CSA proposed amendments to principal-distributor model
This submission addresses regulatory changes that directly affect how mutual funds are distributed, disclosed, and regulated in Canada.
Submission – OSC – CSA consultation – principal distributor model
Recipients
- Ontario Securities Commission (OSC)
- Autorité des marchés financiers (AMF)
- Canadian Securities Administrators (CSA) consultation teams
- attention to The Secretary (OSC) and Me Philippe Lebel (AMF)
Industry segments this resource supports
- Assets management
- Wealth management
Summary
In this submission, we provide feedback on the CSA’s proposed amendments related to the principal distributor model across several national instruments governing registration, mutual fund disclosure, investment fund operations, and sales practices. We support enhanced transparency and investor protection but raise concerns about proposed disclosure requirements within the annual report on charges and other compensation (ARCC). We argue that certain disclosures are better placed in prospectus and fund facts documents rather than in the ARCC, where they may confuse investors and not align with the report’s purpose. We also recommend a two-year transition period for implementing changes to NI 81 101 due to varying prospectus renewal schedules.
Why this matters: This submission addresses regulatory changes that directly affect how mutual funds are distributed, disclosed, and regulated in Canada.
Key takeaways
- SIMA supports amendments that improve investor protection, transparency, and fair practices in the mutual fund industry.
- SIMA agrees with new disclosure obligations in NI 81 101 and supports closing gaps related to deferred sales charge (DSC) options under NI 81 102.
- SIMA endorses amendments to NI 81 105 that prevent principal distributors from incentivizing representatives to favour certain funds within the same family.
- SIMA opposes adding relationship-based disclosures to the ARCC under NI 31103, arguing that such information does not relate to client -level costs and risks confusing investors.
- SIMA recommends placing relationship disclosures in the Simplified Prospectus, Fund Facts, or account-opening documents instead.
- SIMA warns that the proposed ARCC changes would disrupt implementation timelines and create compliance uncertainty for registered firms.
The submission encourages the CSA to reconsider the NI 31 103 amendments and maintain clarity in cost reporting.
