As a follow-up to our article, All Together Now – OSC Joins DSC Ban, in the May 2021 AUM Law Bulletin, we can report that on June 23 the Canadian Securities Administrators (CSA) issued CSA Notice 31-360 Blanket Orders/Class Orders in respect of Transitional Relief Related to the Deferred Sales Charge Option in respect of Client Focused Reforms Enhanced Conflicts of Interest and Client First Suitability Provisions of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (the Notice).
The Notice states that each of the CSA jurisdictions have decided to grant relief by way of blanket orders (the Blanket Orders) to address the issue of overlapping periods between the implementation of the enhanced conflicts of interest and “client first” suitability requirements in the Client Focused Reforms (CFRs) and the implementation of the ban on deferred sales charges (DSCs). The enhanced conflicts of interest provisions of the CFRs come into effect on June 30, 2021 and the client first suitability provisions of the CFRs come into effect on December 31, 2021 whereas the DSC ban only comes into effect on June 1, 2022.
In respect of a trade in a security of an investment fund that results in the payment of an upfront sales commission and that is subject to a DSC, the Blanket Orders will provide registrants with an exemption from the enhanced conflicts requirements from June 30, 2021 to June 1, 2022 and with an exemption from the client first suitability requirement from December 31, 2021 to June 1, 2022. Without the Blanket Orders, a firm selling investment funds with DSCs until the ban on June 1, 2022 could be in contravention of the CFR requirements regarding conflicts of interest and suitability.
If you have any questions about the Notice or Blanket Orders, please contact your usual lawyer at AUM Law.
June 30, 2021