Among other things, the proposed guidance covers the design of the products, their distribution, and sales practices, including compensation arrangements, know your client/product, managing conflicts of interest, and the suitability of intermediaries’ advice and recommendations. It also covers the funds’ issuance, ongoing operation, governance and disclosure obligations.

Bạn đang xem: Closing the gap between mutual, seg fund regulation

For instance, the proposals spell out the regulators’ approach to insurers selling seg funds under the advisor chargeback option — such as requiring them to offer alternative sales charge structures alongside the chargeback model, allowing intermediaries to ensure that they can recommend suitable sales charge arrangements to customers.

Xem thêm : Lazard US Equity Focus Portfolio Q3 2024 Commentary (Mutual Fund:LZUOX)

It also specifies that funds’ sales charge options should be designed so that the compensation that agents and other intermediaries can expect to receive are “substantially similar” under these different alternatives; and, it sets out requirements for chargeback schedules and annual redemption limits.

“This guidance closes gaps in the conduct standards related to the sale and servicing of [seg funds] as opposed to mutual funds, ensuring that customers are treated fairly,” said Huston Loke, chair of CCIR, in a release.

The consultation specifically excludes elements of regulators’ expectations for seg funds that represent provisions of the total cost reporting initiative. It notes that these requirements are not open for comment, having undergone their own separate consultation.

Xem thêm : 5 Fidelity Mutual Funds to Accumulate for Gains in 2025

The regulators stress that the proposals are designed to work alongside existing guidance, including joint guidance on the fair treatment of customers, which requires industry firms to prioritize clients’ interests, and the CISRO’s prevailing conduct standards.

It also noted that, while the proposals don’t supersede provincial rules, they aim to ensure consistency across the country, and to help industry firms and reps treat seg fund customers fairly.

“The proposed CCIR/CISRO consolidated segregated funds guidance creates a consistent national standard for insurers and intermediaries, to be implemented by each province and territory,” said Patrick Ballantyne, chair of CISRO, in a release.

The proposals are out for consultation until April 8.