How OBSI may compensate for non-financial harm
Key Learnings:
- OBSI will compensate clients for non-financial harm where appropriate.
Mr. and Ms. S invested in an exempt market fund. The fund was comprised of a pool of mortgages. The fund experienced financial and management difficulties. As a result a large number of investors tried to sell their shares causing the value of the fund to plummet. Ultimately, the fund was subject to a cease trade order. The only way investors could receive any money back was through a redemption process.
Mr. and Ms. S filled out a form sent to them by their investment advisor in November 2013 to put their name on the redemption list to lock in some priority in the redemption process. When they returned the completed form, the couple received an email from their advisor confirming he submitted it. Three years later, the couple learned from the fund company that their form was never submitted. As a result, Mr. and Ms. S’ request to redeem their investment was not in the redemption queue in November 2013. Instead their redemption process started in 2016, which pushed the estimated completion date to 2023. Mr. and Ms. S complained to the investment firm about their advisor, but did not hear back from the firm within the allotted 90-day response period so they brought their complaint to OBSI.
The complaint OBSI received from Mr. and Ms. S was not regarding financial harm, but instead their much later placement in the redemption process.
It became clear through our investigation process that the investment firm was not able to provide evidence that the completed redemption form was ever submitted on behalf of Mr. and Ms. S. However, there was no way to move the couple ahead in the redemption process. Given the uncertainty about the investment’s future or where exactly the couple would be in the redemption process had their form been submitted in 2013, it was not possible for OBSI to calculate the financial harm caused to Mr. and Ms. S.
Instead, because the advisor admitted some responsibility for causing possible financial harm, and failing to provide the service requested to Mr. and Ms. S, OBSI suggested to the firm that they make a good will offer. The firm proposed reimbursing Mr. and Ms. S the $700 in fees they had paid over a three-year period, since they didn’t receive appropriate service for those fees, and they topped the amount up by $300 for a total good will gesture payment of $1,000. OBSI believed this to be a fair and reasonable offer.
Complaint Upheld
(2016)