Commentary on Investment Dealer complaint handling

 

People often complain about Dealer complaint systems because they can be complex, time-consuming, and frustrating, leading to perceived lack of resolution or responsiveness. 

Based our experience in assisting complainants , here is  a breakdown of common complaints about complaint systems: 

1. Complexity and Lack of Clarity: 

Difficult Navigation:

Many systems are poorly designed, making it hard to find the right channels or information. . 

Confusing Processes:

The steps involved in filing and resolving a complaint can be unclear, leading to frustration and wasted time/effort. 

Lack of Accessibility:

Systems may not be accessible to all users, such as those with disabilities , language issues, lack of internet or limited tech skills. 

 

2. Inefficiency and Delays: 

Long Wait Times:

Getting a response or resolution can take an unreasonable amount of time, causing further frustration. Dealers offer non-independent internal appeal mechanisms which needlessly add to cycle time.

Lack of Timely Updates:

Complainants may not receive adequate updates on the status of their complaint, leaving them feeling in the dark. 

Unnecessary Escalation:

Simple issues may require unnecessary escalation to higher levels, further delaying resolution and adding to aggravation  “ complainant fatigue”. 

 

3. Lack of Resolution and Fairness: 

Unsatisfactory Resolutions:

Complaints may be dismissed or resolved in a way that does not address the underlying issue or provide adequate compensation for losses.This is far too common .

Perceived Bias:

Complainants may feel that the system is biased towards the Dealer  they are complaining against. This is a frequent complaint with evidence from employees prioritized over that provided by complainants. There also attempts to divert complainants away from OBSI.

Lack of Accountability:

There may be a lack of accountability for the Dealer or individuals involved in the complaint. More senior management is needed

 

4. Other Common Issues: 

Inadequate Documentation:

Systems may not provide clear and accessible documentation about complaint procedures or rights. Loss calculation methodology not publicly available 

Poor Communication:

Communication with complainants may be infrequent, impersonal, legalistic , disrespectful or unhelpful. 

Lack of Transparency:

The process of handling complaints may not be transparent, making it difficult for complainants to understand Dealer responses 

Focus on Form over Function:

Systems may prioritize paperwork and procedures over actually addressing the issues raised by complainants. Too often a PR exercise.

All in all, a very difficult process for the average retail investor to navigate. Regulators need to provide a modern complaint handling rule for Dealers to adhere to.

 Client Focused Reforms (CFR) and client complaint handling

Regulators have not provided any direct guidance in this area. However, based on the general principles underlying CFR we believe that the putting clients interest first and resolving conflicts-of-interest in the best interests of clients provisions suggest the following best practices:

Complaint resolution should be considered a material conflict-of-interest requiring definitive Dealer mitigation.

All complaint-related communications should be in plain language including the final response letter

Dealers should assist complainants in articulating their complaints when needed
Dealers should help complainants understand the rules and regulations applicable to the subject matter of their complaint

Dealers should effect a sanity check on recorded KYC information,  objectives, risk profile, experience and consistency

Dealers should clarity what  will happen at each stage, how long each stage should take and keep the complainant informed of progress.
If the Dealer identifies other issues in the investigation of the client complaint, such issues should be investigated and appropriately remediated for the client

If the Dealer identifies an error or wrongdoing, it should take action or offer compensation that places the consumer in the  position they would have been had the error or wrongdoing not taken place

Dealers should provide complainants an opportunity to present information

The loss calculation should use the Opportunity  cost methodology

The Dealer should offer compensation/remediation  for non-financial losses

The final response letter should be provided within 90 calendar days including all internal steps
The final response letter should provide sufficient information for the complainant to make an informed decision
The final response letter should delineate the dispute resolution alternatives available
The time for the complainant to accept (or not) the final response letter should be fair and reasonable

Dealers should make it clear that complaint details can be shared with the applicable regulator or police
Dealers should not gag complainants speaking about the complaint or how well it was handled
Release letters, if used, should be fair and reasonable 

Characteristics of a good complaint response letter:

Communicating Reasons for Decisions

A response to a complaint should be presented to the complainant in a style that is clear and informative. Generally speaking, good reasons will: ­

·         clearly describe the complaint and the issues addressed in the complaints process  

·       use plain language and avoid legal/ industry jargon  

·       outline the steps the Dealer took to investigate or otherwise resolve the complaint ­

·         set out the  relevant facts considered in the review of the complaint

·         ­set out any applicable laws regulations, or policies, in simple language, that were relevant to the complaint

·         connect the facts with the relevant laws or policies used to reach a conclusion

·         identify the outcome and any remedies the organization is offering to resolve the person’s  complaint ­

·         provide the contact information for a  representative at the Dealer that the person can contact to discuss the outcome

·        advise the complainant of any review or appeal rights that exist and the ability to complain to OBSI and any other external oversight body with jurisdiction over the complaint/decision  in question ­

·        be translated into a language other than English or French where appropriate

 

Such a letter would provide the information necessary for the complainant to make an informed  decision on whether or not to accept the response.

 

 

  

 

KYC update for seniors -Problem prevention

In order for your advisor to recommend an optimum portfolio of investments she/ he must have up to date information on your financial status and needs. Advisors are not always proactive in soliciting clients of changing conditions, resulting in stale KYC information .Stale information can result in poor outcomes and result in complaints.

Seniors should inform advisors of life changes and not wait to be approached by their advisor. Examples include:

·         Transition to retirement

·         A material change in income

·         Death of a spouse

·         A change in dependents

·         Sale of primary residence/ new address and phone number /email

·         Nomination of a Trusted Contact Person ( TCP)

·         A material change in expense profile
A material change in risk profile - tolerance, capacity  , need

·         Serious illness / decline in health A change in beneficiaries

·         Identification of POA holder

·         A change in financial objectives

·         Need for liquidity Time horizon for each account

·         Change in tax status  / tax rate Desire to change fee structure e.g. fee-based , fee only ,robo

·         Changes in life/ health insurance coverage

·         Desire to change type of account  e.g. discretionary/ non- discretionary

As a result of the changes, the financial plan will likely need to be updated.

Due to conflicts-of-interest, it is not wise to name your advisor as a TCP, POA, executor, trustee or beneficiary .