Chapter 11 - Client Complaints (v1.2)

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Questions and Answers

What is the primary benefit of tracking and monitoring complaints for a firm?

It generates more client referrals.

It minimizes the time spent on customer service.

It solely ensures compliance with regulations.

It helps to learn from complaints to avoid future problems. (correct)

What may a dealer member need to do when dealing with a complaint?

Address complaints solely through internal review.

Respond only to the client's primary complaint.

Respond to multiple organizations if needed. (correct)

Only deal with the courts for dispute resolution.

Which type of issues typically classify as service-related complaints?

Unreturned phone calls and fee disputes. (correct)

Dissatisfaction with regulatory compliance.

Poor investment performance forecasts.

Errors in client records.

What should the chief compliance officer focus on regarding common types of complaints?

Understand how and why they arise. Signup and view all the answers

What type of issues are categorized as performance-related complaints?

Clients being dissatisfied with their portfolio performance. Signup and view all the answers

Which organization is mentioned as a possible body for dispute resolution?

Ombudsman for Banking Services and Investments (OBSI). Signup and view all the answers

Why should enforcement reports from CIRO and provincial securities commissions be reviewed by all staff?

To understand enforcement policies and resource allocation. Signup and view all the answers

Which of the following could be a root cause of administrative complaints?

Errors in client records handled by administrative staff. Signup and view all the answers

How can a firm ensure they handle complaints effectively?

By establishing a feedback loop to learn from complaints. Signup and view all the answers

What defines a complaint according to CIRO?

An expression of dissatisfaction alleging misconduct. Signup and view all the answers

What must registrants do when faced with a potential complaint?

Assume the client has a complaint and refer it to compliance. Signup and view all the answers

What is the role of a Designated Complaints Officer (DCO)?

To oversee the complaint handling process and liaise for the firm. Signup and view all the answers

Which of the following is a requirement for handling complaints as per IDPC Rule 3700?

Timely complaint resolution and record retention. Signup and view all the answers

What must dealer members ensure regarding their complaint policies?

They ensure complaints are handled effectively and fairly. Signup and view all the answers

What is the primary purpose of appointing a DCO within a firm?

To ensure there is an efficient complaint handling process. Signup and view all the answers

What should be done before entering any settlement agreement with a client?

Get written consent from the dealer member. Signup and view all the answers

Which of the following describes the nature of client complaints?

Can be expressed verbally or recorded. Signup and view all the answers

Under CIRO rules, what should be the initial assumption regarding client communications that may be complaints?

They are potentially valid and must be reviewed. Signup and view all the answers

What is a key characteristic of the substance of a complaint?

It is often unrelated to the form it takes. Signup and view all the answers

What is required for a response to a client complaint to be considered subject to without prejudice privilege?

It must contain a settlement offer. Signup and view all the answers

Which situation would likely constitute a waiver of privilege?

A client sharing a privileged document with a third party. Signup and view all the answers

What action might NOT be considered when discussing common scenarios where privilege is waived?

A lawyer advises a client during a private meeting. Signup and view all the answers

Which type of document is explicitly stated as not necessarily privileged?

A document containing business advice. Signup and view all the answers

What practice should be followed to effectively protect legal privilege?

Keeping documents containing legal advice separate from business advice. Signup and view all the answers

Which is a common misconception about non-privileged communications?

All confidential communications are considered privileged. Signup and view all the answers

What is a characteristic of the arbitration process mentioned?

The hearing is private and information is confidential. Signup and view all the answers

Which statement is true regarding the Ombudsman for Banking Services and Investments (OBSI)?

OBSI allows disputes up to $350,000 to be submitted for resolution. Signup and view all the answers

How are arbitration costs distributed among parties?

Each party contributes equally to the anticipated costs and fees. Signup and view all the answers

What aspect of the arbitration process must be reported through ComSet?

The written reasons for the arbitrator's decision. Signup and view all the answers

What happens if a dealer member violates OBSI's recommendations?

OBSI publishes the fact of noncompliance. Signup and view all the answers

What is the duration of a typical arbitration hearing?

Half a day. Signup and view all the answers

What is a requirement before OBSI will review a client's complaint?

The client must resolve the complaint with the dealer member first. Signup and view all the answers

What is the timeline for written reasons to be issued after the arbitration hearing concludes?

Within 30 days. Signup and view all the answers

What is unique about the confidentiality in arbitration proceedings?

Information can only be obtained with a court-issued subpoena. Signup and view all the answers

What must a dealer member do upon receiving complaints regarding institutional clients?

