CSA finalizes advisor chargeback ban, effective October 2028
The CSA’s concern comes down to timing. A representative keeps the full commission only if the client stays invested past that period, and the regulator said the representative may try to talk the client out of redeeming. That pull grows as commissions get bigger and schedules get longer.
“By prohibiting chargebacks in the distribution of investment fund securities, we are removing a compensation structure that can create conflicts between an advisor’s interests and those of their clients,” said Stan Magidson, CSA Chair and Chair and CEO of the Alberta Securities Commission.
Firms get two years to rework pay plans
The CSA proposed the ban on June 26, 2025, and received 22 comment letters, mostly supportive. Some industry voices said existing NI 31-103 and Canadian Investment Regulatory Organization (CIRO) rules already handle the conflict. Another noted that the Canadian Council of Insurance Regulators has proposed still allowing chargebacks on segregated fund sales under prescriptive guidance, and the CSA said it will keep exploring a harmonized approach over the longer term.
The draft gave firms six months. The final rule gives them 24, after commenters said pay models would need a rebuild. The CSA said it understands two scholarship plan dealers will need to rework their compensation and compliance systems and train representatives. Chargebacks have been part of pay in that sector for many years, in some cases more than a decade.
Older holdings get a pass, too, since redemptions of securities bought before October 1, 2028 are exempt. Chargebacks are not widely used today, the CSA said, but it wanted to act before they become entrenched. It noted that unlike the now-banned deferred sales charge, which investors paid, chargebacks are payments between registrants.
