The Financial Services Regulatory Authority of Ontario (FSRA) launched a public consultation for a period ending July 26, 2024, on proposed Rule 2024 – 002 – Total Cost Reporting (the Proposed Rules) that will affect how insurers report segregated fund investment products to clients.
The Proposed Rules would require insurers to provide customers with improved annual statements about the performance and embedded costs and fees associated with owning seg funds. If approved, the approach to disclosing total costs and fees will become consistent for all segregated fund issuers.
The objective of this consultation is to obtain feedback from stakeholders, including insurers and investors.
If the Proposed Rule is adopted, the changes would be effective for customer statements for the year ending December 31, 2026, in early 2027. Under the Proposed Rules, statements issued to investors by insurers will have to include information such as:
- the total cost of investing, including ongoing embedded fees such as management expenses and trading expenses;
- additional information on the segregated funds’ investment performance;
- a customer’s right to guarantees under their segregated fund contracts and how certain actions might affect their guarantees; and,
- information to more easily allow customers to compare the cost of owning segregated funds with the cost of owning other investments.
Rule 2024 – 002 – Total Cost Reporting is available for download from the website of the Financial Services Regulatory Authority of Ontario.
For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.
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