Your Feedback Needed: Proposals to Restrict Referral ArrangementsPosted: December 04, 2018
Posted in: Strategic Thinking, Current Issue, Financial Advisor, IFB, Independent Financial Brokers, CSA, Canadian Securities Administration, investment advisor, Client focused reforms, Referral Arrangement Restrictions
The Canadian Securities Administrators (CSA) have proposed restrictions on fees related to referral arrangements. The Independent Financial Brokers of Canada (IFB) wants to better understand the impacts of these proposals and has asked for the participation of financial services professionals in a survey, which is open to both IFB members and others in the financial services industry.
The CSA, a national group of provincial securities regulators, has proposed new restrictions on fees related to referral arrangements. The proposals would:
- not permit a securities registrant to pay a referral fee to a non-registrant (if no compensation is received, referrals will be permitted);
- cap the referral fee to 25 percent of the fee or commissions collected from the client by the party receiving the referral; and,
- not permit referral fees to be paid for more than 36 months.
Survey responses are anonymous. They will be used to help evaluate if the proposals will achieve the better client outcomes that regulators are striving for. It should take about eight minutes to complete.
IFB recognizes that non-members may wish to participate in this survey, and we encourage you to forward it to any of your colleagues you think may be interested.
You can find more information on the referral proposals in Section 13 of the Proposed Amendments to NI 31-103, Client Focused Reforms, and in the OSC Annex E, which identifies the particular concerns with referral fees being paid to unregistered individuals, as well as the potential for a sale of a book of business to be captured under the referral restrictions.
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