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The Authority terminates the offer management fee rebates

by

Alain Thériault

25 July, 2017 13:30

During a review completed earlier in the year, thefinancial markets Authority says they have detected a practical concern in a manager of mutual funds: management fee rebates.

She found the fact in the context of its examination of the practices of incentive compensation intended to influence the selection of a mutual fund recommended by a counselor. «The Authority has found only one situation where agreements management fee rebates were in effect. Following the intervention of the Authority, the investment fund manager has put an end to these agreements, » revealed the regulator in its latest bulletin Info-Compliance. She has not identified the manager.

Arrangements are non-compliant to ni 81-105

In the eyes of the Authority, such arrangements on the management fee rebates are granted to the advisers are not in compliance with ni 81-105 sales practices of mutual funds. According to the regulation, a fund manager may not provide an advantage pecuniary or non-pecuniary to a representative of a broker, except in certain cases.

The discount is not one of these cases, since the Authority notes that the agreements management fee rebates are available only for some advisors. «These representatives are therefore at an advantage compared to others because they can offer their clients discounts that other representatives may not offer,» she wrote. In addition, the advisor must maintain an overall level of assets for all of its customers in the funds for the discount to be offered to all its customers, which contravenes sub-paragraph 2.1(3)(b) of ni 81-105.

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