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The Voice of Canada’s Investment Funds Industry

Embedded Commissions

Beginning in 2012, the provincial securities regulators that make up the Canadian Securities Administrators have been considering whether current compensation practices, particularly the payment of trailers, pose unacceptable levels of potential conflict of interest. The review started with a consultation paper 81-407 issued in December 2012. The CSA has narrowed its concerns to focus solely on trailing commissions, issuing consultation paper 81-408 on January 10, 2017 in which the CSA is seeking comment on the potential impact of banning trailing commissions altogether.

Some regulators, at the prompting of investor advocates, argue that mitigating conflicts is insufficient investor protection and that the only acceptable course is to avoid conflict altogether by eliminating the source. The industry takes the position that every form of compensation contains some potential for conflict of interest and that in order to preserve access to advices for as many investors as possible, investors should have choice in how they pay for their advisors’ services. IFIC has consistently argued that better courses of action are to provide investors with meaningful disclosure of any potential conflict to interest and to enforce current rules vigorously.


Economic Impact Assessment of Banning Embedded Commissions in the Sale of Mutual Funds - PwC

Text: Safeguarding Access to Financial Advice for Canada's Middle Class (June 15, 2017)

IFIC Submission – CSA Consultation Paper 81-408 – Consultation on the Option of Banning Embedded Commissions (June 9, 2017)

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IFIC CEO Responds to Release of CSA Consultation Paper on Embedded Commissions

CSA/SRO Compensation Surveys Fail to Justify Ban on Embedded Fees