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CSA NI 31-103 Registration Requirements
Letter Summary:
The CAC applauds the CSA for proposing to mandate the disclosure of trailing commissions in dollars and some commissions in fixed-income transactions, specifically the dollar commissions paid to deal representatives. We agree with the CSA’s statement that investors want and are entitled to receive information about the charges related to their investments. In addition, The CAC is concerned that including client-name only holdings together in the same report with registrant-held securities may create an accurate impression for clients that all of their holdings included in the report are held with the same custodian, protected by IPF and that all disclaimers on the registrant’s report apply to all securities included in the report.
Finally, the CAC is supportive of the proposed additional disclosure regarding the unique costs related to scholarship plans, particularly those relating to the risks of such plans, including the requirements to disclose on the performance report how much money would be returned if the investor stopped paying into the plan (which would also be required to be explained at account
opening), and on the annual report on charges of any outstanding front loaded fees. As noted in our comment letter on the proposed amendments to the scholarship plan form, the CAC continues to question whether improved disclosure standards are enough to protect investors. Sales representatives for these plans are not held to a fiduciary standard and often meet only the lowest standard of investment industry licensing in Canada. It may be necessary, in order to promote investor protection, for these plans to be phased out altogether.
Overview of the Council’s Comments:
The CAC supports the CSA’s goals of providing investors with essential information regarding investment charges and investment performance to help them assess their investments. To that end, the CAC agrees with the general focus on providing information on charges generally at the time of account opening, and more specifically prior to the time a registrant accepts an instruction to purchase or sell a security and, thereafter, on an annual basis.