Investor loses access to trading account after firm ends relationship

Ms. C managed her own investments through a trading account at a do-it-yourself (DIY) investing firm (also known as an order-execution-only (OEO) firm), which operated as a subsidiary of her bank. She linked her bank account and trading account together and enjoyed the convenience of transferring funds between them. Ms. C managed both accounts independently as the sole accountholder.

In April 2024, her bank sent her a 30-day notice for the closure of her bank account. In the e-mail, the bank explained that it conducted periodic reviews of its accounts and would no longer provide banking services to Ms. C. The bank gave her 30 days to withdraw her funds or transfer them elsewhere.

Ms. C followed the bank’s instructions and linked a new bank account at another institution to her trading account. Shortly afterwards, an illness hospitalized her. In May 2024, she went abroad for medical treatment. Despite being an active investor, Ms. C felt too ill to log into her trading account and worried about the status of her investments.

Ms. C returned to Canada and in September 2024 she received a letter from her investment firm stating that it was a second 30-day notice to close her trading account. The firm gave her 30 days to transfer out her assets. It restricted her access to its online trading platform and allowed her to complete only liquidating transactions or outgoing transfers by phone.

Ms. C believed that her investment firm should have considered her health circumstances and allowed continued access to her trading account. She cited an urgent need to trade stocks and protect herself from financial harm. She also asked the firm to explain why it ended its relationship with her. The firm told Ms. C that its decision was final and would not be reconsidered and offered no explanation.

Dissatisfied with the firm's response, Ms. C asked OBSI to investigate.

Complaint not upheld

Under Canadian law and included in standard account agreements, banks may end their relationship with a client at any time if they provide reasonable notice. The Canadian Investment Regulatory Organization also gives dealers the same right and allows them to impose restrictions on a client’s account after termination, provided they meet regulatory and contractual obligations. As a result, the focus of our investigation was limited to whether Ms. C’s firm had acted reasonably in exercising its legal rights.

During the investigation, we contacted Ms. C to verify that she had received the firm’s notices for her account closure. Because she was abroad, she did not receive the first notice but said she received the second notice when she returned to Canada. She also confirmed that she did not incur financial harm related to the account closure.

We verified that the firm mailed out two notices -- one in May 2024 and the other in September 2024 – informing Ms. C of the account closure and giving her 30-days each time to transfer her assets. These notices extended her deadline to October. Our review of the account agreement showed that it allowed the firm to close client accounts at any time for any reason with reasonable notice.

Based on our findings, we concluded that the firm provided reasonable notice for Ms. C’s account closure, acted within the terms of its account agreement and was under no obligation to give Ms. C a reason for ending its relationship with her. We had no basis to recommend compensation or an extended period of access to the firm’s trading platform.