A poll conducted between May 29 and June 4, 2020 of CARP Members, which received over 3,500 responses, reveals older Canadians want stronger investor protections.
24% of CARP survey respondents indicate that they’ve experienced harm from a financial institution or advisor.
Have you ever experienced financial harm from a financial institution or advisor?
The Ombudsman for Banking Services and Investments Investor Protection
In Canada, the Ombudsman for Banking Services and Investments (the Ombuds Office) is an independent and impartial dispute resolution provider for investment firms and their customers. CARP Members strongly support increasing the effectiveness of the Ombuds Office.
- In the event of a dispute between an investor and their investment firm, 81% believe the firm should be required to pay the investor the full amount recommended by the Ombuds Office.
- 82% believe that investors should be fully compensated for their losses; any balance should go to the regulatory body.
- 88% believe that if an advisor is assessed a fine, but has not paid it after a year, the firm (who employed the advisor at the time they committed the breach that resulted in the fine) should be required to pay the firm.
Should an investment firm have the right to pay the investor a smaller amount than the amount recommended by the independent Ombuds Office?
If an advisor is found to have breached their duties to a client and is fined, should the fine go to:
If an advisor is assessed a fine, but has not paid it after a year. Should the firm (who employed the advisor at the time they committed the breach that resulted in the fine) be required to pay the fine?
CARP urges the government enhance the Ombuds Office authority by:
- Making recommendations from the Ombuds office binding
- Increasing the Ombuds Office’s loss award limit to $500,000
- Routinely following-up on firms/advisors found at fault to protect other investors
- Improving visibility of the Ombuds Office on firm websites and communications to increase awareness
Plain Language Communications
When asked how often members read information received from their investment advisor (such as notices, information circulars, and prospectuses), 65% indicated they do not always read this financial information. Of those, 6 in 10 said they would be more likely to read this information if it was written in plain language (not legal-sounding) and was easy to understand. Another half indicated they would read a short summary.
Which of the following would make you more likely to read the information you receive from your financial advisor?
A trusted contact is an individual a bank or firm can contact if they suspect a client is being abused or treated fraudulently. In some jurisdictions, banks and investment firms are required to ask for the name of this individual for each client. 70% of CARP members support the need for a trusted contact. Of those who had an opinion, 86% supported.
Would you like your investment firm or bank to ask you for the name of a trusted person to contact in the event that they suspect fraud or other harm to you?
Treat Segregated Funds as Securities
Insurance companies (including Sun Life, Manulife, etc.) sell financial products called segregated funds. Investors often think of these as investment products, but an investor who has a complaint about their segregated fund does not have the same protections as if they had invested in a stock, mutual fund or other regulated investment product. 71% of CARP members say segregated funds should receive the same regulatory protection as mutual funds, stocks, and other regulated investment products. Of those who had an opinion, 95% supported.