Written by Caseworker Jenny Peng
Updated: August 29, 2023
As a retail investor, it is important to remember that even if you are investing with an advisor or an institution, you should always be proactively monitoring your accounts. If you notice any suspicious activity or if you are uncomfortable with the way your investments are being handled, you should always raise with your concerns with your advisor and the institution first to seek appropriate resolution. However, when that resolution is unsatisfactory, you may consider taking legal action.
If you are seeking to initiate a legal claim in the courts against your investment advisor or an institution, there is a time period during which you must do this – this is known as a “limitation period”.
What is a limitation period?
A limitation period is defined as “the period within which a person who has a right to claim against another person must start court proceedings to establish that right.” Simply put, it is a defined period of time during which you have to begin legal action in the courts against someone. Beyond this period, you will lose the right to sue them.
Provincial limitation periods
In Canada, the legal limitation period to commence a civil action varies depending on the province or territory. In Ontario, the basic limitation period is two years from the discovery of the claim. In 2021, the Supreme Court of Canada defined reasonable discovery of a claim to mean “whether the plaintiff has knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant’s part can be drawn.” In other words, the clock begins ticking once you become aware – or should have reasonably been/become aware - that there may be issues with your investment through the fault of the advisor.
OBSI limitation period
The Ombudsman for Banking Services and Investments (OBSI) is an independent dispute-resolution service in Canada that deals with investment and banking issues faced by investors and consumers in Canada. All registered investment firms are required to participate in OBSI. All banks are required to participate in OBSI or ADR Chambers.
The legal limitation period for commencing civil actions does not apply to complaints made to OBSI. Instead, the OBSI’s limitation period is six years from the earlier of:
- the day on which the investor/consumer first knew about the issue or problem; or
- the day on which the consumer reasonably ought to have known about the issue or problem.
If you have already made a complaint to your advisor/institution and received a response, then you have 180 days to complain to OBSI.
How might limitation periods affect your complaint?
If you are initiating a legal claim in the courts in Ontario, then you must abide by the two-year limitation period. The expiry of this period means that the advisor and/or institution that you are complaining against can simply ask the claim to be thrown out.
If you are filing a complaint with OBSI, they will not investigate any complaints outside of the six-year limitation period.
When should you seek help?
For retail investors, the existence of a limitation period means that you should be reviewing your statements, paying close attention to any red flags, and ensuring that you are scheduling periodic meetings with your advisor to discuss your investments. Any concerns that arise should be addressed immediately to prevent a lapse of the limitation period.
Some common red flags to watch for:
- Unregistered individuals and firms. Use the National Registration Search (NRS) to check registration.
- Guaranteed returns. All investments come with risk. There is no such thing as a completely “risk-free” investment.
- Unrealistic returns. If an investment looks to good to be true, then it probably is.
- Insider information. Trading on insider information is illegal, and you will place yourself at risk if you invest in an opportunity based on “exclusive” information that someone claims to have.
- Lack of documentation. Always request periodic statements of your accounts and ensure that there is a paper trail for every transaction.
- Overly complex strategies. Beware of individuals who may be seeking to confuse you with complex strategies. A licensed professional will always be able to explain clearly what they are doing.
- Solicitations by phone, email, or social media. Fraudsters may be posing as professional advisors to promote their schemes. Always check registration.
As a general precaution, if you notice anything with your accounts that are abnormal or if there is anything that you do not understand, then you should always reach out to your advisor for clarification. Earlier is always better.
If you have suffered losses as a result of mismanagement or wrongdoing by someone else, the Investor Protection Clinic at Osgoode Hall Law School provides free legal advice to people who believe their investments were mishandled and who cannot afford a lawyer. Please contact us for assistance. The Clinic is also a Living Research Lab and you will be asked to provide your informed consent to be a participant in the research.
Legal Limitation Periods Across Canada
| Basic Limitation Period | |
| Alberta | 2 years |
| British Columbia | 2 years |
| Manitoba | 2 years |
| New Brunswick | 2 years |
| Newfoundland and Labrador | 2 to 10 years (depending on the type of claim) |
| Northwest Territories | 2 to 10 years (depending on the type of claim) |
| Nova Scotia | 2 years |
| Nunavut | 1 to 10 years (depending on the type of claim) |
| Ontario | 2 years |
| Prince Edward Island | 1 to 10 years (depending on the type of claim) |
| Québec | 3 years (claims against municipalities are subject to a six-month limitation period) |
| Saskatchewan | 2 years |
| Yukon | 1 to 10 years (depending on the type of claim) |
* Note that this chart is only intended to serve as a general guideline. Please check with the province or territory where you are filing to ensure that you are within the limitation period specifically applicable to your claim.
Disclaimer: This information does not, and is not intended to, constitute legal advice. This document is for general informational purposes only and may not constitute the most up-to-date information. The links to other third-party websites are only for the convenience of the reader and we do not endorse the contents of the third-party sites.