CSA 95/02 - Mutual Fund Sales Incentives Point-of-Sale Disclosure Statement [CSA Notice - Lapsed]

Published Date:	1995-01-20
Effective Date:	1995-01-13

In August 1991, the Investment Funds Institute of Canada (IFIC) issued its report on mutual fund sales incentives (the IFIC Report). The IFIC Report was followed by the release, in October 1991, of the IFIC Code of Conduct (the IFIC Code) dealing with sales incentives.

The IFIC Code required enhanced disclosure of sales incentives offered as compensation for sales of mutual fund securities by way of a summary on the inside front cover of the fund prospectus and a full and complete description of all sales incentives in the body of the prospectus, indexed for reference purposes in the prospectus table of contents. The IFIC Code also required that investors in mutual funds be provided with a separate point-of-sale disclosure statement at the time of purchase of mutual fund securities advising investors of the type of sales incentives applicable with respect to the purchase.

Subsequently, the Canadian Securities Administrators (the CSA) published a notice dated January 29, 1993 (the January Notice) in which the CSA said that they planned to implement the requirements established in the IFIC Code with respect to sales incentive disclosure by way of amendments to the relevant policy statements. The January Notice indicated the CSAs expectation that industry participants would comply with the recommendations in the IFIC Code relating to enhanced prospectus disclosure of sales incentives and delivery of a point-of-sale disclosure statement.

The CSA are of the view that the generic nature of the point-of-sale disclosure statements which have been provided by industry participants to date does not convey sufficient meaningful information to the investor to justify the additional level of expense in the distribution process. Therefore, the CSA wish to announce that, pending the completion of the overall review of the regulation of investment funds, which was announced by the Chairman of the OSC in February 1994, the CSA do not expect industry participants to provide a point-of-sale disclosure statement as originally contemplated in the January Notice.

For further information, please contact any of:

Robert Bouchard
Deputy Director, Corporate Finance
The Manitoba Securities Commission
(204) 945-2548

Marguerite Child
Senior Financial Policy Analyst
Policy Department
Alberta Securities Commision
(403) 427-5201

Susan Wolburgh Jenah
Deputy Director, Policy
Corporate Finance
Ontario Securities Commission
(416) 593-8245

Wayne Redwick
Deputy Superintendent
Corporate Finance
British Columbia Securities Commission
(604) 660-4800

Johanne Duchesne
Deputy Director, Financial Operations
Commission des Valeurs
Mobilieres du Quebec
(514) 873-5326

Lata Casciano
Policy Advisor
Policy and Legislation
British Columbia Securities Commission
(604) 660-4800


January 13, 1995