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February 2017
FAIR Focus
FAIR Canada's Monthly Review
Will 2017 be the year embedded commissions are banned?

The new year began with the much anticipated release of the CSA's Consultation on Banning Embedded Commissions. FAIR Canada has been advocating for the removal of embedded commissions from mutual funds since the CSA began its consultation in 2012. The organization maintains that removing embedded commissions is a crucial part of investor protection and essential for meaningful investor protection and market efficiency.  
We invite you to review FAIR Canada's past comments  on this important topic, and encourage you to provide your own comments to the CSA as part of the consultation. FAIR Canada will be involved in discussions on this issue and will submit formal comments to the CSA at the end of the consultation period.  
FAIR Canada wishes all of you a Happy New Year! We look forward to working hard on this and other initiatives in 2017 in order to help improve investor protection in Canada. 

The Team at FAIR Canada 
Marian Passmore, FAIR Canada's Director of Policy and COO, sat down with Amanda Lang on Bloomberg North to discuss banning embedded investment fund commissions, a proposal which the CSA just released. Passmore said that by banning embedded commissions the CSA can help to address the conflicted compensation structures which are pervasive in the investment fund industry and harm investors and market efficiency. Maureen Jensen, Chair of the OSC also spoke to Amanda Lang to discuss the CSA's consultation. Jensen stated that a proposed rule regarding embedded commissions could come within a year and that, other than banning, no credible alternatives have been provided to date.
FAIR Canada provided comments on the proposed amendments to MFDA Rule 1.2.5 (Misleading Business Titles Prohibited). The MFDA's minimum proficiency requirements for Approved Persons seeking to use the title "financial planner" is a positive step in furtherance of investor protection, however, on its own, is not enough. FAIR Canada strongly believes that what is urgently needed is a comprehensive and coordinated solution that focuses on consumers' needs and their capabilities. This includes a statutory best interest standard and the removal of conflicted compensation, including trailing commissions. By doing so, Approved Persons who hold themselves out to be "advisors" or "financial planners" will actually have a statutory obligation to act in their client's best interest.  Click here to read the full submission.
FAIR Canada is opposed to regulatory changes which grant retail investors easy access to alternative funds which are traditionally complex, illiquid and higher risk. In the absence of a best interest standard, which would ensure that such funds could only be sold to investors if that sale was in the investor's best interest, FAIR Canada does not support any measures permitting the sale of these funds to retail investors. Moreover, FAIR Canada calls on the CSA to present public research demonstrating why retail investors would benefit from being granted access to alternative funds. FAIR Canada also believes it is imperative that registrants receive specific training in alternative funds in order to ensure the registrants understand the structure, features and risks of alternatives before they can recommend the fund to a retail investor.  To read FAIR Canada's comment letter, click  here.
FAIR Canada calls on IIROC to work with other securities regulators expeditiously to prohibit discount brokerages (also known as order execution only (or "OEO") platforms from selling products with embedded trailing commissions before expending resources on regulating the tools that OEO firms provide. In order to regulate OEO firms, IIROC has revised the definition of "recommendation". FAIR Canada questions whether their revised definition is workable and recommends that a broad consultative process with all stakeholders be conducted, along with benchmarking to other leading jurisdictions, before making such as fundamental change to the securities regulatory framework. Finally, FAIR Canada recommends that IIROC make its past research on this important area publicly available including its 2013 survey, the 2015 Working Group and subsequent stakeholder consultations and makes suggestions for further research that is needed before making determinations about OEO tools for investors.  To continue reading click here .
FAIR Canada believes that a dealer member's duty to obtain best execution of client orders is a central tenet of investor protection and of the broader duty that we believe dealers should have to their clients - to act in their best interests. FAIR Canada is concerned that the Proposals would qualify dealers' duty of best execution by fundamentally changing the test of compliance with the duty. Therefore, in our view compliance with the regulations must be subject to close scrutiny and ongoing monitoring. FAIR Canada believes that the Proposed Amendments should include a dealer's effectiveness in obtaining best execution for clients as one of the tests of compliance. The Proposed Amendments should also require dealers to perform minimum standards of compliance monitoring and regular assessments of their effectiveness in obtaining best execution for clients and not simply how the dealer evaluates where its policies and procedures are effective. Finally, FAIR Canada believes that the Notice should explicitly address the impact of the Proposals on all stakeholders, and in particular, retail investors.  To continue reading click here .
The Canadian Foundation for the Advancement of Investor Rights (FAIR Canada) is a non-profit organization that acts as a national voice for consumers and retail investors in securities regulation. For more information about FAIR Canada, please visit our website at www.faircanada.ca.

We currently have an opening in Toronto to fill a multi-faceted role, acting as our Legal Counsel and Corporate Secretary and as Policy Analyst. The successful candidate will be an integral part of a small team working with our board of directors in a collegial and stimulating environment.

Applicants should have a strong understanding of securities regulation with 2 to 4 years of experience in this field. The position also requires exceptional research and analytical skills, strong organizational abilities, and excellent oral and written presentation skills. Fluency in French would be a significant asset.

Interested qualified candidates should email their resumes along with a covering letter and reference contacts to FAIR Canada's Director of Policy and Chief Operating Officer Marian Passmore at marian.passmore@faircanada.ca by February 15, 2017.

We thank all applicants for their expression of interest; however, only those candidates selected for an interview will be contacted.
Media FAIR in the Media
Wealth Professional - Investor rights group weighs in on proposed trailer abolition

Advisor.ca - 
Talk Versus Action on Embedded Commissions Ban

Financial Post - One step closer: Canadian securities watchdogs outline how ban on embedded fees might work 

The Insurance & Investment Journal - 
What does FAIR Canada want for Christmas? A best interest standard and an end to commissions

CBC News - Former branch manager at Wellington West Capital fined $30K by regulator 

Investment Executive - FAIR Canada calls for major changes in yearend wish list 
Events Events

Trending Trending
How Risky are your ETFs? It May be Hard to Find Out

CSA Releases Consultation on Banning Embedded Commissions

Another No-Contest Settlement
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