Insurance regulators expect the industry to stop selling new segregated funds with deferred sales charge (DSC) structures after May 31, even in provinces that have yet to announce their own regulations.
“Although some jurisdictions may not have issued communications specific to DSCs and the June 1 ban, [Canadian Council of Insurance Regulators] and [Canadian Insurance Services Regulatory Organizations] members expect industry to comply with the national policy direction,” CCIR policy manager Tony Toy wrote in an email to Advisor.ca.
On Wednesday, Ontario Finance Minister Peter Bethlenfalvy approved the ban on DSCs on new individual seg fund contracts, effective June 1. Quebec’s Autorité des marchés financiers published its proposed ban for public consultation in December with comments due Jan. 31.
A Canada-wide ban was proposed in 2022 by the CCIR and the CISRO over concerns that regulatory arbitrage could be created by having one set of rules for mutual funds and another for seg funds.
“All CCIR and CISRO members support the policy direction regarding DSCs as released on Feb. 10, 2022,” Toy said.
Advisor.ca reached out to several provinces for a status update, and only Nova Scotia responded by press time.
“Nova Scotia supports the ban and will publish a bulletin to provide guidance to agents doing business in Nova Scotia,” Finance Department spokesperson Steven Stewart wrote in an email.