Securities

Montréal – The Autorité des marchés financiers (the "AMF") reached agreements with six financial institutions in connection with the payment of excess fees by some of their clients.

The institutions concerned are National Bank Investments Inc., National Bank Financia  Inc., Industrial Alliance Securities Inc., Investia Financial Services Inc., Laurentian Bank Securities Inc. and BLC Financial Services Inc.

In February 2015, the AMF undertook an investigation relating to two issues identified in Canada's financial sector, namely, deficient or ineffective internal controls and policies of registrants. The institutions concerned reported certain deficiencies that led some of their clients to pay excess fees in one or both of the following situations:

  • Overbilling of management fees relating to the inclusion of mutual funds and exchange-traded funds with trailing commissions in certain fee-based accounts;
  • Overbilling of management fees due to the fact that no notices were sent to clients who were eligible for a series of low management expense ratio (MER) funds but whose assets were not invested in the series.

Following the investigation, the AMF concluded that the institutions concerned had failed to maintain and adequately apply operational control and supervision systems allowing them to provide reasonable assurance that they were acting in accordance with the Securities Act and its regulations.

Under the agreements, the institutions concerned compensated all clients affected by the overbilling of management fees. Total compensation paid to clients varied from $50,000 to $650,000 depending on the institution and issues identified. The institutions also implemented various control measures in order to remedy the deficiencies observed and avoid any repeat non-compliance.

In view of the non-compliance, the admissions made and repayments offered to affected consumers, the institutions concerned agreed to pay the following penalties:

  • National Bank Investments Inc. and National Bank Financial Inc.: $65,000;
  • Industrial Alliance Securities Inc. and Investia Financial Services Inc.: $87,500;
  • Laurentian Bank Securities Inc. and BLC Financial Services Inc.: $65,000.

The Autorité des marchés financiers is the regulatory and oversight body for Québec's financial sector.

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