Regulators back down on trailer fee ban

Canadian Securities Administrators recommend a ban on DSC and beefed-up rules on conflicts of interest, but limit trailer-fee ban to discount brokers.

Jade Hemeon 21 June, 2018 | 9:00PM

In a long-awaited decision released today, Canadian securities regulators stopped short of an outright ban on trailer fees and other forms of embedded commissions associated with mutual funds.

However, the Canadian Securities Administrators (CSA), the national umbrella association for provincial regulators, proposed the abolition of two well-established investment industry sales commission practices.

It plans to ban all forms of the deferred sales charge (DSC) model, as well as the payment of trailing commissions to discount brokers and other dealers who do not make a "suitability determination" on client transactions or give advice, according to a staff notice entitled Status Report on Consultation on Embedded Commissions and Next Steps

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Jade Hemeon

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