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Industry groups are divided on the prospect of regulators further expanding investment fund cost reporting requirements under the Client Relationship Model, an initiative that has been referred to as CRM3.

Securities regulators should put off their decision on whether to pursue expanded reporting until they’ve had a chance to assess the impact of other recent regulatory initiatives in this area, such as the CRM2 reforms and mutual fund point-of-sale requirements, the Investment Industry Association of Canada (IIAC) announced Friday.

The IIAC’s comments are in response to a recent discussion paper issued by the Mutual Fund Dealers Association of Canada (MFDA) on possibly expanding cost reporting requirements to capture costs such as management expense ratios.

“Canada’s securities regulators should hold off making any decision on mandating further cost reporting until the Canadian Securities Administrators (CSA) completes its comprehensive study on the impact of CRM2 and the point of sale amendments,” says Ian Russell, president and CEO of the IIAC in a statement. “With only two years’ worth of CRM2 reports having been provided to clients thus far, the initiative’s effectiveness has yet to be determined.”

The IIAC’s resistance to expanded reporting runs counter to the views of the Investment Funds Institute of Canada (IFIC), which supports the idea. In its submission to the MFDA, IFIC supports expanded cost reporting, which it believes will benefit investors.

“The industry has invested significant time and effort in providing enhanced disclosures under CRM2, and the next logical step in enhancing disclosure is to expand cost reporting. This will further enhance transparency to investors of the costs of owning investment funds,” IFIC states in its submission.

IFIC’s submission also proposes a calculation methodology for these sorts of disclosures, and provides the mutual fund industry group’s views on possible implementation issues and transition periods. Among other things, the IFIC submission recommends that regulators give the industry at least three years to implement expanded cost reporting, after rules in this area are finalized.

The Canadian Foundation for the Advancement of Investor Rights (FAIR Canada), an investor advocacy group, also supports the underlying idea of improved cost disclosure, but stresses that regulators should focus on eliminating conflicts, rather than relying on expanded disclosure to protect investors.

“FAIR Canada believes investors would be best served by eliminating conflict of interests rather than by more fulsome disclosure of the costs of conflicted compensation. The absence of conflicts of interest should be the goal,” the advocacy group states in its submission to the MFDA. “The focus should be on the best interests of investors, and improving investor protection and investor outcomes.”

In a staff notice published in June, the CSA endorsed the MFDA’s initiative. “We are supportive of the MFDA’s efforts to consider improvements to current disclosure to meet these objectives, and expect to engage more closely with the MFDA and IIROC to advance this important initiative,” the CSA states in the notice.