Regulatory Alerts2020-09-17
CSA Notice of Publication: Prohibition of Mutual Fund Trailing Commissions Where No Suitability Determination Was Required
The Canadian Securities Administrators have adopted amendments to Regulation 81-105 to prohibit fund organizations from paying trailing commissions to dealers who were not required to make a suitability determination for a client's mutual fund purchases. These changes also prohibit participating dealers from soliciting or accepting such commissions, effectively banning trailing fees for order-execution only dealers and those serving permitted clients who waived suitability requirements. The amendments to Regulation 81-105 come into force on June 1, 2022, while related exemptions from Fund Facts delivery requirements for switching to no-trailing commission classes take effect on December 31, 2020.
Share