Client Complaints Handling: The 90-Day Rule and OBSI Process for CIRE

What Constitutes a Complaint?

A complaint is broadly defined as any written or verbal expression of dissatisfaction alleging misconduct, including:

• Theft, fraud, misappropriation of funds
• Forgery
• Unsuitable advice
• Unauthorized trading

Note: A complaint about "bad coffee" is a service issue, but "losing money because you didn't follow instructions" is a regulatory complaint that triggers formal procedures.

The Complaint Handling Timeline

Step 1: Immediate Acknowledgement (5 Business Days)

• Firm must send Initial Response Letter within 5 business days
• Letter confirms receipt, names the investigator (Designated Complaints Officer)
• Includes Client Complaint Information Form (CCIF) explaining the process

Step 2: Substantive Response (90 Calendar Days)

• Firm must provide Substantive Response Letter within 90 days
• Letter states firm's decision: Rejection (with explanation) or Offer (compensation)
• Must outline client's next steps if not satisfied (OBSI, Arbitration)

Advisor's Duty to Report

• Advisors cannot be the judge of their own case
• Must report complaints to Branch Manager/Compliance immediately (often within 2 business days)
• Violation: Hiding a complaint ("burying it in the desk drawer") leads to fines, suspension, or termination

Prohibition on Direct Settlement

Advisors are strictly prohibited from settling complaints directly with clients.

• Cannot cut personal cheques to cover losses
• Cannot offer commission rebates without firm approval
• This is "off-book" activity that prevents proper tracking

OBSI (Ombudsman for Banking Services and Investments)

What is OBSI?

The national, independent dispute resolution service for the investment industry.

When Can Clients Escalate to OBSI?

• Not satisfied with the firm's Substantive Response
• Firm has not responded within 90 days

OBSI Limits

• Can review claims up to $350,000
• Historically recommendations were "non-binding" (firm could refuse, resulting in "Name and Shame")
• Regulatory changes are moving toward binding decisions
• Free for clients

CIRO Arbitration Program

• Alternative to OBSI for disputes between dealers and clients
• Maximum claim: $500,000
• Decision is legally binding on both parties
• Involves costs (unlike OBSI), but arbitrator can award costs to winner

Complainants Information Service

Clients must be informed of their rights at two specific times:

1. At Account Opening: Part of welcome package
2. Upon Complaint: Attached to Initial Acknowledgement letter

Record Keeping Requirements

• Maintain detailed records of all complaints
• Include original allegation, investigation notes, final response
• Retention period: 7 years
• CIRO reviews "Complaint Log" during audits to spot patterns

CIRE Exam Tips for Complaints

• Remember the timeline: 5 days (acknowledgment), 90 days (substantive response)
• Advisors report UP, never settle directly
• OBSI limit: $350,000 (free, historically non-binding)
• Arbitration limit: $500,000 (binding, has costs)
• Records kept for 7 years