Who oversees the investment funds industry?

Investment funds are highly regulated and more transparent than many other managed investment products. Securities commissions in each province and three self-regulatory organizations ensure that the individual investor’s interests are well-guarded. They set rules governing everything from how and when information about a fund must be provided to investors to the standards that advisors must meet. The different roles of these various organizations are described below:

Securities Commissions

Each province and territory in Canada regulates the distribution and sale of investment funds and other securities in its jurisdiction through a government agency, usually known as a securities commission.

The securities commissions across the country have formed a voluntary organization, the Canadian Securities Administrators (CSA) to improve, coordinate and harmonize regulation of the Canadian capital markets. However, some securities laws may differ among jurisdictions.

Self-Regulatory Organizations

Some securities commissions have delegated regulation of mutual fund dealers to the Mutual Fund Dealers Association of Canada (MFDA). All mutual fund dealers in these provinces must be a member of the MFDA. The MFDA’s functions include:

  • Setting regulatory standards for its members;
  • Auditing members for compliance with those standards;
  • Investigating complaints; and
  • Taking enforcement action when necessary.

Investment dealers are required to be members of the Investment Industry Regulatory Organization of Canada (IIROC). IIROC is responsible for regulating its members by:

  • Setting regulatory standards,
  • Confirming advisors and sales representatives meet education and qualification standards to be licenced,
  • Auditing members for compliance with those standards,
  • Investigating complaints, and
  • Taking enforcement action when necessary.

Unlike the securities commissions, the MFDA and IIROC are not government agencies. They operate under the authority and supervision of the securities commissions. However, they have the power to impose standards that are higher than the minimum standards set by securities laws.