August 2, 2018 – SUN LIFE – MISCONDUCT – MUTUAL FUNDS
Sun Life clients may have suffered losses as a result of unsuitable leveraging, investments and DSC (deferred sales charges) fees.
Some Sun Life clients are receiving complex “remediation” offers and only have a short time to make decisions. Investors need to know their legal and investment rights. Investors should understand what they are giving up by signing documents. Investors should not sign the documents sent to them by Sun Life without a full understanding of the implications.
The Mutual Fund Dealers Association (MFDA) has investigated Sun Life Financial Services (Canada) Inc. for breaches in their sales and compliance methods. Sun Life has admitted misconduct including breaches involving their entire book of business. That means all their clients.
The Sun Life misconduct identified by the MFDA include:
- unsuitable arrangements for clients to buy mutual funds with borrowed money. (Leveraging)
- inadequate supervision of concentration risk where concentration limits in client accounts exceeded Sun Life policies and procedures. This was also the subject of a prior MFDA investigation.
- use of Deferred Sales Charges (DSC) without considering client’s age or time horizon. This locks clients into investments with high fees and may not have been disclosed to them.
- unsuitable “switches”, which is selling and buying funds to generate commissions at the expense of clients’ accounts, since it affects performance.
- potential changes to documents (Know Your Client (KYC)).
- Sun Life’s approval of sales incentives which breached securities regulation since incentives could influence the recommendations made by advisors.
The release form that Sun Life requires investors to sign to obtain partial compensation for its misconduct should not be signed without understanding the agreement and its ramifications. If investors are considering an offer by Sun Life, they should consider obtaining legal advice from a lawyer before signing these legal documents.
Read the Reasons for Decision from the Mutual Fund Dealers Association of Canada (Re: Sun Life Financial Investment Services (Canada) Inc.)