Bye Bye DSCs!

OSC joins other provincial regulators in banning the controversial fees in mutual funds 

Ian Tam, CFA 11 May, 2021 | 1:59AM
Facebook Twitter LinkedIn


Last Friday, the Ontario Securities Commission (OSC) announced that it would join other provincial regulators in banning the use of deferred sales charges (DSCs) for mutual funds, effective in June 2022. From Morningstar’s perspective, this is welcome news and in line with our mission of empowering investor success.

DSCs are a form of commission paid to advisors by investors when the units of the fund are sold before a set holding period (usually 5 to 7 years). The approach was used for mutual funds sold to individuals with lower starting amounts and advertised with no up-front commissions paid by the investor. The issue arose when an investor decides to sell the fund prior to the end of the required holding period, triggering a charge of upwards of 5% of assets. On the other side of the coin, advisors are paid up-front commissions by fund companies for placing clients in DSC funds. This questionable practice leads to less than ideal outcomes for a subset of unknowing investors.  

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

Want More Actionable Content In Your Inbox?

Sign Up For Our Newsletter Here

Facebook Twitter LinkedIn

About Author

Ian Tam, CFA  is Director of Investment Research at Morningstar Canada. 


© Copyright 2021 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies