fee-cost-dollar-signs

CIBC has reached an agreement with the OSC to compensate customers for collecting excess fees for certain mutual funds and investment services over 14 years.

Details of the compensation plan and the amount of money improperly collected was not disclosed and requires approval by the provincial regulator.

Read: Only 1 in 4 Canadian equity funds outperformed, says SPIVA

A hearing on a proposed settlement is scheduled for Friday.

According to an OSC statement, short-comings in systems and controls at CIBC World Markets, CIBC Investor Services and CIBC Securities Inc. resulted in some customers being overcharged from as early as Jan. 1, 2002 until as recently as Jan. 31, 2016.

The problem affects clients with fee-based accounts that held non-exchange traded mutual funds, ETFs, closed-end funds or structured notes with embedded trailer fees. These accounts were charged both the embedded fees and the account fee. Further, in August 2006, some clients weren’t advised that they qualified for a lower MER class of certain funds, and so “indirectly paid excess fees when they invested in the higher MER class of the same mutual fund.”

Read: Scotia agrees to pay $20M in client compensation

The OSC says its staff have found no evidence of dishonest conduct by CIBC, which self-reported the problem in March 2015.

It also says CIBC is taking corrective action to prevent a re-occurrence and has a plan to compensate clients and former clients.

Read: OSC seeks new members for Securities Proceedings Advisory Committee

 

Originally published on Advisor.ca
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