Increase in Regulatory Complaints and Inquiries received by IIROC between 2020 - 2022

IIROC recently released statistics with respect to complaints and inquiries statistics for the period from 2020 to the end of 2022. It is important to note that the data provided pertains to the period before the consolidation of IIROC and the MFDA into the new SRO effective January 1, 2023.

You may reach the full information and statistics from the following link at IIROC:

https://www.iiroc.ca/investors/complaints-and-inquiries-statistics

Key Findings

1. IIROC received a total of 13,136 complaints and inquiries from 2020 to 2022. 70% of these contacts related to matters concerning IIROC-regulated dealer firms (member) or trading on the Canadian debt and equity markets (market). The remaining 30% fell outside IIROC's jurisdiction and were redirected to the appropriate regulator, firm, or resource.

2. During the Covid-19 pandemic, there was a significant increase in contacts from clients of Order-Execution-Only (OEO) dealers, which continued to be higher in 2022 compared to contacts from clients of full-service dealers.

3. IIROC averaged 1,820 contacts annually from 2020 to 2022 about IIROC-regulated firms. Almost 70% of the contacts were non-regulatory matters, such as poor customer service or general inquiries about dealer policies and procedures.

4. The five most common topics of inquiries to IIROC by clients of IIROC-regulated firms accounted for 58% of all such inquiries (3,400) from 2020 to 2022.

5. The five most common topics of complaints to IIROC by clients of IIROC-regulated firms accounted for 64% of all such complaints (2,060) received from 2020 to 2022.

6. IIROC averaged 1,235 contacts annually from 2020 to 2022 regarding trading on Canadian debt and equity markets. Non-UMIR (Universal Market Integrity Rules) matters accounted for almost 64% of contacts during this period.

7. Since the start of the COVID-19 pandemic, there has been a significant increase in the number of contacts by clients of OEO dealers.

8. Most inquiries and complaints came from Ontario, British Columbia, Québec, and Alberta.

9. In cases where age and gender were disclosed, there has been an increase in contacts from investors under 60 years old, which may correspond to the rise in DIY (do-it-yourself) investing. Males contacted IIROC more often than females.

The five most common topics of complaints to IIROC by clients of IIROC-regulated firms from 2020 to 2022 accounted for 64% of all such complaints (2,060). These topics are:

1. Unsuitable investments: This type of complaint refers to allegations that an investment advisor or firm recommended investments that were not appropriate for the client, considering their financial situation, risk tolerance, investment objectives, and other relevant factors. Unsuitable investment complaints are considered regulatory matters and are subject to IIROC rules or securities law. It is important to note that the concentration of securities is not explicitly mentioned in this category; however, it does fall under the unsuitable investments umbrella.

2. Account transfers: These complaints arise when clients face issues or delays while transferring their investment accounts between firms or advisors. Account transfer complaints are typically regulatory matters that fall under IIROC's jurisdiction.

3. Fees and charges: Clients may file complaints about the fees and charges associated with their investment accounts, such as account maintenance fees, transaction fees, or other costs. While these complaints are common, they generally fall outside of IIROC's jurisdiction since they are not directly related to regulatory matters. However, certain types of matters, such as when an account type is not in the best interest of the client or when there is a lack of transparency or disclosure about fees, may be considered regulatory complaints. In these cases, the complaint may be subject to IIROC rules or securities law

4. Unauthorized trading: These complaints involve allegations that an investment advisor or firm executed trades in a client's account without obtaining proper authorization. Unauthorized trading is considered a regulatory matter subject to IIROC rules or securities law.

5. Poor customer service: Complaints in this category relate to unsatisfactory service provided by investment advisors or firms, such as delays in responding to inquiries, inadequate communication, or unprofessional behavior. Poor customer service complaints generally fall outside of IIROC's jurisdiction as they are not regulatory matters.

Conclusion

The IIROC Complaints and Inquiries Statistics report reveals essential insights into the types of complaints and inquiries received between 2020 and 2022. It highlights the increase in contacts from clients of OEO dealers, the prevalence of non-regulatory matters, and the demographic patterns among those who contact IIROC. This information can help IIROC and other stakeholders better understand the concerns of investors and improve their regulatory and customer service efforts.