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Regulators put mutual fund fees in their crosshairs in the 1990s, but that campaign died, leaving few lasting changes.Feng Yu/Getty Images/iStockphoto

Investor advocates are already rolling their eyes – here the regulators go again, poised to drop another ball.

More than two years ago, Canada's provincial securities watchdogs made a major splash by releasing an extensive study on mutual fund fees, suggesting they were ready to crack down. Within days, there was widespread speculation that the investment industry was set for a massive shakeup, because any changes would dovetail with a separate push for better disclosure of total fees paid on client statements.

Today all that hoopla is a distant memory, made fuzzy by two years of beating our heads against the wall. For those old enough to remember the last time this played out, it's been a painful reminder of what it feels like to lose hope.

Regulators put mutual fund fees in their crosshairs in the 1990s, but that campaign died, leaving few lasting changes. Those who hoped it would foster reforms saw financial institutions drag their heels for so long that regulators retired or saw their terms end, and the fervour for action fizzled out.

This scenario is playing out again. After soliciting public comment letters and hosting public roundtables across Canada, regulators decided in December, 2013, a year into their review, that they needed more time to study the issue. The problem, according to financial institutions they talked to, is that there wasn't a sufficiently large set of data to make an informed decision. The original 50-page report apparently didn't contain enough.

At the time, the regulators promised the issue wasn't dead – actually, they swore, this was a sign they were serious. To double down, they planned to hire an independent consultant to comb through industry and market share statistics, helping the watchdogs make fully informed decisions.

That initiative started last summer, yet the process has moved at a snail's pace because some fund companies wouldn't play ball, practically refusing to cough up their information – even though they were the ones who pressed for better statistics. The last we heard, regulators now expect to make a decision by March, 2016, the end of their next fiscal year, at the latest.

At this point, it's tough to imagine major reforms will come from this exercise – hence the eye-rolling. Even though the regulators swear they are simply being prudent, making sure to study every angle before they make a decision, it's hard to shake the sense that history is repeating itself.

What the watchdogs could really use is a reminder that no matter how long they study this issue, and no matter what decide, they are going to upset some stakeholders. That's simply a consequence of being in power.

That's not to say they need to go wild and use blunt tools such as outright bans on trailer fees. Some people think this issue is black and white: Greedy investment advisers get paid 1-per-cent trailer fees annually simply for putting their clients into certain funds, regardless of the fund's performance.

There's some truth to that argument. But dig deeper and you'll see the issue turns grey pretty quickly. Canadian banks are gaining more power as the mutual-fund industry evolves, because they have large distribution centres for their in-house funds, in the form of their retail branches. That's why independent fund companies such as AGF and Mackenzie argue they need to pay trailer fees – to make sure bank-owned retail advisers keep their own products in mind. Money talks.

Better fee disclosure rules are also coming, and more banks have embraced low-cost, exchange-traded funds.

But at the very least, the regulators need to address the one-off issues can easily be ring-fenced and tackled. Take trailer fees that are charged on mutual funds purchased through online discount brokerages. The investment industry argues these fees aren't freebies; they are used to pay the broker for 'ongoing investment advice.' But, why then, are they charged in an online model where brokers are bypassed?

Whatever the regulators settle on, they had better be decisive. Already there are whispers that the watchdogs will put their mutual fund fee review on the back-burner, in favour of new mandatory guidelines that will dictate how retail advisers can act in their clients' best interests. The thinking, it seems, is that codifying principles that support putting clients in the lowest cost funds – for instance, when there is an exchange-traded fund that more or less mimics a mutual fund's holdings, for a fraction of the fees – will change their behaviour.

That's silly. Guidelines, even mandatory ones, will do little when they rarely hold up in court. There's just too much wiggle room. Should the mutual fund fee review suggest bold action is required, regulators need to find the courage to demand it.