FAIR Focus
May 2023
In this issue, we highlight changes the federal government is making to the complaint-handling system for banking customers. We discuss Ontario’s new title protection framework and how it is failing consumers, and discuss the importance of hearing from all stakeholders when balancing burden reduction and investor protection. Lastly, we highlight the launch of SEDAR+ in our What’s New section.
Fixing Complaint Handling for Bank Customers
In Canada, banks decide which external complaints body (ECB) they use to resolve customer complaints. This means a bank can select the ECB it believes will produce the best result. Customers can’t choose. To add insult to injury, the ECB’s decisions are not binding and, although none have done so to date, banks are free to ignore an ECB’s decision.
If you don’t think this is fair, you’re not alone. For well over 10 years, FAIR Canada and other consumer advocates have been asking governments and regulators to improve the way complaints about financial services are managed. The Financial Consumer Agency of Canada (FCAC) agrees that having multiple ECBs is not right. Independent reviews have also consistently shown that the current system doesn’t meet Canadians’ expectations, or international best practice or standards.
We are glad to learn that the federal government’s recent Budget Implementation Act (2023) will introduce positive changes when it comes to banking complaints. The Act will authorize the Minister of Finance to designate a single, non-profit ECB that will have to offer consumers assistance when bringing a complaint against a bank. The Act will also create new rules to make sure the ECB is working effectively, including that the ECB notify the FCAC Commissioner right away if a bank chooses to ignore its decision.

FAIR Canada and many other consumer advocates believe the Ombudsman for Banking Services and Investments (OBSI) is the best choice to be the sole ECB for banking complaints. OBSI is a non-profit, independent organization that’s been providing Canadians with effective dispute resolution for more than 25 years. It also provides services to several major banks and federal credit unions and has a proven track record of serving the public interest. We believe that selecting an established ECB with a proven track record serves the public interest, particularly since it will avoid unnecessary dislocation and disruption for both the public and federally regulated financial institutions.
We’re eager for the changes to be adopted so all Canadians have access to a fair banking ombuds service. Together with other consumer-focused organizations, we’ll continue to advocate that OBSI be designated as Canada’s ombudsman for all banks and that it be provided with the authority to make binding decisions. It’s time to get this issue over the finish line.
To learn more about making a complaint, read the following helpful resources which include our new comprehensive guide called, Getting Your Money Back – An Investor’s Guide to Navigating Canada’s Complaint System:

Is Ontario’s Title Protection Framework Failing Consumers?
Did you know that until 2022 the “financial planner” and “financial advisor” titles were unregulated in Ontario? This meant that anyone, regardless of their education, qualifications, or training, was free to use either title. And many people, particularly those working in the investment and insurance industry, did just that. After all, it looks great on a business card and helps to attract potential new clients.
Consumer advocates and regulators raised concerns about this situation, which eventually led the Ford government to establish a new Title Protection Framework in 2022. The origins of the framework span many years and iterations, including a series of recommendations from an Expert Committee set up by the previous government. The Committee’s final report in 2016 correctly observed that “…without regulatory oversight, consumers have no way of determining which individuals or firms warrant their trust or are qualified to provide [financial planning or financial advice] services.”
Some credentialing bodies have little to no history of taking enforcement action
when the consumer is harmed, whereas others fall short of being
robust standard-setting bodies that act in the public’s interest.
As the committee highlighted, the fundamental problem was that the individuals who tended to use these titles were being “regulated for their product sales activities, not their financial planning or advice services per se.” Public expectation was that the new Title Protection Framework would address this fundamental consumer protection problem. The hope was that the framework would ensure that those holding themselves as financial advisors would, in fact, be in the business of providing financial advice and not selling products.
Unfortunately, the new framework fails to deliver on its consumer protection promise, particularly in relation to “financial advisors.” This is because the framework maintains the old product-focused approach for financial advisors. Rather than require these individuals to meet new standards designed to ensure they provide holistic financial advice to their clients, financial advisors can continue to be product-focused salespeople and advisors.
To make matters worse, the Financial Services Regulatory Authority of Ontario (FSRA), the primary regulator responsible for administering the framework, has approved multiple credentialing bodies in Ontario, and may soon approve more. And each of these bodies offers different programs and designations to their members. The result is that we’ve now created an alphabet soup of credentialing bodies and programs that will be virtually impossible for most consumers to navigate or understand.
This has created another problem because each credentialing body has different standards and track records when protecting consumers. Some credentialing bodies have little to no history of taking enforcement action when the consumer is harmed, whereas others fall short of being robust standard-setting bodies that act in the public’s interest. And FSRA, the one regulator that is supposed to ultimately protect financial consumers in Ontario under the framework, was not given any enforcement powers by the government.
Suffice it to say, numerous groups are calling on the government and FSRA to learn from these initial missteps and improve the framework. But until then, investors would be wise to look out for themselves when working with someone calling themselves a financial advisor or financial planner.
Tips on Financial Advice
If you’re looking for financial advice, always ask the person about their qualifications and what types of financial products they are regulated to sell you. Ask them where they received their credentials and what experience they have in giving broad-based financial advice. Also ask how they will act in your best interest, including whether they work on a fee-based or commission basis. Note that the better advisors and planners tend to work on a fee-based approach. And remember, just because someone calls themselves a financial advisor, do not assume they are qualified to give you holistic financial advice—they may still just be a product salesperson.

