The Mutual Fund Dealers Association of Canada (MFDA) is contemplating a possible expansion of the cost and compensation reporting required under the second phase of the client relationship model (CRM2) reforms.
The MFDA on Friday published a bulletin soliciting feedback on whether the self-regulatory organization (SRO) should consider expanding the new cost reporting requirements — which are being imposed as part of the CRM2 reforms and will take effect in July 2016 — to include the costs imposed by fund managers.
Starting next year, fund dealers will have to provide clients with annual reports detailing the charges paid by the client, and compensation received by the dealer, over the previous 12 months.
The MFDA is now considering whether to expand the CRM2 reporting requirements to require the disclosure of other costs of owning investment funds that are not paid to dealers (and reps), "such as management fees, fund operating costs, redemption fees and short term trading fees," the MFDA bulletin says..
The idea comes in response to input MFDA staff have received from fund dealers, reps, and others, the SRO reports. Karen McGuinness, senior vice president of member regulation, compliance, at the MFDA, says that some dealers want expanded reporting because they believe that it is the right thing to do. "They want to give clients a complete picture of the costs they are paying," she says. "I think it is that simple."
The MFDA has not yet decided whether to pursue expanded disclosure requirements. "This consultation is preliminary in nature and is intended to promote further dialogue of the issues raised," the MFDA bulletin says, adding that the MFDA will be sharing the results of the consultation with other securities regulators.
Comments on the proposal are due by March 10, 2016.