Acknowledge all written and verbal complaints. Signup and view all the answers

What does CIRO's limitation regarding restitution suggest for clients pursuing compensation?

Clients must seek arbitration for compensation claims. Signup and view all the answers

How long must dealer members retain complaint files?

For seven years. Signup and view all the answers

What action should be taken if an Approved Person leaves a firm after a client complaint?

They must cooperate with the dealer member that received the complaint. Signup and view all the answers

What is the limitation on settlement agreements between dealer members and clients?

They should allow the client to initiate complaints to regulatory authorities. Signup and view all the answers

What must be included in the record retained by the dealer member for complaints?

All recorded submissions and follow-up documentation. Signup and view all the answers

How quickly must a dealer member convey the results of their investigation to the institutional client?

In due course after the investigation has been completed. Signup and view all the answers

For what duration must the complaint record be kept readily accessible?

For two years from the complaint date. Signup and view all the answers

What is not a requirement of a dealer member when dealing with client complaints?

Prepare comprehensive reports for regulators. Signup and view all the answers

Which of the following is true regarding allegations of serious misconduct?

They must always be reported to an appropriate executive. Signup and view all the answers

What is a consequence if an Approved Person becomes an employee of another member firm after a complaint?

They must assist the dealer member they left with the investigation. Signup and view all the answers

Study Notes

Client Complaints

Dealer members must respond to all client complaints within a timely manner.
Complaints must be reviewed, findings reported to regulators and clients.
Key issues involved in client complaints are service, administration and performance.
All complaints must be recorded.
Verbal complaints must be recorded if a preliminary investigation indicates possible merit.
A Designated Complaints Officer (DCO) must be appointed to oversee all complaints.
Clients may pursue multiple avenues to resolve complaints.

### Complaint Handling Process

All complaints are reviewed and responses provided to clients within a reasonable time with clear timelines provided based on historical data.
Complaint records must be retained for a period of seven years, accessible within a reasonable period.
Complaints are reviewed internally and then reported to the appropriate regulators.
Complaints are documented and investigated by the dealer member.
If the complaint involves serious misconduct, the complaint will be elevated to an appropriate executive.
Complaints involving institutional clients require documentation and specific procedures.
Dealer members cannot enter into settlement agreements with clients without prior written consent.

Dispute Resolution

Client disputes can be resolved via:
- direct resolution with the member firm
- arbitration
- the Ombudsman for Banking Services and Investments (OBSI)
- legal action
- regulatory action
Regulatory breaches are brought to the attention of regulatory organizations by dealer members or by clients.
Regulatory breaches are reviewed and addressed by the provincial securities commissions.
The arbitration process takes on average 90 working days with hearing lasting half a day.
Arbitration is private and confidential and involves a third-party arbitrator.
Arbitration is required for claims for compensation and can be undertaken at the same time as a regulatory investigation.
Arbitration fees are shared equally.
OBSI provides assistance to clients before seeking legal action.
OBSI recommends dispute resolution with the dealer member before accepting client cases.
OBSI recommendations are not binding.
OBSI dispute resolution is free of charge to clients.
OBSI is not accepting claims greater than $350,000.
OBSI requires claims to be submitted within 180 days of completing the dispute resolution process with the dealer member.

Privilege

Legal privilege applies to all client communications between a client and their lawyer.
The privilege covers all written, verbal, and electronically recorded communications.
The privilege applies to all communications relating to providing legal advice.
Privilege can be waived by:
- disclosing privileged information to a third party.
- discussing legal advice with a third party.
- failing to keep advice confidential.
Privilege can be waived accidentally by disclosing privileged information.
Not all client communications are privileged.
Confidential documents created solely for business purposes are not privileged documents.
When legal advice is provided to a client in the presence of a third party, it is not privileged.
When legal advice is discussed with a third party, it is not privileged.
Common third parties who may have access to legal advice include auditors, accountants, consultants, and affiliated companies or subsidiaries.
Documents marked “privileged and confidential” are not automatically privileged.

Protecting Privilege

Documents containing legal advice should be marked as privileged legal memoranda.
Legal advice should not be provided in a circular or memo format.
Businesses should avoid routing regular communications through a law department to try to claim privilege protection.
Documents containing legal advice should be disseminated selectively and should be limited in circulation.
Employees should be encouraged to mark all legal communications with a privilege statement.
Any communication that includes legal advice should include language stating that it is privileged.

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Description

This quiz covers the essential procedures for managing client complaints, including timely responses, record-keeping, and investigation processes. Key roles such as the Designated Complaints Officer and the complaint handling timeline are also discussed. Test your knowledge on how to effectively address and resolve client issues in a compliant manner.