Skip to main content

The Globe and Mail

What if advisers couldn't accept commissions from mutual fund companies?

A move by British regulators to ban financial advisers from accepting commissions for selling mutual funds and other products after 2012 is likely to cause lot of soul searching elsewhere, including in Canada.

The Financial Services Authority published new rules last Friday, saying the move is needed to "help restore confidence in the market…Firms will have to be upfront about how much they charge for their services, and no longer hide the cost of their advice behind the cost of a product."

The change means that investors in that country will have to negotiate a fee for advice directly with their adviser who won't have an incentive to sell one producer over another, notes David O'Leary, an analyst at Morningstar Canada: "It's as if the entire UK fund industry will go F-class." See Morningstar notebook.

Story continues below advertisement

For those not familiar with F-class, its a series of funds developed in Canada for fee-based accounts where advisers charge a transparent fee not embedded in the management expense ratio (MER).

Vikash Jain, president of archerETF Portfolio Management, says Canadian investors would benefit from the same rules. See blog.

The debate is only beginning.

Report an error
As of December 20, 2017, we have temporarily removed commenting from our articles. We hope to have this resolved by the end of January 2018. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.