Canadian Fund Firms and Dealers Ignore New Sales Regs
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Spot reviews by provincial securities commissions in Canada have found that some mutual fund companies and dealers are ignoring recently enacted sales practice rules.
Last May, national regulations went into effect banning such practices as allowing fund companies to pay for dealers' marketing campaigns. The rules also eliminated sales-incentive programs that offered lavish trips.
"It appears that there are companies with virtually no policies in place regarding sales practices," says Elle Koor, head of the sales compliance office at the Ontario Securities Commission.
Koor adds that other firms seem to be struggling with the interpretation of the rules.
The fund-sales rules were put into place after several years of bitter debate between regulators and representatives of the mutual fund industry.
The Canadian Securities Administrators, comprised of the heads of all provincial commissions, plans to issue a formal report identifying which firms have not met the rules. That report had not been released at RR press time in mid-January. If bad publicity doesn't work, the commissions have threatened to take enforcement action.
