The Mutual Fund Dealers Association of Canada (MFDA) is continuing to consider expanded cost reporting for investors, which would capture fund management fees and operating costs alongside the dealer costs that are currently reported under the client relationship model (CRM2) reforms.
In April, the MFDA published a paper to promote further discussion of expanding cost reporting requirements to investors. The proposal has been dubbed CRM3 as it would represent the next iteration of the cost disclosure requirements adopted with the implementation of CRM2 in 2016.
On Wednesday, the self-regulatory organization (SRO) published a summary of the submissions it received in response to the discussion paper and next steps.
In general, the consultation found support for the basic idea of expanding cost reporting, but there were concerns raised about levelling the playing field with competing products (such as banking and insurance products), ensuring a consistent disclosure methodology, avoiding needless duplication, and various implementation issues.
“Total cost reporting, provided on a consolidated basis, will be more helpful to investors, and coordination between regulators and stakeholders will be an important part of exploring options and developing potential future directions for this initiative,” the MFDA says in a bulletin. The SRO also indicates that it sees the need for investor research to examine details such as disclosure options and calculation methodologies.
“We agree that reporting should be simple, clear and concise, and should allow an investor to easily understand account performance, and costs of investing, in conjunction with their investment objectives. The comments and alternative examples submitted were appreciated and will be helpful when considering potential revisions,” the MFDA says.
The MFDA “will be sharing the results of this consultation with other regulators for the purpose of advancing the discussion on this initiative, exploring the viability of available options in conjunction with input received during the consultation, and considering implementation and other related matters,” it says.