Global News recently reported on a case where an elderly woman had been the victim of fraud by her longtime financial advisor.[1] The elderly woman had been an RBC customer for some 40 years. Her retirement savings accumulated over 25 years of working 12-hour days, six days a week, were largely held in RBC mutual funds sold by Royal Mutual Funds Inc. (RMFI). The financial planner, Jeong (Abraham) Shin, had been the elderly lady’s trusted advisor for a decade, according to her family.

Janet Yu (“Yu”), the elderly woman’s daughter, drove to Toronto from Texas in June 2020, to assist her 90-year-old mother, who was recovering from a spinal injury. Upon reviewing her mother’s accounts, she noticed something did not add up.

Yu and her sister Donna Koh (“Koh”) allege their mother was the victim of fraud and an unauthorized transfer of funds resulting in a loss of more than $120,000 according to an internal investigation by RMFI.

Despite the RMFI compensating Yu’s mother for the $60,000 that the financial advisor allegedly stole from her accounts, plus more than $7,000 in lost investment growth for that amount and the fund dealer also offering more than $52,000 as additional compensation to account for other lost investment growth tied to the alleged second unauthorized transaction, Yu and Koh say that their mother’s story highlights significant shortcomings in a major financial institution’s ability to protect a vulnerable senior from fraud. It also reveals how consumers seeking compensation may struggle to navigate a system where banks and their affiliated investment dealers are separate corporate entities often with different complaint channels.

Canada‘s big banks, which are federally regulated, offer many investment services through affiliated mutual funds and investment dealers, which answer to a different set of regulators. Normally, transactions affecting a client’s investments are the responsibility of the dealers, not the banks. Banks and investment dealers may rely on different independent bodies to handle client complaints they cannot resolve on their own.

This is the case with RBC and RMFI. Bank customers who want to escalate their concerns are referred to the ADR Chambers Banking Ombuds Office (ADRBO). RMFI clients, on the other hand, must turn to the Ombudsman for Banking Services and Investments.

Jean-Paul Bureaud, executive director at FAIR Canada, an investors’ rights advocacy group told Global News that FAIR Canada has been advocating for years to streamline the complaint handling process. “It’s very confusing to most people and part of the confusion stems from, where do you bring your complaint?” he says.

The full article can be found at: https://globalnews.ca/news/7465223/90-year-old-rbc-client-60k-fraud-advisor/

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[1] 90-year-old RBC client allegedly lost $60K to fraud by longtime advisor, Erica Alini,  Global News, Posted November 19, 2020, found at https://globalnews.ca/news/7465223/90-year-old-rbc-client-60k-fraud-advisor/

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This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.