Outsourcing of complaint handling to a third party has proved costly for the firm
TD Investment Services Inc. failed to adequately supervise and train personnel at an outsourced complaint handling service – and has been fined $300,000 as a result.
At a settlement hearing, a Canadian Investment Regulatory Organization panel found that TDIS did not have adequate policies, procedures, and supervisory controls in place to ensure that it complied with the Mutual Fund Dealer Rules requiring mandatory reporting to CIRO (previously MFDA) via the Member Event Tracking System regarding complaints handling, the investigation and resolution of potential Approved Person misconduct, and the identification of events to be reported to CIRO.
The outsourcing of complaints handling began in 2017 although the information reporting function remained with TDIS at all relevant times.
However, between January 2018 and March 2021 TDIS had not reported 99 client complaints and 15
instances of reportable discipline of Approved Persons on the Member Event Tracking System.
The firm also admitted that it had failed to investigate and resolve the complaints including eight that were not resolved fairly, 52 in which records were not kept to enable the firm to determine if the complaints had been investigated or resolved, and it has failed to communicate a final decision to complainants in most of the 99 cases.
The hearing panel noted that TDIS did not profit from the misconduct; that none of the allegations related to theft, fraud, misappropriation, forgery, misrepresentation, personal financial dealings or unauthorized trading; that the firm took action to improve complaints handling procedures including ensuring its HR personnel are aware of reporting requirements and a twice weekly review of all opened and closed HR files.
CIRO’s decision also notes that TDIS “has paid or is currently offering clients a total of approximately $10,000 in compensation, in addition to approximately $58,000 already paid when the Respondent first addressed the complaints that are the subject of this proceeding.”
As well as the $300,000 fine, TDIS is also required to pay costs in the amount of $25,000.
