The Canadian Council of Insurance Regulators has published its proposed framework for providing point-of-sale disclosure to buyers of segregated funds, which allows less stringent delivery requirements than proposed by securities regulators.

The CCIR framework follows a similar effort from the Canadian Securities Administrators, which was released a couple of weeks ago.

In both cases, regulators are proposing the introduction of a simplified disclosure document that sets out the basic features of the fund being purchased, and requires that in most cases that disclosure is delivered at, or before, the client decides to purchase.

However, the insurance regulators’ proposed regime also contemplates less onerous delivery requirements than those advocated by the securities regulators. Notably, it would allow the sort of “access equals delivery” approach that some in the securities industry have sought, but that regulators have explicitly rejected.

According to the CCIR’s consultation paper, “A prospective contractholder may choose to receive the information folder either physically (in person, mail, or fax) or electronically (e-mail or viewed by consumer on-line). A prospective contractholder must be specifically directed or linked to the information folder if it is delivered electronically.”

Securities regulators have rejected the argument that simply linking to a document constitutes delivery. Notwithstanding the looser definition of delivery, the new document must be delivered in the same circumstances as that proposed by securities regulators — for all new purchases recommended by advisors, except money market funds and when the client initiates the transaction (in which case they can opt to receive the information along with the trade confirmation).

The draft framework is out for comment until Sept. 11. After that, it will be up to individual regulators, and in some cases governments, to implement the new standards.

IE