To help firms gear up for the final implementation of various new disclosure requirements as part of the Client Relationship Model (CRM2) reforms, the Mutual Fund Dealers Association of Canada (MFDA) has issued a notice detailing its responses to frequently asked implementation questions.
In a bulletin published Tuesday, the MFDA spells out its responses to questions on a host of technical issues related to the implementation of the CRM2 requirements, which are slated to be fully adopted by mid-July 2016. “The purpose of this bulletin is to provide additional guidance and clarification to [dealers],” it says.
The bulletin touches on a wide range of issues, from how to determine book cost in certain situations, to the timing of new reporting requirements. It also address issues such as the reporting of referral fees to clients, rebates, and various other issues associated with reporting charges and compensation to clients. And, the bulletin spells out how firms are to value investments such as GICs, annuities, and mortgages, that don’t trade in a secondary market.
Additionally, the FAQ provides guidance on best practices in certain areas. For instance, it notes that while firms aren’t required to disclose charges and compensation incurred by trades in products, such as segregated funds, that are not considered securities; it recommends, “In the interests of providing more fulsome reporting to clients, and where reliable data is available, we would encourage [dealers] to provide disclosure… in respect of non-securities investment products. Such disclosure will further assist investor decision-making and is consistent with the obligation of [dealers] to deal fairly, honestly and in good faith with their clients,” it says.