NI : Cost Disclosure and Performance Reporting - Recap June 7, 2012 Share the tools

Summary History and Regulatory Confusion Cost Disclosure Proposals Performance Reporting Proposals IFIC September 2011 Submission IFIC Call to Action Share the tools

History and Regulatory Confusion MFDA and IIROC engaged since 2004, at the CSA’s direction, to develop rules for the implementation of the Client Relationship Model (CRM) MFDA Rule 5.3.5: Performance Reporting Result of 4 years of extensive stakeholder consultations Approved by CSA in 2010 At the time was required to be implemented by June 2012 Share the tools

History and Regulatory Confusion (cont.) CSA amendments followed in June 2011 with additional, more detailed provisions superseding MFDA The MFDA has suspended its cost disclosure and performance reporting rules at the request of the CSA  Lack of regulatory coordination will cost the industry and investors -unnecessary systems builds and delay in implementing the right level of cost disclosure and performance reporting Share the tools

Cost Disclosure – Proposals  Delivery of Deferred Sales Charge Disclosure at Point of Trade (s (3.1) (b) creates a point of sale requirement with systems implications not appropriate to insert point of sale requirements here - the concept of POS delivery is being addressed in NI – POS Stage 3  Disclosure of Aggregate Charges (s (4.1) (b) (c)) Requires an annual aggregation of operating charges and transaction fees Operating charges include account fees Transaction fees include sales commissions, switch fees, short term trading fees Share the tools

Cost Disclosure – Proposals (cont.)  Disclosure of Fixed Income Dealer Compensation (s (4.1) (d)) Fixed income products require only a text disclosure saying that dealers received a fee  Disclosure of Fees Paid to Registered Firm (s (4.1) (e)) Requires an annual aggregation of other fees such as referral fees  Disclosure of DSC Charges(s (4.1) (f)) Requires annual disclosure of securities that may be subject to DSC Share the tools

Performance Reporting – Proposals  Net Amount Invested net amount invested over the life of the account change in value for the 12 month period change in value since inception Increased storage requirement - information going back to inception date presentation in text and table format increased data storage and statement redesign issues  MFDA provides the right amount of information that investors want and are willing to pay for. Share the tools

IFIC Submission- September 2011 IFIC Submission outlines the industry’s high level concerns with the proposals: Regulatory confusion – CSA and MFDA rules conflict and industry pays Cost disclosure requirements – mislead clients and treat mutual funds unfairly in comparison to other financial products Performance reporting requirements - go beyond investors needs or wants Share the tools

IFIC Call to Action IFIC provided the following members to its members IFIC Submission IFIC Matrix Template Letter The previous submission Deadline was September 23, submissions were filed with the CSA 28 member responses in support of the IFIC position 16 responses by advisors in support of the IFIC position Share the tools