Introducing more stringent cost reporting requirements for the fund industry, ensuring compliance with the ban on certain embedded fees, and implementing a new industry self-regulatory organization will be a major focus of the Ontario Securities Commission (OSC) in the coming year.
The regulator has publicly published its draft priorities for the financial year ending March 31, 2024, containing a long list of initiatives.
Among the most important issues, the document indicates that in April 2023 there will be a proposal to introduce disclosure requirements for reporting of total costs, which will aim to expand and standardize the information disclosed by investors from investment funds and separated funds.
Additionally, the OSC has signaled that it will focus on enforcing compliance with the spirit and letter of the prohibition on deferred sales structures (DSC) and trailer fees for fulfillment-only companies.
“It is critical for the OSC to quickly review emerging practices that may circumvent the policy intent of the bans,” the regulator said in the draft.
To this end, it will monitor compliance with the new requirements and, in particular, review “industry practices involving the use of a master distributor model and/or the use of dealer chargebacks that raise conflict of interest concerns.”
The bill states that industry firms are expected to comply with the new rules and “adopt dealer compensation that enables dealers to provide unbiased advice to investors.”
It also said the new SRO, which will be created by the merger of the Canadian Mutual Fund Dealers Association (MFDA) and the Investment Industry Regulatory Organization of Canada (IIROC) by the end of this year, is on track.
Over the coming year, the OSC will work with the rest of the Canadian Securities Administrators (CSA) to launch a new oversight model for the new SRO, enabling streamlined registration of dual-platform dealers and representatives – and that they will begin work to consider expanding their mandate to include other categories registrations (such as portfolio managers and exempt market dealers).
In addition to these policy priorities, the regulator’s agenda includes a long list of other items, including efforts to strengthen issuers’ ESG disclosure requirements, improve board diversity and improve redress mechanisms at the Ombudsman for Banking Services and Investments (OBSI).
“The draft priorities mark the first time our new organizational and governance structure is reflected in our plans and outline the approach we will take to address the regulatory, economic and technological environment in which OSC operates,” OSC CEO Grant Vingoe said in a statement. .
“Providing strong investor protection remains a core value of all the initiatives and actions we take as we continue to streamline regulation and implement our expanded mandate to promote competition and support capital formation,” he added.
You can comment on the project until December 22. Any changes to the agenda will be reflected in its final priorities, which will be published in spring 2023.
