The Mutual Fund Dealers Association of Canada (MFDA) is proposing the first set of amendments designed to bring its rules into line with the Canadian Securities Administrators’ (CSA) latest Client Relationship Model (CRM) reforms.
The MFDA and the B.C. Securities Commission (BCSC) have published proposed amendments to the MFDA’s rules regarding relationship disclosure, and other rules, to reflect certain elements of the second phase of the CRM reforms (known as CRM 2), which are slated to come into effect on July 15, 2014.
The proposed amendments will revise the MFDA’s rules to mirror the CSA’s requirements by requiring that the upfront relationship disclosure provided by dealers to indicate whether the firm will be receiving trailer commissions; to require disclosure that the client might be required to pay deferred sales charges, and setting out the fee schedule that will apply; and, to specify that a reasonable estimate of fees or charges will be disclosed to the client if the actual amount is not known at the time of disclosure.
Additionally, the relationship disclosure will have to include a general explanation of how investment performance benchmarks might be used to assess the performance of a client’s investments, and any options for benchmark information that might be available to clients.
The CRM 2 amendments regarding cost and performance reporting disclosure were adopted by the CSA on March 28. Those amendments came into force on July 15, and various aspects of the requirements are subject to transition periods of one, two or three years. Now, the SROs have to revise their own rules to conform to the CSA’s requirements.
The proposed amendments were developed in consultation with the MFDA Policy Advisory Committee, and have been approved by the MFDA board. They are now out for a 60-day comment period.