Regulators have granted relief to Berkshire dealers recently acquired by Manulife Financial allowing reps to pay commission rebates to clients that switch into funds within the Manulife family, subject to certain conditions.

The decision, reported in the OSC Bulletin, gives Berkshire Investment Group Inc. and Berkshire Securities Inc. relief from the part of the sales practices rule.

The rule prohibits sales reps from paying commission rebates to clients that switch into proprietary funds, but allows reps to pay rebates for switches between third-party funds.

The regulators granted relief from the rebate provision provided several conditions conditions are met.

The cost of the rebate must be borne by the sales rep, and not the firm.

Clients must be advised that any rebate offered in connection with a switch into Manulife funds will be available to them regardless of whether the redemption proceeds are invested in a proprietary fund or a third party fund.

The rebate must not be conditional upon the purchase of units of a proprietary fund.

Reps must not subject to quotas or incentives to recommend house funds.

As well, the amount of the rebate must be determined by the sales rep and the client.