Canadian securities regulators plan to look at whether they need to intervene to resolve regulatory concerns with the current cost structure of investment funds.
Speaking at OSC Dialogue 2012 in Toronto Tuesday, Rhonda Goldberg, director of the Ontario Securities Commission’s investment funds branch, provided a preview of an upcoming consultation paper from the Canadian Securities Administrators (CSA) that will examine issues related to investment fund fees.
Goldberg says that the forthcoming paper, which is expected to be published by the end of the year, will look at whether there are regulatory responses, beyond disclosure, that are necessary to ensure that investors are being treated fairly, and to foster market confidence. She explains that it will spell out some of the regulatory issues surrounding fund fees — such as the lack of investor understanding of those fees, the potential conflicts posed by embedded compensation, and the allocation of costs.
It will survey the landscape of reforms being taken in other jurisdictions to deal with similar issues, and set out a range of options for the CSA to consider — stretching from further disclosure, all the way to more direct intervention, such as banning third-party commissions. The paper will set out the full gamut of regulatory alternatives, Goldberg suggests, in order to explore possible policy options.
Indeed, as with the CSA’s recent paper on fiduciary duty, the paper on fund fees will represent a starting point for discussion, Goldberg notes. She also stresses that regulators intend to consult broadly on these issues, and that they plan to hold a roundtable in the new year to discuss some of the issues raised by the paper.
She also notes that any policy response will not be limited to mutual funds specifically, but would aim to address all comparable products that have the same regulatory concerns.