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CSA CP 81-408 Embedded Commissions
Letter Summary:
The Consultation Paper seeks input on:
• the potential effects on investors and market participants of discontinuing embedded commissions, including on the provision and accessibility of advice for Canadian investors, and business models and market structure;
• potential measures that could assist in mitigating any negative impacts of such a change, if a decision is made to move forward; and
• alternative options that could sufficiently manage or mitigate the identified investor protection and market efficiency issues.
Overview of the Council’s Comments:
[N.B. The comment letter is 26 pages long, answers 36 questions from regulators and provides fairly detailed comments on the specific views of the council. Thus, for a more comprehensive perspective, please refer to the letter directly].
The council generally supports the proposals in the Consultation Paper which appear to be evidence driven as a result of thoroughly studying embedded commissions and making appropriate recommendations based on the research data. It reminded the CSA that is important to set finite periods for determining next steps in implementation. Also, in implementing these proposals, the CAC believes that addressing conflicts of interest, improving disclosure of fees, advisor’s education, deterrent enforcement measures and focusing on the end investor’s interest at all times, are paramount.