Advisors may soon find themselves encouraging their firms to settle client claims brought to the OBSI.
The Ombudsman for Banking Services and Investments made a housekeeping move last week that drastically alters the confidentiality and disclosure requirements for its dispute resolution process putting advisors in a potentially unflattering position.
“The changes are being made to meet regulatory expectations and requirements,” noted the OBSI statement. “Now the identity of the complainant and their financial advisor (if applicable) will be shared with the appropriate regulator.”
The OBSI considers it a tweak to its terms of reference but with most compensation recommendations being ignored by firms involved in the dispute resolution process, if advisors of those firms have their names revealed to the appropriate regulators, it’s likely they’ll want their firms to alter their tactics in order to maintain their reputation.
The big question is whether or not the firms will play along.
“Until now you’ve been required to sign a confidentiality agreement. I assume that now [OBSI announcement} it’s going to change,” says Toronto advisor Tony De Thomasis. “I’ve been involved in just one OBSI case. It’s really one sided. The last one the OBSI reported on they blamed the dealer because the advisor was selling limited market securities and was doing it off the dealer’s book. They still blamed the dealer because it should have done a better job patrolling what the advisor was doing.”
Advisors caught up in OBSI cases given this change aren’t going to want to take the chance that their name gets out in the press despite the fact the information won’t be disclosed to the public but rather to the appropriate regulators and in certain circumstances the OBSI board of directors.
“If one guy has one claim, it doesn’t matter, you’re forced to settle,” says De Thomasis. “If you don’t settle you’ll never get your reputation back, especially the advisor.”
So, the OBSI inadvertently might have created a giant game of chicken. The question is whether advisors should be concerned a little or a lot.
Time will give us the answer.
“The changes are being made to meet regulatory expectations and requirements,” noted the OBSI statement. “Now the identity of the complainant and their financial advisor (if applicable) will be shared with the appropriate regulator.”
The OBSI considers it a tweak to its terms of reference but with most compensation recommendations being ignored by firms involved in the dispute resolution process, if advisors of those firms have their names revealed to the appropriate regulators, it’s likely they’ll want their firms to alter their tactics in order to maintain their reputation.
The big question is whether or not the firms will play along.
“Until now you’ve been required to sign a confidentiality agreement. I assume that now [OBSI announcement} it’s going to change,” says Toronto advisor Tony De Thomasis. “I’ve been involved in just one OBSI case. It’s really one sided. The last one the OBSI reported on they blamed the dealer because the advisor was selling limited market securities and was doing it off the dealer’s book. They still blamed the dealer because it should have done a better job patrolling what the advisor was doing.”
Advisors caught up in OBSI cases given this change aren’t going to want to take the chance that their name gets out in the press despite the fact the information won’t be disclosed to the public but rather to the appropriate regulators and in certain circumstances the OBSI board of directors.
“If one guy has one claim, it doesn’t matter, you’re forced to settle,” says De Thomasis. “If you don’t settle you’ll never get your reputation back, especially the advisor.”
So, the OBSI inadvertently might have created a giant game of chicken. The question is whether advisors should be concerned a little or a lot.
Time will give us the answer.
