FAIR Focus
April 2022
In this month’s newsletter, we discuss the federal government’s decision to establish a single, external non-profit organization to manage complaints for Canadian banking consumers. We explain what investors should consider about investment funds that market themselves as environmental, social and governance (ESG) funds. We also discuss new developments that have an impact on financial planning and advising services, and highlight FAIR Canada’s new fraud prevention guide.

Improving Complaint Handling for Bank Customers
We are pleased the federal government announced in its 2022 Budget that it will designate a single, non-profit, external complaints organization to handle consumer complaints involving banks.
This is a welcome development for all bank customers. “While consumers have the right to have their complaints heard, the banks currently get to choose which external complaint body (ECB) to use,” said Jean-Paul Bureaud, Executive Director, FAIR Canada. “And despite the fact that one of those ECBs relies on the banks’ business to make a profit, consumers have no choice.” 
Did you know?
Canada continues to lag international best standards
when it comes to complaint handling.
For more than a decade, FAIR Canada has consistently advocated for a simpler and fairer complaint-handling system for consumers. Our latest efforts involved writing an open letter on behalf of a coalition of consumer advocates to Finance Minister Chrystia Freeland. We asked Minister Freeland to designate the Ombudsman for Banking Services and Investments (OBSI) as the sole ECB for banks. OBSI has been offering free services to Canadians for 25 years. The organization works to provide a fair, impartial and independent service and, as a not-for-profit, consumers do not have to worry whether OBSI will favour the banks to make more money.  
Although we are glad to see this important development taking shape, more work is required to deliver a better system for all financial consumers in Canada. FAIR will continue to advocate for binding decisions. Essentially, this would require banks to follow OBSI’s recommendations if it believes the client should be compensated financially. After all, it doesn’t make much sense to go through a long and difficult process if, at the end of it, the financial institution doesn’t have to listen to the ombudsman.  
What You Need to Consider About ESG Investing
Canadians are increasingly interested in making decisions that promote sustainability and positive societal changes. It should be no surprise then that the number of investors considering environmental, social and governance factors continue to grow rapidly.  

Investment fund companies are responding to this interest by offering an ever-expanding set of mutual funds and exchange-traded funds (ETFs) marketed as ESG-focused products.
The challenge, however, is to provide investors with dependable and comparable ESG information. Unfortunately, there are no globally accepted standards for ESG-related information. As a result, investors may be at risk of being misled—a problem known as “greenwashing”. To help address this, the Canadian Securities Administrators (CSA) issued guidance to mutual fund and ETF providers when marketing ESG funds to investors. For example:

  • A fund’s name should refer to ESG only if it is actually focused on ESG factors.
  • The fund’s information should describe how it will meet its ESG objectives.

Sales communication must not be misleading or promote the following:

  • Indicate the fund is focused on ESG, if it is not.
  • Inaccurately state how the fund uses ESG strategies when making investments.
  • Misquote the fund’s performance against its ESG objectives.

If you’re considering ESG-based investments, pay attention to the products being promoted, do your own research before you invest, and consult with an advisor you trust. 
Defining What it Means to be a Financial Planner or Advisor
The Financial Services Regulatory Authority of Ontario (FSRA) has approved two credentialing organizations, FP Canada and the Institute for Advanced Financial Education (IAFE), to use the titles financial planner and financial advisor in Ontario.
Based on a new law in Ontario, anyone using the title financial planner or financial advisor must meet minimum requirements established by a credentialing body approved by FSRA. Until now, anyone could use these titles without meeting any minimum requirements. The new framework doesn’t address all of FAIR Canada’s concerns when it comes to financial professionals or confusion about their titles, but it is a step in the right direction. 
Other provinces are following suit with their own proposed regulatory requirements, such as Saskatchewan and New Brunswick. In Quebec, financial planners have been subject to more stringent requirements and oversight since 1998.
If you’re receiving investment advice from a financial professional, be sure to ask about their qualifications and credentials. Visit our website for information on choosing an advisor. 
New! A Guide to Protect Investors Against Investment Fraud

We produced a new and informative guide on investment fraud.

The guide highlights common types of fraud and reasons why investors fall for fraud. It also provides helpful tips to protect yourself from investment scams, and how to report fraud.

Opportunities: Join Our Team!
Board of Directors: We currently have three openings on FAIR Canada’s volunteer Board of Directors. Our Board offers a unique opportunity to make a real difference for Canadian retail investors. Learn more here.

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