The Canadian Investment Regulatory Organization (CIRO) is being called out for rushing consultation on its proposed fee model for investment and mutual fund dealers, for launching the consultation simultaneously with others, and for not providing the critical information needed to appropriately analyze the model’s impact on stakeholders.
The response from the Investment Funds Institute of Canada (IFIC) states that its members agree with the model for the most part but adds there are key points that must be addressed before the model is finalized.
“There is a lack of certain data from CIRO to support the proposed fee model, even though the consultation includes transparency as one of its guiding principles. IFIC cannot make final recommendations on potential adjustments to the model without seeing details about the figures and assumptions that went into the decision-making process,” they state. “IFIC was surprised to see that fees are likely to rise for 64 per cent of registrants, given that enhancing regulatory efficiency was one of the main goals when CIRO was created in 2023.”
The organization also asks the regulator to review definitions and make other elements of its calculation clear, as well. “For approved persons, IFIC members believe that only those who are client-facing should be included in the calculation of fees, while those who work in compliance or branch management should be excluded,” they write. (The model calculates fees for investment and mutual fund dealers based on revenue and the number of approved persons registered by each firm.)
IFIC is also asking CIRO to disclose the rates it will apply and clarify inconsistent information. Regarding the revenue tiers that will be used, for example, they point out that some references include the concept of scale while others refer to complexity. “If differentiated rates are being considered, the rates per tier should be disclosed and a public consultation should be held if material fee increases could result.”
The response concludes with a discussion about Quebec, saying there is great concern in the industry about the possible duplication of fees in Quebec. “IFIC recommends that the AMF (Autorité des marchés financiers) reduce its fees to reflect the oversight activities it is delegating to CIRO and that CIRO reduce its fees proportionally to the oversight activities that are already conducted by the CSF (Chambre de la sécurité financière),” they write.
“IFIC urges CIRO to accept their suggested changes and recommends holding a second consultation before the fee model is finalized.”
