The inevitable result is the sale of unsuitable investments and losses for investors.
Further ,the dismissive response to investor complaints is not neutral. There are several downsides to IIROC's prevailing practices that can actually harm retail investors . These include but are not limited to:
(a) It wastes victim's time in filing a complaint
(b)The IIROC response is used by IIROC member dealers to deny victim restitution claims
(c) It may affect OBSI's efforts to effect a facilitated settlement
(e) It creates a false impression that the IIROC decision is robust and fair
(f) It sets a bad role model example for dealers in their handling of retail investor complaints
(g) It restrains the industry from moving from a low suitability framework to advice that is professional
It also reflects poorly on IIROC and the investment industry leading to investor cynicism .
Kenmar have also provided a detailed report to IIROC that its dealer complaint handling rules are inadequate to protect retail investors. For example , dealers continued use of so-called " internal ombudsman" have had the adverse effect of reducing client claims and subverting OBSI .Action to date: NIL.
There is clear and convincing evidence that IIROC 's idea of investor protection is far from that expected and needed by investors .We urge IIROC to review its policies and practices with a view to making its claim to protecting investors credible by diligently preventing and reducing investor abuse and fraud.
With its Recognition Order as a Self-Regulating Organization , the CSA has given IIROC not only the right but the obligation to protect investors. In effect, IIROC has been given the privilege and honour to be the national regulator for Retail investors. We do not believe this obligation is being adequately fulfilled starting from governance and investor engagement right through to enforcement and complaint investigation.Reforms are urgently required.
In the interim , it's CAVEAT EMPTOR for retail investors .