For information and tips on financial advice and credentialing bodies approved by FSRA, check out the following:

Finding a Balance Between “Burden Reduction” and “Investor Protection”
Today, it sometimes feels as if burden reduction has become a core priority for regulators. The Canadian Securities Administrator’s (CSA) business plan for 2022-2025 lists burden reduction as one of its main goals. In 2018, the Ontario Securities Commission set up a task force to find ways to reduce the regulatory burden on public companies and is continuing to implement many of the task force’s recommendations.
Some of these initiatives made sense and were uncontroversial. Other initiatives raised questions, however, particularly since the proposals often said they were being implemented “without compromising investor protection.” Little analysis or explanation is provided about how they concluded investor protection is not affected.
As we know, what is compromising to investor protection is often in the eye of the beholder. We also know it is far easier to calculate costs into dollars and cents than it is to show the value of investor protection or confidence in our markets, which by their nature are inherently difficult to price. This tends to tilt the discussion in favour of those arguing for burden reduction.
Recently, in response to the industry’s request to eliminate the costs of having to print and deliver information to shareholders of public companies, the CSA proposed an access equals delivery model. This approach was criticized by consumer advocates and others as weakening investor protection and shareholder engagement. It was also criticized for being too focused on saving companies a few dollars, as opposed to building a more modern delivery system that responds to investor preferences. The jury is still out on whether, and how, the CSA intends to proceed with this proposal. Many believe that, as proposed, it could compromise investor protection for the sake of eliminating what some would characterize as “nuisance” costs of being a public company. 
The critical issue is getting the balance right between the costs and benefits. The process begins by listening to all stakeholders’ perspectives and concerns.
The recent bankruptcies of Silicon Valley Bank, Signature Bank and First Republic Bank in the U.S. are also a cautionary tale about the dangers of getting burden reduction wrong. After the 2008 financial crisis, the U.S. government put in place stricter measures to stop banks from failing. During the Trump administration, the banking industry pushed back and managed to claw-back several requirements, particularly for regional banks. They were able to persuade the administration that the costs of doing additional stress tests outweighed the benefits to investors. We now know they grossly underestimated the benefits of having these requirements, and investors are paying a steep price for their mistake.
No one disagrees with the principle that we should avoid regulations that add unnecessary costs or that have no discernable value. Our point is that we need to move beyond the current fixation on burden reduction, and the growing tendency to oppose needed regulatory reforms chiefly on the basis they will add costs. By definition, all regulation imposes a cost.
The critical issue is getting the balance right between the costs and benefits. The process begins by listening to all stakeholders’ perspectives and concerns. In our experience, it is when governments and regulators focus too much on industry’s desire for burden reduction that problems begin to emerge. We must also guard against the industry’s tendency to reduce everything down to a specific dollar amount when it comes to costs, while ignoring the overall benefits to market integrity and confidence. The latter are difficult to measure yet are critical when fostering vibrant capital markets.

What’s New
New SEDAR+ Platform Coming Soon
The CSA will launch SEDAR+ on June 13, 2023. This new platform will improve how public companies and investment funds file investor disclosure documents electronically. It will also consolidate data from multiple different databases all in one place (for example, data about individuals disciplined by regulators, companies or individuals that have been cease traded, or insiders that have acquired more stocks). This will make it easier for investors to find the information they need. To learn more, visit SEDAR+.
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