Securities regulator proposes ending chargebacks in distribution of investment funds
A magnifying glass enlarges the holographic image of Parliament Hill's Peace Tower on a $20 bill issued by the Bank of Canada, shown in a display case at the Bank of Canada Museum in Ottawa, Wednesday, Sept. 4, 2024. THE CANADIAN PRESS/Justin Tang
TORONTO — The Canadian Securities Administrators is proposing to stop the use of chargebacks in the distribution of investment funds.
The regulatory group says investment dealers sometimes receive an upfront commission or payment when their client buys securities.
It says chargebacks happen when those clients redeem those securities before a fixed schedule, requiring the dealer to pay back all or part of the upfront commission or payment.
The CSA says it's concerned that poses a conflict of interest as it may incentivize advisers to prioritize their own interest over that of their clients.
CSA chair Stan Magidson, who also is chair and CEO of the Alberta Securities Commission, says the proposed amendments prioritize investor protection and foster fairer compensation practices.
The council of the securities regulators of Canada's provinces and territories has published the proposed amendments for a 90-day comment period, which closes on Sept. 24.
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This report by The Canadian Press was first published June 26, 2025.
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