Regulators banning deferred sales charges in segregated funds

Published February 22, 2022

The Canadian Council of Insurance Regulators (CCIR) and the Canadian Insurance Services Regulatory Organizations (CISRO)—the two national organizations for Canadian insurance regulators—have set out their expectation that insurers cease use of Deferred Sales Charges (DSCs) in sales of segregated funds by June 1, 2023. CCIR and CISRO have also announced their intention to consult on upfront commissions in sales of segregated funds.

A DSC is a back-end fee that is charged to the client if the client redeems their investment prior to the length of time set out in their contract term. In a February 10, 2022, news release, CCIR and CISRO outlined their position that “there is a high risk of poor consumer outcomes associated with DSCs in segregated fund sales” and that this type of sales charge is not in the interest of fair treatment of consumers.

As such, Canadian insurance regulators are urging insurers to refrain from new DSC sales in segregated fund contracts by June 1, 2022, in line with the Canadian Securities Administrators (CSA) ban on DSCs in mutual funds which takes effect at that time. Further to this, regulators expect a complete cessation of DSC sales in segregated funds by the following year on June 1, 2023.

CCIR and CISRO are considering what other changes may be needed to improve outcomes for segregated fund customers and plan to consult on upfront commissions for these products later in the year. Following consultation, CCIR and CISRO intend to produce a policy position and guidance on this topic.  

CCIR comprises the provincial and territorial regulators for insurers, which includes the BC Financial Services Authority (BCFSA). Similarly, CISRO is made up of the provincial and territorial regulators of insurance intermediaries, including the Insurance Council of BC.

For inquiries about this matter, please contact the Insurance Council’s Practice and Quality Assurance Team at