A deferred sales charge is a fee for selling a mutual fund within a set number of years of buying it; Canadian securities regulators banned new DSC sales from June 1, 2022.
Under the DSC option you paid nothing up front, but the fund company paid the selling firm a commission of about 5% at purchase and charged you a fee if you sold early, on a schedule that usually fell to zero over five to seven years. The ban also covers the low-load option, which worked the same way.
The ban took effect on the same day in every province and territory, including Ontario, which adopted its own matching rule. Funds bought before June 1, 2022 can still carry a redemption fee until their schedule runs out.
If you're moving to a new advisor, ask whether any of your funds are still on a DSC schedule. Selling them now could cost a fee that disappears if you wait, and that should be part of any switching plan.
How to check
Your account statement shows each fund's purchase option (DSC, low load, front-end or no load). Your dealer can tell you how much of the schedule is left and what selling today would cost.
Sources
- Canadian Securities Administrators, Canadian securities regulators adopt ban on deferred sales charges
- Ontario Securities Commission, OSC to implement ban on deferred sales charge option, harmonizing rule across Canada
- BC Securities Commission, InvestRight: Mutual fund fees explained (June 15, 2022)
- Ontario Securities Commission, GetSmarterAboutMoney.ca: Mutual fund fees (updated September 26, 2023)
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