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How do I lodge a complaint about my broker?

The relationship between a client and an investment adviser is sometimes a grey area but there are certain basic rules that apply.

The know-your-client (KYC) rule is the number one rule in full-service investment firms. Simply stated, it means that your investment adviser’s number one concern should be the most appropriate choice of investment products for your financial circumstances, goals, risk tolerance, and age.

A grey area can easily arise when a client over-estimates their risk tolerance. For example, inexperienced investors were flocking to high-tech stocks just two years ago. If you told your adviser you wished to invest in tech stocks and they failed horribly, that is not a valid complaint.

While an investment adviser has an obligation to know a client, the onus is on you, the investor, to give clear instructions and fully share your financial situation and goals. If the instructions are not followed, or the adviser makes trades without your permission, you then have a valid complaint.

First step: Talk to your adviser and tell them about your complaint. Follow up with a letter to your adviser, confirming the details of your complaint. Then give your adviser sufficient time to follow up on your complaint.

If you cannot resolve the situation with your adviser, or in a timely fashion, the next step is to write a letter to the branch manager, compliance officer of the firm, or, in the case of a bank, the ombudsman.

In your letter to your adviser, or any representative of the firm, always give a detailed account of your complaint and include all valid information such as account numbers, photocopies of statements, and any letters sent to the firm.

If your complaint is not handled to your satisfaction, the next level in filing a complaint is the federal bank ombudsman, the Investment Dealers Association (IDA), the provincial securities commission, or the Toronto Stock Exchange. As well, many licensed financial advisers are members of the Canadian Association of Financial Planners.

While these organizations follow up on complaints, you may not receive compensation. These regulatory bodies investigate whether an adviser or firm breached securities regulations. In some cases, an adviser may be fined or suspended from further securities trading. Compensation may be given to investors in some circumstances but there are restrictions.