Canadian financial regulators propose full cost reporting for investment funds and segregated funds

MONTREAL, April 28, 2022 /CNW Telbec/ – The Canadian Securities Administrators (CSA) and the Canadian Council of Insurance Regulators (CCIR) today released proposals to improve the reporting of total costs for investment funds and segregated funds. These proposed amendments are intended to improve the transparency of the total fees and costs paid by mutual fund investors and segregated fund holders.

“The proposals are part of Canadian securities and insurance regulators’ harmonized response to concerns we have identified regarding current cost disclosure and product performance reporting requirements for investment funds and segregated funds,” said Louis Morisset, President of the CSA and President and CEO of the Autorité des marchés financiers. “We seek to improve investor protection by making investors and policyholders more aware of the ongoing costs of owning investment funds and segregated funds, which include management fees and trading fees.”

The proposals would include periodic reports to clients showing the ongoing costs of owning segregated funds and investment funds. For securities investors, account statements would be expanded to include the fund expense ratio for each of the investment funds the client holds, expressed as a percentage. In addition, annual reports on costs and compensation for securities investors would be expanded to include the total dollar cost of holding investment funds over the past year. For segregated fund holders, a full report of this information would be included in a new annual report.

The proposed changes would leverage existing requirements for account statements and annual compensation reports, rather than requiring additional documentation to be sent to clients.

The proposals were jointly developed by the CSA, CCIR, Canadian Insurance Services Regulatory Organizations (CISRO), the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA). They reflect prior consultations with investor advocates and market participants, and are based on behavioral insights and results from testing sample documents with investors.

The proposals follow work that securities regulators began after the completion of the Client Relationship Model, Phase 2 (CRM2) project and recommendations published by the CCIR in earlier position papers.

“We strongly encourage registrants and insurers to consider reviewing their systems and conducting advanced planning as soon as possible so that they are fully resourced for implementation in time, after final release and subject to ministerial approvals. required,” added Morisset.

“Consumers will better understand the cost of advice and asset management and will be able to evaluate and compare the performance of segregated funds and mutual funds,” said Robert Bradley, President of the CCIR. “As financial products intertwine and regulatory responsibilities overlap, by working closely and collaboratively, financial services regulators ensure that the fair treatment of customers across all industries is maintained. a big step towards implementing the recommendations of our position paper.”

Proposals for the securities industry are amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) and related guidance. The IIROC and MFDA rules would be amended to be substantially consistent with the final amendments to NI 31-103.

Proposals for the insurance industry include Continuous Disclosure Guidelines for Individual Variable Insurance Contracts (IVICs), an enhanced disclosure framework for individual segregated fund contracts. The Guide aims to better harmonize the insurance industry and the securities industry. CCIR expects each of its member jurisdictions to adopt the framework through local guidance or, in some jurisdictions, regulation.

Stakeholders are invited to provide comments in writing no later than July 27, 2022.

The CSA and CCIR Joint Notice and Request for Comments on the Proposed Amendments and Proposed Guidelines can be found on the CSA member websites and on the CCIR website.

About CSA

The CSA, the board of securities regulators of from Canada provinces and territories, coordinates and harmonizes the regulation of Canadian financial markets.

About CCIR

The CCIR is an intergovernmental association of insurance regulators. CCIR’s mandate is to facilitate and promote an efficient and effective insurance regulatory system in Canada to serve the public interest. CCIR members work together to develop solutions to common regulatory problems.

For media inquiries:

Canadian Securities Administrators
[email protected]

Sylvain Theberge
Financial Markets Authority
[email protected]

Russ Courtney
Financial Services Regulatory Authority of Ontario
(For English-related insurance – Toronto)

For investor inquiries, please contact your local securities regulator.

SOURCE Financial Markets Authority


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