coin stacks with letter dice - fees

As provincial regulators debate how best to address concerns with mutual fund fee structures, the Mutual Fund Dealers Association of Canada (MFDA) is soliciting feedback on expanding client cost reporting.

The MFDA published a discussion paper on Thursday that aims to “promote further dialogue, and to solicit feedback from all stakeholders, in respect of expanding cost reporting,” the MFDA says in a news release.

Specifically, the paper examines whether the disclosure that clients now receive should be expanded to cover costs that aren’t currently captured in the client relationship model (CRM2) requirements, which focus on charges that are paid to fund dealers.

According to the discussion paper, expanded reporting could include:

  • the impact of mutual fund expenses (not just embedded commissions);
  • transaction costs that are not currently reported (such as redemption fees and short-term trading fees); and
  • account administration costs that are not paid to dealers, but may be paid directly by clients for custody (and other administrative) services.

There are costs associated with owning investment funds that are not currently required to be reported under CRM2, the paper notes. As a result, “cost reporting to the client is incomplete and this may prevent clients from fully understanding their total costs of investing,” the discussion paper says.

“Providing investors with information to help them better evaluate their investments and to make informed decisions is a priority for the MFDA. With the publication of this discussion paper the MFDA hopes to advance the discussion regarding mutual fund cost reporting in Canada,” says Mark Gordon, president and CEO of the MFDA, in a statement.

Comments on the discussion paper are due by July 20.