The Mutual Fund Dealers Association of Canada (MFDA) is a self-regulatory organization (SRO) that oversees the Canadian mutual fund industry with respect to the sale of mutual funds to individual investors.
KEY TAKEAWAYS
- The Mutual Fund Dealers Association of Canada is a self-regulatory organization that oversees the Canadian mutual fund industry.1
- The organization is recognized by eight out of 10 provincial securities commissions in Canada.2
- MFDA members and their advisors represent more than $700 billion in client assets. Its members financially advise nine million Canadian
- households.
Understanding the Mutual Fund Dealers Association (MFDA)
The Mutual Fund Dealers Association of Canada (MFDA) was formed in 1988 as a non-profit corporation at the behest of the Canadian Securities Administrators (CSA). Its creation came in response to a ten-fold increase in the size of the mutual fund industry in the late 1980s, and amid concerns the industry lacked a sufficient regulatory structure.4
Among the MFDA’s stated goals is to regulate the operations of its member dealers to maintain public faith in the Canadian mutual fund industry.5 As an SRO, its implicit motivation is to minimize regulation by the government. A 13-member board of directors, with six public directors and six industry directors, oversees MFDA operations.6
The self-regulatory organization is recognized by eight out of 10 provincial securities commissions in Canada.2 By its own account, the MFDA members and their advisors have more than $700 billion in client assets under administration (AUA). The MFDA claims its members financially advise nine million Canadian households.3
The Authority of the MFDA
As a self-regulatory organization, the MFDA falls under the supervision of the CSA but has the freedom to set and enforce regulations beyond the minimums defined by the law. In the eight provinces which formally recognize the MFDA, mutual fund dealers must be members of the MFDA to operate. In Québec, the MFDA works cooperatively with the Autorité des marchés financiers (AMF).
MFDA 2018-2026 Strategic Plan
One way the MFDA intends to increase public confidence in the Canadian mutual fund industry is through the education of its members. Included in the MFDA’s 2018-2026 Strategic Plan is a key initiative to impose a continuing education requirement on MFDA advisers who, unlike life insurance agents and financial planners, do not currently need to earn continuing education credits to maintain their license in Canada.7
This will bring MFDA members more in line with the members of several other Canadian regulatory bodies, such as the Investment Industry Regulatory Organization of Canada (IIROC), by requiring a number of professional development credits on a two-year cycle.8 Many such credits will likely overlap with the credit requirements of related industry self-regulatory organizations, but the MFDA has pledged to work to avoid unnecessary duplication.
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