New OSC head Grant Vingoe wants stronger powers for banking sector ombudsman

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The agency that takes complaints from the public about investment firms needs more teeth to ensure consumers who have been wronged are compensated, the new acting head of the Ontario Securities Commission says.

Grant Vingoe, who became the acting chair and chief executive of the OSC in mid-April, says that one of his goals is to strengthen the sanctioning powers ability of the Ombudsman for Banking Services and Investments, or OBSI.

OBSI, which was established in 1996, acts as a dispute resolution service for aggrieved investors whose money may have been placed in inappropriate investments or who may have been charged excessive fees. The ombudsman’s office is funded through industry member fees, but is overseen, in part, by a joint committee of regulators from across the country. Mr. Vingoe is the chair of that joint committee, which oversees the side of OBSI that polices investment services, as opposed to the banking sector.

OBSI can recommend that a member firm should compensate consumers to a maximum of $350,000, but its decisions aren’t binding. In an interview with The Globe and Mail, Mr. Vingoe said he has a “strong commitment” to improve “investor redress” and said investment firms should not be allowed to ignore an OBSI recommendation.

Since 2007, there have been 20 cases where OBSI has recommended compensation and the firms have refused, according to data posted on OBSI’s website. Mr. Vingoe said this name-and-shame system isn’t sufficient. “I think that should be strengthened.”

In an e-mailed statement, a spokesperson for OBSI said the organization has “long advocated for greater ability to secure redress for consumers where it is warranted.”

Mr. Vingoe, who had been serving as the OSC’s vice-chair, replaced the outgoing chair, Maureen Jensen. Ms. Jensen announced her retirement in January, about a year before the term of her contract was set to expire, amid tensions with the Progressive Conservative government of Premier Doug Ford. In particular, the Ford government announced publicly in 2018 that it would not support the OSC’s efforts to ban certain types of mutual fund fees.

Mr. Vingoe also takes the helm of the regulator at a time of unprecedented volatility in the capital markets. He said that even before COVID-19 froze economic activity and markets plummeted, one of his first priorities as the acting chair was to provide stability, and that mission has only been heightened because of the pandemic.

Two days into his new role, he supported a decision by the Canadian Securities Administrators – the umbrella organization for Canada’s provincial securities regulators – to permit mutual funds that invest in fixed-income securities to borrow more money to keep up with investor redemptions. Mr. Vingoe told The Globe that the move – which temporarily increased the funds’ borrowing power from 5 per cent of their net asset value to 10 per cent – helped maintain liquidity. “It’s industry relief, but also ensures that investors get what they bargained for,” he said.

Mr. Vingoe said the OSC has been increasingly on the lookout for frauds related to COVID-19. Since the pandemic struck Canada in a significant way in March, a number of securities regulators across the country, including the OSC, the British Columbia Securities Commission and the Alberta Securities Commission, have issued warnings about specific investment scams connected to the virus.

“The anxiety that people are suffering, they’re more susceptible than ever to a fraudulent pitch,” Mr. Vingoe said. “And a COVID pitch that offers a medication or some way of addressing [the virus] is a particularly pernicious type of pitch, but it finds a more susceptible audience at the moment – particularly with vulnerable investors. So we’re seeing more of that and we’re warning about it.”

Despite having most of the OSC’s staff working from home, Mr. Vingoe said the regulator is still actively pursuing wrongdoers and issuing orders for documents. The only power investigators have not been able to use is their ability to execute search warrants, which can allow the OSC to disrupt investment scams before they take root, Mr. Vingoe said.

“The only thing we cannot do at the moment, for safety reasons for our own staff and others, would be on-the-ground, physical-disruption activities. And that, we’re going to try and initiate as soon as we can safely,” he said.

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