The Canadian Foundation for Advancement of Investor Rights (FAIR Canada) is calling for the industry to provide relief to retail investors during the pandemic by stopping deferred sales charges (DSCs) and charges for transfers between funds, as well as relieving margin loans.
DSC mutual funds and segregated funds are “particularly harmful to investors who must access their cash,” said Ellen Roseman, co-chair of FAIR Canada, in a release on Thursday. “Investors should not be constrained by early redemption penalties or compelled to pay excessive fees to transfer their investments between funds.”
With their conflicts and “excessive, hidden fees,” DSC funds are “even more egregious at a time when many Canadians need urgent access to their money,” FAIR Canada said in the release.
The organization also called for relief from margin loans.
“The risks of leveraged sales of mutual funds in particular have now crystallized with the market crash this month,” said Ermanno Pascutto, executive director at FAIR Canada, in the release. “The thousands of retail investors who followed their investment advisor’s recommendation to borrow money to invest are now faced with substantial losses and in some cases margin calls that will make their difficult financial situations even worse.”
FAIR Canada urged the industry to do what’s right for clients.
“It’s now time for the financial services industry to take a long-term enlightened view and act in the best interests of their clients,” Roseman said in the release. “The industry will benefit in the long run.”