There are rare cases where an investment advisor intentionally mismanages or even steals clients’ money. For more information on financial advisors, visit our Know Your Advisor section.
Reporting Illegal & Unethical Advisor Conduct
Even though you depend on your financial advisor to help you make investment decisions, it is essential that you monitor your portfolio and keep an eye on their work. If you suspect anything is wrong, ask questions. If the advisor does not give satisfactory answers, or you still have doubts, you should first contact the advisor’s firm, the Investment Industry Regulatory Organization of Canada (IIROC), or the Mutual Fund Dealers Association of Canada (MFDA).
IIROC is the national self-regulatory organization that regulates investment advisors and their employers, the dealer firms. The MFDA is responsible for regulating the operations, standards of practice and business conduct of Canadian mutual fund dealers and their representatives.
You can also bring suspicious activity to the attention of the BCSC by contacting BCSC Inquiries. Report your concerns through our online complaint form. Remember to keep records in case you need to take legal action.
Know the Warning Signs
- Offers of Lucrative Private Deals – Registered advisors should not be selling or recommending “off-book” or “secret” deals to clients.
- High-Pressure Sales – If an advisor pressures you into buying an investment, or bullies you into an uncomfortable investment strategy, there may be something wrong.
- Request for Direct Payment – When you write a cheque for investment purposes, always make it out to the firm that holds your account, not the advisor or a company they own.
- Errors on Your Statements – If you see questionable investments or you think there is money missing from your account, and your advisor can’t explain or fix it, you need to speak with their employer immediately.
- Your Statements Don’t Look Right – When there is a discrepancy, or something doesn’t look right, check into it right away.
- Unregistered Dealing – Check to see if your advisor is registered to recommend the products they are offering.
- Churning – Watch for excessive trading in your account to generate higher commissions for the advisor and their firm.
Taking Action Against Advisor Misconduct
- Draw Up a List of Questions – An advisor who is doing something wrong may make excuses or offer to make things right. This list will help you stick to key issues.
- Make Sure You Document the Answers – Email is an effective form of communication, as it creates a record of the conversation. When you cannot use email, take notes or record the conversation.
- Speak to the Investment Firm or Make a Complaint – Once you get the answers to your questions, talk to the investment firm your advisor works for, and possibly, a securities regulator.
Check Before Investing
Check a salesperson’s registration on the Canadian Securities Administrators’ (CSA) website or contact the British Columbia Securities Commission (BCSC).
Bring suspicious activity to the attention of the BCSC by contacting BCSC Inquiries. You can also report your concerns through our online Complaint Form. Remember to keep records in case you need to take legal action.