Regulators roll out 'best-interest' concept

Proposed reforms cut slack for full range of industry's business models.

Rudy Luukko 26 June, 2018 | 5:00PM

Trailer commissions for mutual funds are here to stay. But the broader investor-protection issues of conflicts of interest, suitability, advisor proficiency and relationship disclosure aren't going away either, according to one of the two major policy papers released on June 21 by the Canadian Securities Administrators.

Had they decided to ban all embedded commissions, not just deferred sales charges and trailers paid to discount brokers, the regulators would have completely eliminated the conflict that arises when advice-givers are paid by fund companies, rather than directly by their clients.

Instead, the industry's referees are taking a broader approach to improving investor outcomes. In doing so, they recognize that conflicts of interest are about much more than trailer commissions.

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About Author

Rudy Luukko

Rudy Luukko  Rudy Luukko is a freelance writer who contributes to Morningstar.ca on topics involving fund industry trends and regulatory issues. He retired in May 2018 from his position as editor, investment and personal finance, at Morningstar Canada, where he had worked since 2004. He has also worked as an editor and writer for various general, specialty and institutional media, and he has co-authored courses for the Canadian Securities Institute. Follow Rudy on Twitter: @RudyLuukko.

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