In The NewsEllen Bessner Questions Proposed Point of Sale RulesPublished: 08/06/2010 Litigation partner Ellen Bessner was featured in "Industry Still Waiting for Point of Sale Rules," an article which appeared in the June/July 2010 edition of The Insurance and Investment Journal. The article noted that Bessner questioned the usefulness of the proposed new point of sale rules at the Investment Funds Institute of Canada's annual compliance forum in May 2010. The new regulations will dictate the type of information financial advisors must provide to clients when they sell segregated funds and mutual funds. Bessner noted that although the motivation behind the new rules is to ensure that clients know they are purchasing a suitable investment, the rules do not specifically require that advisors explain the product design and risks outlined in the point of sale documentation. Instead, the rules only dictate that advisors must deliver and provide receipt of the the Fund Facts document which contains information already found in the prospectus at the time of sale. Bessner believes that most clients are not interested in learning the intricacies of a product or reading more documentation and want to rely on their advisors instead. She said that the regulators seem to believe that if clients are given more paper, they will read it and that the paper will protect them. Ellen stated that regulators should focus their efforts on the Know Your Product rules to ensure that advisors understand all the features and risks of the investment being sold. She said, "If the advisor does not understand the basics of the product, if he or she does not understand product risks, then they can not determine whether it is suitable for the client." |