Investor advocacy group the Canadian Foundation for Advancement of Investor Rights (FAIR Canada) is calling on securities regulators to take action to help group RESP subscribers who may be unable to make scheduled contributions due to the effects of the Covid-19 outbreak.
In a letter to the Ontario Securities Commission (OSC), FAIR Canada asked the regulator to “implement urgent measures” to protect subscribers to group RESPs by imposing moratoriums on default and cancellation terms, and on penalties and forfeitures, due to missed contributions.
FAIR Canada also asked the regulator to issue guidance on the impact of the pandemic on conducting suitability assessments for new subscribers.
“Canadians and particularly low and middle-income Canadians are in financial crisis. They should be afforded relief during these extraordinary circumstances from potentially costly and punitive terms that could otherwise deepen their financial hardships,” the group said.
FAIR Canada said that because group RESP payouts are partially based on subscriber attrition, the regulators should pay special attention to group plan promoters and managers, and their customers, “during periods of broad financial distress.”
“We are asking that the OSC and CSA take this opportunity to exercise its mandate in investor protection by turning its attention to the most vulnerable Canadians with respect to highly complex and risky financial products and sales practices,” FAIR Canada said.