait for the cheque and, hopefully, a letter of apology from the investment firm. You get neither. The problem is, OBSI lacks the power to make its recommendations binding on the investment firms. As a result, some investment firms, like the one in this example, either offer the investor a lesser amount, or nothing at all.

If an investment firm ignores OBSI’s recommendation, there’s nothing you can do about it. This is a fundamental flaw in our “investor protection system.”

To identify how to make OBSI more effective, its board, in consultation with the Joint Regulators Committee of the Canadian Securities Administrators, commissioned an independent report, which became known as the Battell Report on its release in 2016.

The Battell Report made 19 recommendations, including giving OBSI the authority to compel investment firms to pay investors the amounts it recommends. This sounded promising, but almost two years have passed and regulators have yet to put it in place. Investment firms continue to harm investors with limited or no consequences.

Other countries have effective oversight bodies so that if a firm wrongs an investor, the oversight body can ensure fair and timely restitution. It’s past time for OBSI to have that power too.

CARP, together with our allies in the investment industry, has submitted an open letter to OBSI’s Joint Regulator demanding a response to the many problems noted in the Battell Report. (See the letter at


Grey Matters is a weekly column by Wanda Morris, the VP of Advocacy for CARP, a 300,000 member national, non-partisan, non-profit organization that advocates for financial security, improved health-care for Canadians as we age. Missed a week? Past columns by Wanda and other key CARP contributors can be found at