Securities commissions report top investor complaints

Toronto -- Investor complaints continue to flow into securities regulators across Canada, most often stemming from a relationship breakdown between a financial adviser and an investor. However, unscrupulous behavior also continues to arise in the marketplace.

"Securities regulators strive to protect investors through the administration and enforcement of securities laws in each jurisdiction across Canada," said Doug Hyndman, Chair of the Canadian Securities Administrators (CSA), the umbrella organization representing the 13 provincial and territorial securities commissions.

"But investors need to help protect themselves by doing their homework and being proactive in building a good relationship with their investment adviser."

The CSA list of top five complaints and how to avoid them:

1. Suitability -- Increasingly, investors are contacting securities regulators after finding themselves in investments that they do not believe are suitable for them. It is critical for investors to ensure that the "Know Your Client" forms they must complete on the opening of an account are up-to-date and that advisers are well aware of investment objectives and risk tolerance levels.
2. Customer Service -- General customer service issues such as delays in transferring of accounts continue to be a problem in the industry. Investors could reduce delays by: getting professional assistance when completing forms, avoiding transfers during peak season, reading about the company's policies ahead of time, and following up with the institution they are transferring from.
3. Unauthorized trades -- Investment advisers are not allowed to make trades on an account without the investor's permission unless the adviser has been given discretionary authority over the account (note that only specially qualified advisers are allowed to accept this authority). Investors who have not given discretionary authority should monitor their account to ensure unauthorized trading isn't occurring.
4. Disclosure -- Many investors are still in the dark about fees, and in particular, about mutual fund fees. Investors should read the prospectus and ask questions if they still don't understand the fee structure of their investment. The Mutual Fund Fees Impact Calculator found on a number of regulators' web sites may help investors understand how fees can impact their investment returns over time.
5. Scams and frauds including unregistered sales -- There is a growing number of scams and frauds being reported across the country. The best way investors can protect themselves from fraud is to do their homework. Ask questions. Check with your securities regulator to verify the registration of an adviser. Read all documents carefully. Don't fall for guarantees of high returns with low risk.

An investor who has a complaint should:

1. Contact the adviser directly -- be sure to make detailed notes of any conversations.
2. Write to the branch manager with a copy to the firm's compliance officer.
3. Contact the provincial or territorial securities regulator in writing.
4. Securities regulators cannot get investors' money back. Instead, investors should contact a lawyer and they have the option of going to small claims court or proceeding to civil court or an arbitration program.

The CSA (http://www.securities-administrators.ca/) has developed a number of investor resources aimed at helping investors avoid many of the most frequent complaints listed above. In addition, most jurisdictions have print or web resources on how to file a complaint. Contact your jurisdiction for a free Investor Education Kit.

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