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ICI Comments on Canadian Point-of-Sale Disclosure Proposal
Washington, DC, October 15, 2007 – The Institute supports an effort by Canadian regulators to simplify mutual fund disclosure, but filed comments stating that it cannot support a recent proposal because its delivery requirements place funds at a competitive disadvantage with other investment products.
Canada’s Joint Forum of Financial Market Regulators published a proposal regarding point of sale disclosure for mutual funds. The proposal would require funds to provide a two-page “Fund Facts” document meant to highlight key fund information. The document would have to be delivered to investors before or at the point of sale of the fund shares.
In an October 15 comment letter, ICI states that the disclosure model in its Proposed Framework 81-406 represents a significant step toward a disclosure document that will be more useful for both investors and funds, but expresses disappointment that the Joint Forum has chosen to propose the imposition of new delivery requirements on mutual funds and segregated funds that will not be applicable to other investment products. ICI and its members with affiliated Canadian operations cannot support a proposal that would change the timing of delivery to require mutual funds and segregated funds, but not other investment products, to provide product disclosure earlier in the sales process.
“Requiring disclosure prior to selling mutual funds would create incentives for dealers and other intermediaries to sell products not subject to the same requirement,” said Susan M. Olson, ICI Senior Counsel, International Affairs, “even when those products do not offer the same level of regulatory protection and other benefits for investors.
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