SEC May Sanction Operators over Complaint Management Framework


The Securities and Exchange Commission (SEC) has intensified efforts to implement the complaints management framework introduced last year, following slow compliance to the policy.

SEC had developed rules on complaints management in February 2015 as part of efforts to restore investor confidence in the Nigerian capital market.

The rules outlined a new and more responsive complaint management framework that requires SEC, Self-regulatory Organisations (SROs) and capital market trade groups/associations to establish fair, impartial and objective complaints management policies for the handling of investor complaints. This framework was expected to significantly improve dispute resolution within the market and ultimately reduce infraction rates as it streamlines the complaints management process.

However, the framework has not been complied with by market operators due to the inability of some trade groups to develop their respective complaints management policies and of the refusal of the operators to register with trade groups.

In order to fully implement the framework, SEC has directed all capital market operators who are yet to be registered with their respective trade group/association to do so on or before October 31, 2016 unfailingly.

The market regulator said failure to comply with the directive will attract appropriate actions.
According to the commission, the new directive followed resolutions at the recent Capital Market Committee (CMC) meeting in Lagos. SEC explained that it had been receiving the overwhelming majority of complaints from investors even when such complaints could be addressed more swiftly at trade group level.

But the need to overhaul the complaints management mechanism in the Nigerian capital market as provided the SEC Rules and Regulations, the commission decided to delegate key complaints management functions to market operators.

“This is to enable them play more prominent roles in the management and resolution of investor complaints. Empowering SROs and trade groups to handle and resolve investor complaints is in line with best practice from both emerging and developed markets,” SEC said.

However, a review of the framework’s implementation at the last CMC meeting revealed that a key constraint facing the trade groups is the non-compliance of some market operators who are yet to be registered with their relevant trade association.