Scotia Securities fined $275,000 over investor complaint failures

Scotia Securities Inc. must pay a $275,000 fine and $10,000 in costs after admitting failures in how investor complaints were routed, reported and investigated. In Re Scotia Securities Inc., 2026 CIRO 29, a Canadian Investment Regulatory Organization hearing panel accepted a settlement addressing 371 complaints recorded in an affiliated bank’s system and a separate failure to contact clients during investigations of 128 complaints.

The Ontario District panel approved the agreement on August 6, 2026, at a hearing in Toronto by videoconference, and issued reasons on September 15. It found the negotiated sanctions reasonable and in the public interest, taking account of serious failures as well as the dealer’s self-reporting, corrective work and voluntary compensation.

Complaints went through the wrong process

The first admitted contravention covered June 2022 to May 2024. Branch and contact-centre staff entered some Scotia Securities client complaints in the affiliated bank’s complaints system rather than directing them to the dealer’s complaints department. Those staff included both registered dealing representatives and people not registered in the securities industry.

The bank addressed the complaints through its own process. The problem was not that every complaint vanished without any response: Scotia Securities did not receive them, report them through the applicable regulatory reporting system or handle them under its own securities complaint requirements. It lacked supervisory procedures and reviews to detect the misrouting.

The bank discovered the problem during an April 2024 evaluation of how complaints were received. Scotia Securities began an investigation in May and reported the failures to CIRO in June. It identified 371 complaints, retained external counsel to reassess them, reported them through CIRO’s replacement complaints-reporting system and sent substantive written responses to the affected clients.

The complaints covered allegations ranging from delays and service concerns to unsuitable investments, misrepresentation, discretionary trading and confidentiality breaches. Those were categories of allegations recorded in the settlement, not a finding that every underlying allegation was proven. The contraventions admitted in this proceeding concerned the dealer’s reporting, complaint-handling and supervisory controls.

For this group, the settlement recorded payments totalling $58,780.17 to 105 clients and offers totalling $15,395.11 to 10 others. The latter amounts had not been paid: those clients had not responded to communications or had not signed releases on which payment depended. These payments and offers were distinct from the regulatory fine and costs.

Investigations also missed required client contact

The second contravention covered July 2023 to June 2024. Scotia Securities found that its complaints department had not contacted clients as required by its own policies during investigations of 128 complaints. Those policies called for contact in circumstances including unclear allegations, higher-risk complaints, serious misconduct involving seniors or vulnerable clients, and requests for a call.

After reassessing the files, the dealer determined that 67 complaints required further client contact and reached 44 of those clients. The other 23 did not respond or declined to speak. Files not requiring further contact included complaints already resolved or withdrawn, cases where contact had occurred in a related complaint, and matters within the Quebec securities regulator’s jurisdiction. The decision does not establish that every one of the 128 files remained unresolved.

In connection with the client-contact failures, Scotia Securities compensated 10 clients a total of $70,613 and offered two others a total of $4,500. The two offers had not been paid for reasons described in the settlement, including a refusal to sign a release and rejection of an offer for a reason unrelated to its amount. The report does not combine the two complaint groups into a purported count of distinct affected clients.

Corrective measures and cooperation credit

The agreed facts described changes to routing instructions, staff training and technical controls. Scotia Securities represented that, as of April 2026, the bank’s system could automatically redirect its clients’ complaints to the dealer’s complaints department. Regular reviews of bank-system reports were also introduced to identify complaints requiring securities-dealer handling.

For investigations, the dealer clarified when clients must be called, required approval for exceptions, trained its complaints staff and introduced checklists, note-taking templates and call trackers. Substantive written responses became subject to review by the chief compliance officer, except for responses concerning transfer delays. The settlement also described regular reviews of the full complaint-handling process.

The dealer received a 30 per cent reduction from the fine enforcement staff would otherwise have sought. The settlement credited it for identifying the reporting and handling failures itself, investigating the problems and providing the results to CIRO. That reduction was part of the agreed $275,000 fine, not an additional deduction available after the decision.

The panel nevertheless treated both failures as serious. Missing complaint reports can leave misconduct undetected and deprive the regulator of a chance to examine supervision and complaint handling. Failing to contact clients when required undermines investor protection. The panel also considered a previous settlement accepted in December 2022, while noting that it concerned unrelated misconduct.

A settlement, not a blanket finding on investor claims

The panel applied the standard for negotiated settlements: it should not reject the agreement unless the proposed penalty clearly falls outside a reasonable range. Investor protection, proportionality, deterrence, corrective measures and compensation all informed that assessment. The panel unanimously accepted the agreement after written and oral submissions and assurances from the dealer’s president and chief executive.

The fine and costs were payable on acceptance, subject to any different agreement with enforcement staff, and the dealer agreed to comply with the specified rules in future. It waived further hearing, appeal and review rights. Staff retained the ability to bring proceedings if the dealer failed to comply with the settlement.

CIRO’s public proceeding page records the matter as concluded on August 6. The decision establishes the agreed regulatory outcome, not the date every payment was made or the present effectiveness of the revised systems. Its central lesson is that a bank’s response to a complaint does not replace the separate reporting and investigation obligations of its affiliated securities dealer.