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FAIR Canada Newsletter
January 2013 |
FAIR Canada Launches Investor Resources Page |
FAIR Canada announces the launch of its Investor Resources webpage, aiming to provide investors with unbiased information and helpful links on issues of importance to Canadian financial consumers.
This section of our website includes information on conducting background checks (including registration, SRO membership and disciplinary history), FAIR Canada's Consumer Investment Complaints Guide, leverage, RESPs, and financial literacy websites, among other information. We hope this information is useful and helpful to investors who seek investment information and hope it connects financial consumers with information they need.
FAIR Canada plans to continue to build the content of this page and would appreciate investor input into what resources are helpful and any other information they would like to see on our website.
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FAIR Canada's NEW "Consumer Investment Complaints" Guide
In conjunction with the launch of our Investor Resources webpage, FAIR Canada launches its 'Consumer Investment Complaints Guide'. This guide, available on the Investor Resources page, provides tips and useful links to assist consumers with their investment complaints whether it is to recover money, report wrongdoing, obtain an apology or something else. The guide provides an overview of dispute resolution options, legal action, a list of regulators who can order compensation to investors, and compensation funds that allow investors to recover if the investment firm has become insolvent. It notes that it is important to 'act quickly' to avoid limitations period issues and 'keep records', including copies of all correspondence and notes on any conversations that occur. It also explains that consumers can report wrongdoing directly to regulators and provides the Canadian securities regulators' and the two self-regulatory organizations' (the MFDA and IIROC's) contact information. |
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Mount Real Victims Group Requests Support
Victims of the Mount Real/iForum fraud which occurred in 2005 have launched a campaign requesting that the Autorité des marchés financiers (AMF) make victim compensation a priority and that the Financial Services Compensation Fund also cover losses arising from fraud or insolvency related to a financial product sold by a registered member of the AMF, regardless of the type of product. You can view and support their petition in English or in French by March 11, 2013.
FAIR Canada provided comments to the AMF regarding compensation of consumers of financial products and services in March 2012. See the AMF's website for the full consultation.
For more information about this fraud and others, see our Report on a Decade of Financial Scandals and the report's chart appendix with details of each scandal.
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CSA Finalizes Plan Summary for Scholarship Plans
The Canadian Securities Administrators (CSA) have issued final rules governing how information about group scholarship plans (GSPs) is disclosed to retail investors. The rules are to come into force on May 31, 2013 and will require the disclosure of a two-page, double sided, Plan Summary document which is designed to highlight the potential benefits, risks and costs of investing in a GSP. The CSA notes that the number of investors in scholarship plans, particularly investors with low or modest incomes, has grown substantially since the Canada Education Savings Grant was introduced. As of December 2011, the aggregate value of assets held in scholarship plans was $9.1 billion and is approximately 29% of all assets currently held in RESPs. It notes that for many of these consumers a scholarship plan is the only security they will ever purchase, that many of these consumers have little or no financial literacy and, in some instances, they may not speak or understand English or French as a first language.
Please click here to read the full story.
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OSC Finds Major Deficiencies at 4 of 5 GSPs
The OSC has completed compliance reviews of five scholarship plan dealers and issued Public Interest Orders against four of them as a result of significant compliance deficiencies. Among other things, the orders require the GSPs to retain independent monitors to examine their policies, practices and procedures. |
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OSC Brings Enforcement Proceedings
The OSC has also recently made allegations against group scholarship plan dealer Global RESP Corporation, the plan's investment manager, Global Growth Assets Inc., the ultimate shareholder and ultimate designated person of both companies, Issam El-Bouji, and Global RESP's chief compliance officer Margaret Singh. The allegations include the claim that Bouji and Global Growth Assets Inc. directed that over $30 million in funds received from plan subscribers be used to purchase subordinated notes of Pacific and Western Bank of Canada (contrary to the advice of the Plan's registered advisor) and that a company owned by Bouji received $2 million in finders' fees/commissions as a result. The transactions were allegedly not approved by the board of directors or the Independent Review Committee. |
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Helpful RESP Guidance for Canadians
FAIR Canada encourages Canadians to check out www.SmartSaver.org for useful tips and information about how to start a Registered Education Savings Plan (RESP) and obtain government money for their children's post-secondary education. The SmartSAVER website provides clear, unbiased information about RESPs in 16 different languages and includes brochures from RESP providers with (i) no enrolment fee; (ii) no annual fee; and (iii) no minimum contribution. |
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FAIR Canada Supports IIROC's Outsourcing Guidance
FAIR Canada submitted brief comments to the Investment Industry Regulatory Organization of Canada (IIROC) on January 12, supporting the objectives of their draft Guidance Note. In the comments, FAIR Canada stressed the importance of ensuring that the ultimate responsibility for any outsourced activities rest with the Dealer Member.
FAIR Canada's comments recommended that IIROC add "client harm risk" to its list of risks associated with the outsourcing relationship that need to be managed by Dealer Members as part of their due diligence when outsourcing. In our view, IIROC has a responsibility to ensure that Dealer Members consider the potential for harm to clients in managing the risks of outsourcing. |
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