Compliance Memo

Compliance Memorandum 2018-05; Investment Fund Sales Practices

For more information, contact:

Compliance Team

Date Issued:

November 18, 2018

As you know, there has been considerable scrutiny from regulators with respect to dealer and advisor compensation and incentive programs and the conflict of interest that arises from certain sales practices that might lead to mis-selling or unsuitable advice related to investment funds.

In 2016 one of the MFDA strategic objectives was to review and gain a more detailed understanding of Member compensation and incentive programs (“Compliance and Member Education Priorities”) MFDA Bulletin #0736-C. This initiative was part of a continued focus on identifying any compensation or incentive practices through the receipt of promotional items from mutual fund companies or participation in promotional activities that are funded by mutual fund companies.

There are several key items that must be adhered too to avoid regulatory scrutiny and any conflict of interest as it relates to your suitability requirements that include:

  1. A Financial Advisor must not solicit or accept from a fund company, or a member of a fund company, in connection with the distribution of securities of the mutual fund, the payment of money, the provision of a nonmonetary benefit or payment or reimbursement for a cost or expense incurred or to be incurred by the participating dealer or representatives of the participating dealer. 
  2. If a benefit has been received from a fund company, a financial advisor must maintain detailed records of the benefits including the date the benefits were received.

If you would like additional information please refer to National Instrument 81-105: Mutual Fund Sales Practice and our Advertising Policy and Procedure Manual, Section 12 for complete details.

As always, if you have questions or comments, contact the Compliance Department by email at