Toronto-based Mutual fund dealer Quadrus Investment Services Ltd., expects to pay $8 million in restitution to clients who inadvertently paid higher MERs when they were entitled to lower-cost versions of their funds.

The Ontario Securities Commission (OSC) on Tuesday approved a no-contest settlement agreement with Quadrus, which self-reported an apparent compliance issue that resulted in certain clients owning higher-MER versions of its funds when they could have been in cheaper funds based on the size of their holdings.

OSC staff alleged that control and supervision inadequacies resulted in the clients paying excess fees.

As part of the deal with the OSC, Quadrus agreed to pay approximately $8 milllion in compensation to the affected clients. It also agreed to make a voluntary payment of $250,000 to the regulator, along with $20,000 in costs.

According to the settlement agreement, the issue came to light in the wake of the OSC’s first ever no-contest settlement, which was reached with several TD investment firms in November 2014. “Quadrus discovered the MER control and supervision inadequacy as part of a review of its internal practices and procedures prompted by the publication of a no-contest settlement agreement [with TD],” the settlement agreement says.

See: TD to repay $13.5 million to clients it overcharged

The agremeent with TD was the first use of a no-contest settlement by a Canadian regulator, which allows the firm to resolve an enforcement case without admitting to any wrongdoing. The case with Quadrus was also resolved on a no-contest basis.

According to today’s settlement agreement, there was no evidence of dishonest conduct by Quadrus. The firm discovered and self-reported the issue; it also co-operated with OSC staff.