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CIRO – Policy Options for Leveling the Advisor Compensation Playing Field
Letter Summary:
CIRO is requested feedback on its position paper regarding policy options for leveling the advisor compensation playing field.
Currently, Approved Persons governed by the Mutual Fund Dealer (MFD) Rules of the Canadian Investment Regulatory Organization (CIRO) are permitted to utilize an approach where the compensation they have earned through a sponsoring Dealer Member is paid to a party other than themselves. Approved Persons governed by the CIRO Investment Dealer and Partially Consolidated (IDPC) Rules, are not permitted to use such an approach.
The position paper which analyses three policy options for leveling the Approved Person compensation playing field, sets out CIRO’s preliminary position on the option to pursue and requests public comment on which option they should pursue.
Overview of the Council’s Comments:
The CAC is generally hesitant to support the tax-driven regulatory reforms as contemplated in the Consultation. We are concerned that tax benefits to Approved Persons are being placed paramount to investor protection, and that any perceived benefits may not outweigh the cost to industry in compliance measures. We acknowledge however, that there is industry momentum to pursue changes in this area; considering this, we would prefer CIRO to work jointly with the CSA to establish the regulatory framework necessary to permit the Incorporated Approved Person approach in a fulsome manner at the outset.