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ARTICLE · 30 SEPTEMBER 2022

Upfront Compensation For Segregated Funds: Is A Total Ban On The Horizon?

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The Discussion Paper comes on the heels of the Insurance Regulators' February 2022 joint statement with respect to the negative impact of Deferred Sales Charges on customers.

CanadaFinance and Banking
Darcy Ammerman
Darcy Ammerman
Kendra Wilson
Kendra Wilson
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On September 8, 2022, the Canadian Council of Insurance Regulators (the "CCIR") and the Canadian Insurance Services Regulatory Organizations (the "CISRO"), collectively, (the "Insurance Regulators") commenced a sixty-day consultation period with respect to their Discussion Paper on Upfront Compensation in Segregated Funds ("Discussion Paper").

The Discussion Paper comes on the heels of the Insurance Regulators' February 2022 joint statement with respect to the negative impact of Deferred Sales Charges ("DSCs") on customers. Pursuant to DSCs, the customers generally pay a redemption fee if they withdraw their funds before the end of the redemption period (which is usually 3 to 7 years). DSCs were banned for mutual funds as of June 1, 2022. On the insurance side, insurers have been urged to refrain from new segregated fund ("Seg Fund") sales involving DSCs as of as of June 1, 2022, with full cessation of such sales by June 1, 2023. DSCs can be differentiated from

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The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

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