Following a ban in June 2023 on new sales of segregated funds with deferred sales charges (DSCs), a regulatory review in Ontario has found its insurance industry to be largely compliant with the ban.
The Financial Services Regulatory Authority of Ontario (FSRA) reviewed 54 information filings from 14 insurers in 2023, finding the companies complied with the DSC ban, as well as with prohibitions against adding DSC options to existing seg fund contracts and making an existing DSC less favourable to a client.
“Consumers shouldn’t have to pay to withdraw their own money, and that’s why we banned deferred sales charges,” said Huston Loke, executive vice-president of market conduct with FSRA, in a release. “I am pleased to report that, based on the filed information, insurers are complying with the ban on deferred sales charges in new segregated fund contracts.”
Earlier this year, the regulator required insurers to remove DSCs as an option from existing segregated fund contracts if that change were possible. In cases where the DSC option can’t be dropped, insurers must provide investors with disclosure to help them determine whether to continue making deposits.
FSRA further required companies to provide investors with disclosure about their sales charge options for seg fund contracts when the DSC is eliminated.