The Investment Funds Institute of Canada (IFIC) has proposed measures as an alternative to the ban on embedded commissions that is currently being considered by securities regulators.
In a statement issued June 9, IFIC said that its proposals address the harms identified by the Canadian Securities Administrators while at the same time allowing Canadians to continue to choose to pay investment fund dealer fees indirectly through embedded commissions.
Capping or standardizing commissions
IFIC's proposals include: “capping or standardizing embedded commissions; ensuring that funds that include a payment for advice are only available through channels where advice is permitted; instituting guidelines for the sale of DSC funds; expanding personalized disclosure provisions to include fees paid by the investor to fund managers and describe how trailing commissions that have been paid would compare to other similar funds in the category; and increasing transparency through simplified pricing, naming conventions, and dealer disclosure of client service entitlements and fees, including trailing commissions.”
Availability of investment advice
Paul C. Bourque, IFIC president and CEO, commented, "A prohibition of embedded commissions will reduce the availability of investment advice for mass-market households with smaller amounts to invest. This unintended consequence will have significant long-term impacts on Canadians' ability to plan and save for retirement."