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Investor advocates are growing impatient with Canadian regulators’ lack of progress on reforming the sale of mutual funds that charge investors early withdrawal fees.

Last fall – after a six-year review – the Canadian Securities Administrators (CSA), an umbrella group for all provincial securities regulators, proposed a prohibition on what are known as deferred sales charges (DSCs), which are fees investors must pay when they pull money from a mutual fund before a set date. Regulators also proposed to curtail certain commissions collected by discount brokerages providing do-it-yourself investing services.

On the same day regulators opened a public comment period, the Ontario government released a statement opposing the ban on DSC funds, throwing the industry’s review into disarray. The government provided almost no explanation for its opposition, and regulators were sent back to the drawing board.

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Now more than a year later, the Ontario Securities Commission (OSC) is still reviewing its next moves. An official told a Toronto audience last week that while the regulator wants to get to a resolution “as soon as possible,” there has been no date set for any changes and to “stay tuned.”

“We are taking our time, and we know that our decision is going to be a very important decision for investors in the market,” Raymond Chan, director of the investment funds and structured products branch at the OSC, said during an annual regulatory conference. Mr. Chan said the OSC has been speaking with stakeholders and “listening to them actively."

A spokeswoman for Ontario Finance Minister Rod Phillips told The Globe and Mail the minister has had several meetings with industry stakeholders since stepping into his new role this past June.

But for some investor advocates, the progress isn’t quick enough, after already waiting six years for the initial proposal to be drafted that involved consultation, research reports and much debate within the investment industry.

Ken Kivenko, a prominent investor advocate who helps Canadian investors who have been wronged, says he hopes other provincial regulators won’t wait any longer and will ban DSC funds without the participation of Ontario.

“The CSA continues to let the investor community down," Mr. Kivenko said. “We regard such funds as harmful to investors and families saving for retirement or for their children’s education. We expect the other CSA jurisdictions – outside Ontario – to ban DSC funds.”

In a letter written to Mr. Chan, Mr. Kivenko suggests that if DSCs are not going to be banned, the CSA should consider several conditions to help reduce the harm to investors. For example, he recommended prohibiting DSC funds in registered retirement income funds, or putting a cap of no more than three years for a fund to prohibit withdrawals without incurring a fee.

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John DeGoey, portfolio manager at Wellington-Altus Private Wealth Inc. and long-time advocate against the sale of DSC funds, said that after countless studies, focus groups, advisory panels and white papers, the industry continues to not have “anything close to material progress.”

“When all is said and done, more will be said than done,” Mr. DeGoey said.

But Dan Hallett, vice-president and principal with HighView Financial Group, said he has participated in several industry round table discussions with stakeholders, the latest this past October, and feels the conversation is moving forward.

During the OSC’s annual conference, Mr. Chan also said the OSC is looking at options to replace the CSA’s proposed ban on the payment of trailer fees to discount brokers. That suggestion was also killed last year when the province shot down the CSA’s proposed amendments.

The controversial payment, which charges DIY investors millions of dollars in fees for advice they do not receive, has sparked several class-action lawsuits filed against some of Canada’s largest asset-management companies. Mr. Chan said the OSC is looking at solutions that may require certain fees to be more transparent before a fund can be purchased, or could have the advisory fees rebated to investors.

The first class-action certification motion – against TD Asset Management – will be heard in court on Jan. 10.

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