Canadian securities regulators published final amendments on 8 October to prohibit specified commission chargebacks on investment funds that are reporting issuers. Subject to the required approvals, the NI 31-103 changes take effect on 1 October 2028.[1][2]
The targeted arrangement pays a dealer or representative upfront and requires repayment if the client redeems within a specified period. That creates a financial incentive to discourage an exit. It differs from a deferred sales charge paid by the investor.[2]
Scope and transition
| Item | Details |
|---|---|
| Effective date | 1 October 2028, subject to approvalsSource 2 |
| Covered trigger | Commission repayment connected to redemption of reporting-issuer fund securitiesSource 2 |
| Earlier purchases | Securities purchased before commencement are exempt from the new prohibitionSource 2 |
| Implementation period | 24 months in the final noticeSource 2 |
| Without a redemption | Cancelling a contribution plan or transferring holdings is not itself the prohibited triggerSource 2 |
Legacy and new business need separate treatment
The transition makes the purchase date important. A dealer cannot implement the change accurately by switching off every recovery entry in its compensation system on the commencement date. It needs to identify which securities fall within the new prohibition and which pre-existing arrangements remain outside it.[2]
The economic question is also narrower than whether all fund costs fall. Removing a representative’s redemption-linked repayment obligation addresses one incentive conflict. It does not, by itself, determine management fees, adviser fees or how a distributor will redesign compensation.[2]
The notice also explains that a transfer or contribution-plan cancellation without redemption falls outside the prohibition. Where a transfer involves redeeming and repurchasing securities, the analysis changes. Dealers therefore need transaction-level treatment rather than labels such as “transfer” that may describe several different operational steps.[2]
Sources & further reading
- Canadian securities regulators publish final amendments prohibiting chargebacks in investment fund distribution Canadian Securities Administrators via Alberta Securities Commission · 8 Oct 2026 · Accessed 27 Oct 2026
- CSA Notice of Amendments to NI 31-103: prohibition on chargebacks Canadian Securities Administrators / Alberta Securities Commission · 8 Oct 2026 · Accessed 27 Oct 2026