Barbara Amsden is the managing director of the Investment Industry Association of Canada (IIAC). While in Montreal participating in a panel discussion on the disclosure of commissions, she said that the measure presents challenges but also offers opportunities and greater transparency. The Canadian Securities Administrators' (CSA) Client Relationship Model Phase 2 will come into force on July 15, 2016. It is usually known by its acronym CRM2, and financial advisors tend to identify it with the mandatory disclosure of commissions. On Dec. 9 SS&C Technologies, an IT solutions company for fund managers, organized a forum in Montreal to discuss the effects of CRM2.
A major part of the CSA's National Instrument 31-103 on Registration Requirements and Exemptions, CRM2 will create a number of obligations for managers and mutual fund dealers, as well as mutual fund representatives. One of the requirements is that the mutual fund dealer (or registrant) must provide clients with an annual summary of all the fees that have been charged to them as well as other forms of compensation that the salesperson has received. Investment fund managers will have to provide dealers and advisors with specific information on the amount of trailing commissions that the registrant has received on investments held in the client's account.
"For some, CRM2 may be eye-opener about the challenges ahead. Those who do not do it properly will not survive. For others, it will be seen as an advantage and an opportunity with clients," said Amsden to the hundred managers and compliance officers who attended the forum.
In her opinion, different players will face these challenges in different ways. Amsden believes that some members of the industry will provide more information than they did before, while others may offer less. Professionals who were not always in contact with one another, such as lawyers, accountants, managers and advisors, will be so now. "CRM2 has the merit of bringing all parties to work together," commented Amsden. Some of these discussions will include assessing the impact of new rules on taxation and the book value of the blocks of business, while others will inform advisors about compliance.