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The Voice of Canada’s Investment Funds Industry

Media Release

Investment Funds Industry Ready To Tackle CRM3


Toronto, ON – April 25, 2017 – The Investment Funds Institute of Canada (IFIC) has advised Canadian regulators that its members are ready to discuss a plan for extending disclosure requirements to encompass the full Management Expense Ratio (MER) of investment funds – a  proposal known as CRM3. A request to meet with regulators was made in a letter dated April 21, 2017, addressed to Canadian Securities Administrators (CSA) chair Louis Morisset and the heads of the Mutual Fund Dealers Association (MFDA) and Investment Industry Regulatory Organization of Canada (IIROC).

“There is widespread agreement among regulators, investor advocates and the industry that CRM2 is a significant step forward in investor disclosure,” said Paul C. Bourque, IFIC president and CEO. “One of the early successes of CRM2 is that client-advisor discussions are generating more questions about the full MER. Our members now are ready and willing to turn their attention to CRM3,” said Bourque.

In 2015, the MFDA consulted on a proposal to provide investors with personalized reports of what the investor paid, in dollars and cents, to the fund manager. IFIC supported expanded disclosure in its response to the 2015 MFDA consultation and suggested that research into investor and advisor responses to CRM2 would provide valuable insights that would help direct further disclosure.

The results of the CSA’s research on CRM2 won’t be known for some years; however, the industry suggests that development of CRM3 can move ahead in tandem with the CRM2 research. “CRM3 will take some time to design and implement and regulators can absorb and incorporate learnings from CRM2 as we work through new CRM3 rules together,” said Bourque.

The Canadian Council of Insurance Regulators is also considering expanded disclosure, which provides a window for securities and insurance regulators to benefit investors through better alignment of the information they receive on their investments. “Canada has one of the best investor-centred disclosure regimes in the world. Full disclosure of the MER would make Canada the world leader,” Bourque added.

About CRM

CRM stands for Client Relationship Model – a series of initiatives that touch on every aspect of the relationship between investors and participants (including dealers and advisors) in the investment industry.

CRM1 came into force in September 2009. It harmonized registration requirements across the securities industry and required each firm to create one standard document – the Relationship Disclosure Document – that clearly sets out the key issues in the relationship, including the types of products that are sold, how suitability is determined, obligations of the dealer, responsibilities of the investor, compensation, conflict of interest, proficiency requirements and dispute resolution.

Under CRM2, investors are receiving new personalized annual reports that provide detailed information about the fees paid to their dealers to handle their accounts and how their investments have performed.

About Management Expense Ratios (MERs)

The MER includes the fund manager’s expenses and may include some fees paid by the fund manager to the dealer on the investor’s behalf. The asset-weighted average mutual fund MER in Canada is 2.02% (excluding GST/HST), which is comparable to other countries, such as the U.S. at 2.00%.

Mutual fund MERs vary based on the types of securities held in the fund and whether the MER includes a payment to the dealer on the investor’s behalf known as a trailing commission. The MER is listed in investment fund prospectuses and Fund Facts documents as a percentage of the fund’s total assets.

About IFIC

The Investment Funds Institute of Canada is the voice of Canada’s investment funds industry. IFIC brings together 150 organizations, including fund managers, distributors and industry service organizations, to foster a strong, stable investment sector where investors can realize their financial goals. By connecting Canada’s savers to Canada’s economy, our industry contributes significantly to Canadian economic growth and job creation. The organization is proud to have served Canada’s investment funds industry and its investors for more than 50 years.

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For more information:

Sara Clodman, Senior Manager, Public Affairs (sclodman@ific.ca │416-309-2317)