The Canadian Securities Administrators (CSA) and the Canadian Council of Insurance Regulators (CCIR) recently published proposals that would enhance total cost reporting for investment funds and segregated funds (The Proposed Changes). The Proposed Changes aim to improve the transparency of total fees and costs paid by mutual fund investors and segregated fund holders.

Stakeholders are invited to provide comments in writing on The Proposed Changes by July 27, 2022.

The Proposed Changes include periodic reporting to clients showing the ongoing costs of owning segregated funds and investment funds. For securities investors, account statements would be expanded to include the fund expense ratio for each of the investment funds that the client owns, expressed as a percentage. Additionally, annual cost and compensation reports for securities investors would be expanded to include the total dollar cost of owning investment funds over the past year. For segregated funds holders, comprehensive reporting of this information would be included in a new annual report.

The Proposed Changes would leverage existing requirements for account statements and annual compensation reports, rather than requiring additional documents be sent to clients.

The proposals were jointly developed by the CSA, CCIR, Canadian Insurance Services Regulatory Organizations (CISRO), Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA). They reflect advance consultations with investor advocates and market participants, and draw upon behavioural insights and the results of testing sample documents with investors.

The Proposed Changes follow the work securities regulators began after the completion of the Client Relationship Model, Phase 2 (CRM2) project and recommendations published by the CCIR in earlier position papers.

  • The proposals for the securities sector are for amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) and related guidance. IIROC and MFDA rules would be amended to be uniform in substance with final amendments to NI 31-103.
  • The proposals for the insurance sector are for an Individual Variable Insurance Contracts (IVICs) Ongoing Disclosure Guidance, an enhanced disclosure framework for individual segregated fund contracts. The Guidance is designed to better harmonize the insurance sector and the securities sector. The CCIR expects that each of its member jurisdictions will adopt the framework by local guidance or, in certain jurisdictions, regulation.

The CSA and CCIR Joint Notice and Request for Comment of the proposed amendments and proposed guidance can be found on CSA members’ websites and on the CCIR website

For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.

This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.