IFIC, representing the investment funds industry, has advised Canadian regulators that it’s ready to discuss extending disclosure requirements to the full MERs of investment funds — a proposal known as CRM3.
A request to meet with regulators was made in a letter dated April 21, addressed to Canadian Securities Administrators chair Louis Morisset and the heads of the MFDA and IIROC.
“There is widespread agreement among regulators, investor advocates and the industry that CRM2 is a significant step forward in investor disclosure,” says Paul Bourque, IFIC president and CEO, in a statement. “One of the early successes of CRM2 is that client-advisor discussions are generating more questions about the full MER. Our members now are ready and willing to turn their attention to CRM3.”
In 2015, the MFDA consulted on a proposal to provide investors with personalized reports of what investors paid, in dollars and cents, to the fund manager. IFIC supported expanded disclosure in its response to the 2015 MFDA consultation, and suggested that research into investor and advisor responses to CRM2 would provide valuable insights that would help direct further disclosure.
The results of CSA’s research on CRM2 won’t be known for some years; however the industry suggests that development of CRM3 can move ahead in tandem with the CRM2 research.
“CRM3 will take some time to design and implement, and regulators can absorb and incorporate learnings from CRM2 as we work through new CRM3 rules together,” says Bourque.
The Canadian Council of Insurance Regulators is also considering expanded disclosure, which provides a window for securities and insurance regulators to benefit investors through better alignment of the information they receive on their investments.
“Canada has one of the best investor-centred disclosure regimes in the world,” says Bourque. “Full disclosure of the MER would make Canada the world leader.”