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Investment complaints surged in 2019

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Investment complaints surged in 2019

By: Greg Dalgetty March 13, 2020-Investment Executive

Last year was far from stellar for investment firms when it came to client complaints, according to the latest annual report from the Ombudsman for Banking Services and Investments (OBSI).

There were 388 complaints about investment companies in 2019 — up 12% from the 345 complaints lodged in 2018, and significantly higher than the number of complaints in each of the previous four years, OBSI reported.

Once again, suitability was the biggest source of complaints, with 22% of investors complaining about unsuitable investments, compared to 26% in 2018. Fee disclosure came in second at 13%, compared to 15% in 2018.

Forty-seven per cent of complaints were related to mutual funds, while 31% were about common shares.

Scholarship plan dealers, which represent only 0.5% of the 1,244 investment firms that participate in OBSI’s dispute resolution process, accounted for a disproportionate 8% of the investment complaints fielded by OBSI, up from 5% in 2019.

The IIROC firm accounting for the most cases opened was TD Waterhouse Canada Inc., with 46. Thirty-nine cases were closed with TD Waterhouse, 21 of which were in favour of the investor.

Investors Group Financial Services Inc. led MFDA firms, accounting for 38 cases opened in 2019. Forty cases involving the firm were closed, 23 of which were in favour of the investor.

In almost half (47%) of investment complaints, investors were compensated. A total of $2.5 million was paid to investors, with each investor receiving $14,291 on average. The highest payout was $280,000.

Five cases resulted in non-monetary compensation, such as an apology, restoration of service or explanatory letter to a creditor.

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