The insolvency of Markham, Ont.-based mutual fund dealer W.H. Stuart Mutuals Ltd. (WHS) in 2013 is going to cost the dealer industry about $8 million, according to a new report.

The industry contingency fund, the MFDA Investor Protection Corp. (IPC) published its annual report Wednesday indicating that dealers are facing an $8 million assessment to cover the payouts to clients in the WHS insolvency, and associated administrative costs.

Starting on Jan. 1, 2015, IPC members will be assessed $1.33 million over each of the next six years to recover those funds, the report indicates. This is in addition to the regular $2.9 million annual assessment required to build the fund’s resources to $50 million by mid 2018 (a plan that was put in motion back in 2010).

The report notes that, as of June 30, the fund had operating fund assets of $30.3 million, which is down by $5.0 million from the previous year. There were no new insolvencies during the past year, it says; however, the bankruptcy of WHS in 2013, has resulted in approved claims of $6.8 million (as of June 30). Provisioning for those claims, along with related expenses of $800,000, caused the $5 million shortfall in 2014.

Apart from the impact of the WHS insolvency, the fund’s operating expenses for the year were more or less unchanged at $1.1 million. And, it’s forecasting similar costs for 2015 (excluding any additional claims or expenses associated with the insolvency).