CSA’s new disclosure requirements

The CSA is implementing new requirements to ensure all investors receive essential information about the costs and performance of their investments.

The new requirements apply to all firms registered to deal in securities or act as portfolio managers. The requirements are set out in amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103).

The CSA are taking these important steps as research by the CSA, among others, shows that many investors currently do not receive this vital information. Providing investors with clear and meaningful information about the costs and performance of their investments will enable them to assess their progress toward their investing goals and the value of professional advice they receive.

Investors can expect new cost disclosure that includes: • at account opening, what product and service costs they can expect to pay; • at the time of a transaction, the transaction cost and any deferred cost; and, • annually, a summary in dollar terms of what they were charged and any other fees paid to the firm, such as trailing commissions and commissions on bond trades.

Investors can expect a new annual investment performance report that includes: • how much they have contributed and what it is worth as of the report date; • deposits and withdrawals for the past year and since their account was opened; and, • percentage returns for their account over one, three, five and 10 years and since it was opened.

The new requirements under NI 31-103 also include enhancements to account statements.

The amendments will take effect on July 15, 2013, to allow time for ministerial approvals that are required in some jurisdictions. They will then be phased-in over three years, so that firms can develop, test and implement the necessary systems, as well as compile the information they will need in order to generate the new reports to clients.

Also read:

OSC seeks comment on CSA discussion paper

CSA proposes framework for shareholder rights plans

CSA seeks comment on early warning reporting

Staff

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