The Canadian Securities Administrators (CSA) says it is reviewing the practices of mutual fund companies that have principal distributors relationships with registrants to distribute their securities. The initiative is listed as part of the CSA’s 2022 to 2025 business plan. The CSA says it is beginning the process of assessing whether additional mutual fund sales practice rule modernization efforts are needed to improve investor protection.
The first phase of the CSA review includes surveying investment fund managers and principal distributors about the scope of their arrangements. The CSA says the survey for investment fund managers identified as using principal distributors was sent out in early September.
“The information obtained will provide a better understanding of sales practices and distribution structures,” they write in a statement announcing the commencement of the review effort.
Under the umbrella effort to improve investor protection, the CSA, in its business plan, says it will conduct targeted sweeps to ensure the implementation of client focused reforms. It also says it will continue the modernization of mutual fund sales practices.
The effort to review and modernize National Instrument 81-105 Mutual Fund Sales Practices, includes an effort to contemplate whether amendments are necessary in light of client focused reform initiatives, “including reviewing principal distributors’ practices, considering whether amendments are needed to clarify the circumstances in which a principal distributor model would be available, and whether such a model remains appropriate in light of the reforms,” they write.
The CSA says the review will provide a better understanding of sales practices and distribution structures.
“Ensuring the CSA has the information needed to determine whether further investment fund sales practice regulatory reform is needed to put investors’ interests first is an important piece of this work,” says CSA chair and chair and CEO of the Alberta Securities Commission, Stan Magidson.
