“We want to strengthen investor protection by better informing investors and policyholders about the current built-in costs associated with owning mutual and separate funds, including the commission and the management commission. “Transactions,” said Louis Morissette, president of the CSA, president and CEO of the Autorité des marchés financiers (AMF).
In this way, clients could have access to periodic information on the value of these investment products.
Those who invest in the securities industry will receive a more detailed account statement, which will include the fund’s expense ratio for each investment fund they own, expressed as a percentage. The annual report on fees and other forms of compensation will now show the total value of holding investment fund securities in dollars over the past year.
For owners of individual funds, this information will be presented in detail in the new annual report.
Thus, the proposed amendments use the requirements of the current account statement and annual reporting of compensation, and will not require the submission of additional documentation to customers.
“Consumers will better understand the value of advising and managing assets, and will be able to evaluate and compare the effectiveness of individual funds and mutual funds,” said Robert Bradley, president of CCIR.
The projects were jointly developed by the CSA, CCIR, Canadian Insurance Regulators (CISRO), the Canadian Investment Industry Regulatory Organization (IIROC) and the Canadian Mutual Fund Dealers Association (MFDA).
They are pre-consulted with investor protection groups and market participants, and rely on the results of behavioral research and prototype testing of documents with investors.
They are the result of the work carried out by the securities authorities at the end of Phase 2 of the Client-Advisor Relationship Model (CRM2) project, as well as the recommendations published by the CCIR in its position statement.
“We urge registrars and insurers to consider reviewing their systems and expanding their planning as soon as possible so that they have all the resources they need to implement in a timely manner after final publication and ministry approval,” adds Luis Morisset.
The draft for the securities industry takes the form of amendments to National Instrument 31-103 Registration requirements, exemptions and current obligations of registrants and related instructions. The IIROC and MFDA rules would essentially correspond to the final version of these amendments.
As for the project for the insurance sector, it aims to develop a Directive on the continuous disclosure of information on certain variable insurance contracts, ie an extended disclosure regime for certain contracts with separate funds. This Directive aims to further harmonize insurance practices with securities practices.
A joint notice of CSA / CCIR consultations and proposed amendments and proposed guidelines are posted on the websites of the relevant CSA members and the CCIR website, respectively.