On June 3, the Ontario Securities Commission (OSC) adopts amendments to National Instrument 81-105 Mutual Fund Sales Practices.
The Amendments aims at prohibiting ‘the payment by fund organizations of upfront sales commissions to dealers, which will result in the discontinuation of all forms of the deferred sales charge option (‘DSC option).’
The proposed changes were first announced by the Canadian Securities Administrators. The OSC complete ban of DSC option comes in response to industry participants’ vigorous support to the proposal.
The Amendments address the conflict of interest that arises from the payment of the upfront sales commission by fund organizations to dealers for mutual fund sales associated with the DSC option that can be detrimental to investor interests.
The Amendments are subject to the Minister of Finance approval before implementation and are scheduled to come into force on June 1, 2022.