1. The coming into force date of the requirement for registered dealers and registered advisers to deliver reports on charges to clients and on investment performance will remain July 15, 2016. However, firms that report for the calendar year 2016 will not be required to include comparative data from 2015 in their investment performance reports. They will be able to base their first investment performance reports on 2016 information alone.
But the regulator did wiggle a little on this year’s deadline:
2. The CRM2 Amendments applicable to registered dealers and registered advisers that are currently scheduled to come into force as of July 15, 2015 will instead come into force as of December 31, 2015.
3. The definition of “book cost” will not change. Registered firms that wish to provide tax-adjusted cost information to their clients can do so as supplementary information.
IIAC has provided Advisor.ca with Amsden’s response to CSA’s letter:
1. We appreciate the CSA’s change to the July 15, 2015 implementation dates to align to a calendar year. Clients expect reporting changes to take place at period-ends and many investors meet with their advisors early in the calendar year when clients do much of their financial planning, make RRSP contributions and prepare to do their taxes – this is a good time for advisors to explain or answer questions about the changes. The adjustment also helps address the delay in finalizing the regulations for 2015: the rules were approved last week.
2. We think investors would prefer to receive book cost information that can be used for both securities regulatory and tax purposes. Many clients have received book cost information for their investments for a good number of years and they use it to get a good idea of how well an individual security holding is doing by comparing the security’s cost to its current market value. Book cost, which is similar and sometimes identical to tax cost, is also an important factor clients use to decide when to sell a security to realize capital gains.
Book cost that currently reflects tax elections clients had asked for (for example, when the $100,000 capital gains election was eliminated in the 1990s or when a deceased client’s securities are rolled over to a spouse) appear not to meet the new book cost definition. We will work with tax and securities authorities, and with accounting professionals, to address investors’ needs.
3. The July 15, 2016 CRM2 annual performance report and fee report requirements remain unchanged. The changes announced by the CSA provide more time in 2015, which is much appreciated, but the overall time allowed remains the same. What this means is that investment dealers that want to provide the calendar-year reports or members think make sense for clients must still be ready to implement six and a half months earlier than the implementation time allowed.
Firms that can’t safely speed up implementation will be forced to mid-year 2016 to mid-year 2017 annual reports, at least to start. With the final rules announced last week, and the CSA answer on matters not addressed in the rules received [January 28], it is now easier for planning to continue. IIAC members will continue to work with interested parties towards a smooth effective implementation.