Opinion: Investors are waiting too long for complaint responses

Most Canadians assume that if something goes wrong with their investments, there is a consistent, fair and timely process that firms must follow. Unfortunately, the complaint system is fragmented and has not kept pace with international best practices.

Investors have a right to see their complaints addressed and resolved in a transparent and just way, within a reasonable timeframe. That is central to an effective financial consumer protection framework.

Extended timelines cause fatigue and frustration. Investors often abandon complaints before they are resolved. Longer resolution timelines increase the likelihood that investors will accept unfavourable, low-ball settlements rather than waiting for a firm’s response.

Delays also increase the likelihood investors will escalate to regulators, arbitration or the courts, damaging the firm’s reputation and increasing its operating costs.

Complaint handling mechanisms are especially important for low-income and vulnerable investors. Timely and effective recourse processes can make or break their trust in the industry and its regulators.

After 20 years of assisting retail investors with complaints, I have spoken with retirees who waited months to receive a complaint response. Individuals who needed access to funds for living expenses. People who trusted an advisor and then felt abandoned. While they waited, they endured stress, distrust and financial strain.

These are not isolated stories. It is difficult to understand why securities regulators are not focused on establishing a national, fair and timely standard designed to reduce investor harm.

In Quebec, the Autorité des marchés financiers (AMF) requires firms to provide a final response letter to complainants within 60 calendar days. An extension of up to 90 days will be granted in exceptional circumstances.

Everywhere else in Canada, firms generally have 90 days to respond to a complaint. But that timeline can be exceeded when firms have an internal appeal process.

Fairness should not depend on geography. If investor protection is a national priority, why is investor experience not national in practice?

Negative effects

The Canadian Investment Regulatory Organization (CIRO) received comments about harmonizing its rules with the AMF’s complaint response timeline during phase five of its rule consolidation project. Its response: “We currently do not have evidence that the 90-day period has had negative effects on complainants or yields a better outcome.”

Tell that to the senior who waited months for a response. Tell that to the retiree using their investments to pay their living expenses. The harm is real.

This is not disputed internationally:

• The Financial Conduct Authority in the U.K. requires firms to respond within 56 days. It explicitly states that delays “exacerbate consumer harm” and undermine trust. The U.K. Financial Ombudsman Service has repeatedly highlighted that faster timelines reduce escalation and improve fairness.
• The Australian Securities and Investments Commission requires firms to respond within 30 days to most complaints. Its publications say that long delays cause consumers to abandon complaints, accept unfair outcomes or disengage from financial markets entirely.
• Many European Union jurisdictions require 30- to 50-day maximum response timelines.

None of these jurisdictions require investors to prove harm before adopting reasonable timelines. They recognize that a delay is the harm.

Actions not words

Canadian securities regulators say investor confidence is central to their mandate. Confidence is built with action.

When regulators dismiss the potential for harm, delay reforms for years and accept inconsistent treatment of investors, they are not instilling confidence.

At its core, this issue is more than whether the timeline should be 60 or 90 days. It is about whether investors matter. Whether their time matters. Whether their stress matters. Whether their financial hardship matters.

CIRO and the Canadian Securities Administrators should harmonize with the AMF requirements for a nationally consistent standard — in line with international best practices.

No more consultations. No more debates. No more excuses. There is a wonderful opportunity here for CIRO to demonstrate leadership.