OSC bars mutual fund distributors from cross-family incentives
Mutual fund dealers are facing new limits on cross-family incentives. Amendments to National Instrument 81-105 – the rule that governs sales practices across Canada’s mutual fund industry – were published in the Ontario Securities Commission Bulletin on August 20, 2026, and take effect October 1, 2026. The changes reach directly into how principal distributors compensate the representatives who sell their funds.
The core change is a new section, 2.4, aimed squarely at principal distributors. It says a distributor of one mutual fund can’t also act as principal distributor for another mutual fund unless the two funds sit in the same fund family. That closes off a structural overlap that had let a single distributor hold the role across otherwise unrelated families.
A companion provision goes after compensation directly. New subsection 4.2(0.1) applies once a distributor is principal distributor for more than one fund in the same family – and bars it from paying representatives an incentive to recommend one of those funds over the other. In practice, it keeps a distributor from using compensation to steer advisors toward one of its own funds instead of another.
