14 September 2018 13:30
Vic Fedeli, Finance minister of Ontario, says that his government does not agree with the proposed amendments by the canadian securities administrators (CSA) aimed at prohibiting deferred acquisition costs (FAR) and the commissions followed for the brokers. The province indicates that it will work with other provinces and territories and other stakeholders to ” explore other potential alternatives “.
In a press release published on 13 September, Mr. Fedeli pointed out that the amendments proposed by the CSA and the securities Commission of Ontario (OSC) are the result of a process started by the previous government.
“If they are made, as a mode of payment for the purchase of mutual fund that allows families and investors ontarians to save for their retirement and pursue other financial goals will be removed. Our government does not agree with this proposal in its current form “, he added.
Reduction of the investment choices viable
The body Independent Financial Brokers of Canada (IFB) has applauded the government’s position. The organization is concerned that the elimination of the commissions integrated brokers, including the BAF, reduces the choices of viable investment that are suitable to some consumers.
“The minister Fedeli has opened the door to a revision of the ban FAR and we look forward to working with the ministry of Finance of Ontario to find solutions that protect investors, and to encourage a competitive market efficient “, said the director general of the IFB, Nancy Allan.
IFB advocates an approach based on the principle of compensation, when combined with the prescriptive measures targeted to specific situations at high risk. “This type of approach would be a better option to survive in markets that are cyclical and constantly changing, while preserving investor choice,” says Ms Allan.
The consumer to choose
Advocis, the association of financial advisors of Canada, also welcomed the statement by the minister of Finance, the welcoming of having ” defended the right of the consumer to choose when it comes to financial advice “.
“Our intent as an association is to ensure that Canadians have equal access to financial advice from reliable,” said Greg Pollock, president and chief executive officer of Advocis. He added that the announcement by the government shows that it ” shares this vision, and intends to work with stakeholders to protect consumers “.
In a press release, Advocis notes that 80 % of canadian households have total assets of less than $ 100,000. “Restricting access to financial advice professionals would make it more difficult for the savings, investment and the achievement of financial goals of the public. The statement of the minister Fedeli strengthens its commitment to ensure fair and equal access to financial services for the consumers of Ontario. “
A difference significant
The law firm Osler, Hoskin & Harcourt has also commented on the statement by the minister of Finance of Ontario. “Public criticism of the government of Ontario in respect of the proposed amendments are a distance large compared to the historical practice which led to the regulatory bodies of the securities to undertake consultations on policies with a limited supply of the current government,” noted the firm.
The firm adds that this public criticism raises ” interesting questions regarding the functioning of the OSC and the process established by Canada for the development of national rules in the field of securities “.
The law firm also noted that in Ontario, ” the minister of Finance has the discretion to approve or reject any rule proposed by the securities Commission of Ontario or of the return for review “.
Consultation of 90 days
As a reminder, the CSA announced consultation on the proposed abandonment of the deferred sales charge and trailing commissions to dealers who do not evaluation of suitability (brokers), for a period of 90 days.
The proposed amendment includes the prohibition to the organizations of collective investment undertakings, the payments of commissions collected at the time of the subscription, which should eliminate the option of acquisition costs deferred under the CSA and to eliminate the payment of trailing commissions to the brokers shall make no assessment of the suitability.
Transition period of one year
The amendments will come into force one year after final publication, which ” should allow registrants sufficient time to implement the projects of change “, indicate the CSA.
The objective of the CSA is to ” mitigate conflicts of interest for brokers and their representatives to ensure that all conflicts of interest […] are treated to the best interests of the client or avoided “.
Thefinancial markets Authority has also announced that it is holding an information session about the October 3 open to all stakeholders.