The Canadian Foundation for the Advancement of Investor Rights (FAIR Canada) is calling on the industry to provide relief to retail investors during the pandemic by ending the use of deferred sales charges (DSC) and inter-fund transfer fees, and easing margin lending.
DSC mutual funds and segregated funds are “particularly harmful to investors who need to access their cash,” Ellen Roseman, co-chair of FAIR Canada, said in a statement Thursday. “Investors should not be constrained by early redemption penalties or forced to pay excessive fees to transfer their investments between funds.”
Due to their conflicts and “excessive hidden fees,” DSC funds are behaving “even more egregiously at a time when many Canadians need urgent access to their money,” FAIR Canada said in a statement.
The organization also appealed for exemption from margin loans.
“In particular, the risks associated with leveraged sales of mutual funds crystallized with this month’s market crash,” Ermanno Pascutto, executive director of FAIR Canada, said in the release. “Thousands of retail investors who followed their investment advisor’s advice to borrow money to invest are now facing significant losses and, in some cases, margin calls, which will further worsen their difficult financial situation.”
FAIR Canada urged the industry to do what’s right for customers.
“It is time for the financial services industry to take a long-term, enlightened view and act in the best interests of its customers,” Roseman said in the release. “The industry will benefit in the long run.”
