IQON Financial Inc. representatives have received an exemption from the prohibition against paying commission/fee rebates to clients who switch investments from third party mutual funds to mutual funds managed by an affiliate, namely McLean Budden Funds and C.I. Funds.
Sun Life Assurance Company of Canada controls approximately 56% of McLean Budden and 34% of C.I. Fund Management Inc. It also indirectly owns 51% of the voting shares of IQON. Therefore, the sales practices rule prohibits reps from paying proprietary rebates to clients who are switching from third party funds to MB Funds and C.I.Funds.
The firm says that the decision to pay proprietary rebates will be made by the reps based on the best interests of the particular client; and reps are not required by IQON or any of its affiliates to sell MB Funds or C.I. Funds to clients and have no quotas.
The OSC provided the relief, as long as:
- IQON and the reps comply with the informed written consent provisions of the sales rule;
- the reps advise each client in advance that any rebate will be available to the client regardless of whether the redemption proceeds are invested in an MB fund or C.I. fund or a third party fund (to a maximum of the commission earned by the rep on the purchase), and will not be conditional on a purchase of securities of the MB Funds or C.I. Funds;
- reps are not and shall not be subject to quotas (either express or implied);
- the amount of the rebate that is borne by a rep is determined by the rep and the client; and
- the reps that pay the rebates are not reimbursed by IQON or any of its affiliates.
http://www.osc.gov.on.ca/en/Regulation/Orders/2003/ord_20030718_215_iqonfinancial.htm