Kenmar calls for earlier implementation of DSC ban

Investor advocate Kenmar Associates is calling on the Canadian Securities Administrators (CSA) to accelerate its forthcoming ban on deferred sales charge (DSC) funds.

In an open letter to the regulators, Kenmar asked the CSA to move the planned implementation date for a ban on DSCs — which is being enacted everywhere but Ontario — to March 2021 from the current date of June 1, 2022.

Calling the planned DSC ban “a long awaited positive for investor protection,” Kenmar argued that the current transition period is too long.

The investor advocate said that the distant implementation date leaves vulnerable investors exposed and discourages competition and innovation in the fund industry.

“The lengthy implementation deadline date for the DSC ban is clearly prejudicial to the public interest and should be reconsidered,” Kenmar said.

Kenmar argued that the industry has already had a long time to plan for the elimination of the DSC option, and said that accelerating the process “would demonstrate to Canadians that the CSA has a balanced approach to regulation that weighs both investor and industry interests.”

Absent an earlier implementation date, the group said that the CSA should take other steps to reduce risks to investors, such as reporting monthly DSC sales, carrying out enhanced compliance reviews and providing dealers with added guidance on documenting DSC recommendations.

“Kenmar believe these actions would significantly reduce the harm caused by the extended transition timeframes permitted by the CSA.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.