The second phase of the Client Relationship Model (CRM) reforms are now in effect, although it will be three years until the most significant changes are fully phased in.

The CRM 2 reforms, which aim to enhance the disclosure of investment costs and improve performance reporting, among other things, officially began their three-year implementation period on July 15.

The Canadian Securities Administrators (CSA) says the amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) are now in effect, with key elements being phased in over three years to allow industry sufficient time to meet the new requirements.

For example, starting on July 15, 2014, firms will have to provide pre-trade disclosure of charges, and disclose their compensation from debt transactions in trade confirmations; in 2015, enhancements to client statements will be introduced, which will provide position cost information and market value under a set methodology; and, in 2016, firms will have to begin delivering annual reports on charges and other compensation and an annual investment performance report.

The CSA’s reforms apply to the firms under their direct supervision, such as exempt market dealers, scholarship plan dealers and fund managers. The self-regulatory organizations still have to produce their own rule changes, which are expected to impose equivalent requirements on investment dealers and mutual fund dealers, with similar timelines.

The regulators say that the amendments “ensure that all investors receive the same information about the cost and performance of their investments and that the same standard to disclose this information is applied to all firms registered to deal in securities or act as portfolio managers.”

These reforms are also significant given the ongoing debates about whether regulators should intervene with mutual fund fee structures, or to impose a fiduciary duty on financial advisors.

“Research shows that investors across Canada lack vital information about the cost and performance of their investments,” said Bill Rice, chair of the CSA and chair and CEO of the Alberta Securities Commission (ASC). “These amendments demonstrate the CSA’s commitment to arm investors with sufficient account information to make informed decisions about their investments.”