TORONTO — The Ontario Securities Commission says it moving to ban deferred sales charges on mutual funds in the province.
The securities regulator says the policy it is preparing will prohibit the payment of upfront sales commissions by fund organizations to dealers and mirror policies in other provinces.
Deferred sales charges are paid by investors when they pull money out of mutual funds before a set date.
Controversy has surrounded funds with such fees because advisers earn upfront commission higher than they would on other types of mutual funds, potentially incentivizing them to push DSC funds over ones with lower costs.
The Canadian Securities Administrators announced a ban on such charges last year, but the OSC did not follow suit and does not expect its new policy to take effect until next June.
The OSC says it wants to adopt a ban because the idea received support from stakeholders and recent advances in innovation have provided investors with more affordable and transparent products and advice.