MFDA issues update on total cost reporting

If you’re an MFDA advisor, your regulator isn’t yet ready to implement total cost reporting. Further consultation and research is needed before moving forward with the initiative, says the MFDA in a bulletin.

Last April the MFDA published a consultation paper on expanding cost reporting, which would apply to mutual funds, ETFs, labour sponsored funds and commodity pools. In the paper, the MFDA provided reporting examples, with costs that included management fees and transaction costs.

Read: Move over CRM2: MFDA proposes total cost disclosure

In the bulletin, the MFDA summarizes the comments it received. As it continues to work on total cost disclosure, coordination between regulators and stakeholders will be important, the SRO says, as will market research on such things as methods for disclosure and calculation—suggestions made in comment letters to the paper. Comments received also suggested quantifying the impact of CRM2 before moving forward.

The paper’s disclosure examples were critiqued by commenters for being unnecessarily complex in some instances and duplicative where the example included deferred sales charges. In the bulletin, the MFDA notes that CSA’s proposed ban on those charges would simplify the given example.

Commenters also noted that extensive programming and systems changes would be required to meet any expanded cost disclosure requirements, requiring a transition period of about three years.

To advance the discussion on total cost reporting, the MFDA says in the bulletin that it will share results of the April consultation paper with other regulators.

Read the full MFDA bulletin.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.