Fee Fight: Industry Group Challenges CIRO Over Rising Regulatory Costs

By Sharon Henderson

TORONTO – The Canadian investment industry is bracing for a potential showdown over rising regulatory costs, as the Securities and Investment Management Association (SIMA) publicly challenges a proposed fee increase by the Canadian Investment Regulatory Organization (CIRO). While acknowledging the need for robust oversight, SIMA argues the planned hike is untimely, lacks transparency, and could disproportionately impact smaller investment dealers – potentially limiting access to advice for everyday investors.

CIRO announced the proposed increase – raising annual fees for Approved Persons (APs) from $250 to $300 – citing rising operational costs and the need to maintain regulatory effectiveness. However, SIMA contends the timing – so soon after many firms finalized their 2026 budgets – is particularly problematic.

“The industry is already facing economic headwinds, and this unexpected fee increase places an undue financial burden on dealers, potentially affecting their ability to serve clients effectively,” a SIMA spokesperson told Capital Currents. “We’re not opposed to responsible funding for regulation, but it needs to be predictable, transparent, and consider the cumulative impact on firms of all sizes.”

A Growing Cost of Compliance

The dispute comes against a backdrop of increasing regulatory scrutiny and a growing cost of compliance for financial institutions. Experts suggest that firms are facing a perfect storm of new rules, evolving technology, and rising enforcement activity. The cumulative effect is placing significant strain on profitability and forcing some firms to re-evaluate their business models.

“Regulatory costs have been steadily rising for years, and the pace has accelerated in recent years,” says a consultant specializing in regulatory compliance, speaking on background. “Firms are having to invest heavily in technology, training, and personnel just to keep up. For smaller firms, it can be a real struggle.”

According to industry data, Canada’s regulatory fees are mid-range compared to other developed markets like the US, UK, and Australia. However, concerns are growing about the frequency of increases and a perceived lack of coordination between different regulatory bodies.

“There’s a sense that firms are being nickel-and-dimed to death,” says a senior executive at a mid-sized investment dealer, also speaking on background. “It’s not necessarily the amount of the fee, but the constant stream of new charges and the lack of clarity around how the money is being used.”

Turf War or Legitimate Disagreement?

Some industry observers suggest the dispute between SIMA and CIRO is more than just a disagreement over fees; it’s a reflection of deeper tensions within the regulatory landscape.

“There’s a sense that CIRO and the Canadian Securities Administrators (CSA) sometimes operate in silos, leading to duplication of effort and conflicting requirements,” says a regulatory lawyer. “Better coordination and harmonization would not only reduce costs for firms but also improve the overall effectiveness of regulation.”

SIMA is actively pushing for greater transparency and stakeholder consultation in the fee-setting process. The association argues that firms should have a meaningful opportunity to provide input and challenge proposals before they are finalized.

“We’re not asking for a free pass, but we believe the process should be more collaborative and consider the impact on all stakeholders,” a SIMA representative says. “A more open and transparent approach would build trust and ensure that regulation is effective and sustainable.”

Innovation at Risk?

Beyond the immediate financial impact, some worry that rising regulatory costs could stifle innovation in the Canadian financial industry.

“Firms are having to allocate more and more resources to compliance, leaving less for investment in new technologies and services,” says a fintech entrepreneur. “If Canada wants to remain competitive, it needs to create a regulatory environment that fosters innovation, not hinders it.”

SIMA is advocating for a regulatory framework that strikes a balance between investor protection and innovation. The association believes that regulators should be willing to embrace new technologies and business models, rather than imposing overly burdensome requirements.

“We need a regulatory framework that is flexible, adaptable, and forward-looking,” says a SIMA policy analyst. “If we want to attract investment and foster innovation, we need to create an environment that is conducive to growth.”

Looking Ahead

The dispute between SIMA and CIRO is likely to escalate in the coming weeks, as the industry awaits a response to SIMA’s concerns. Industry watchers predict that the outcome will have significant implications for the future of regulation in Canada.

“This is a critical moment for the Canadian financial industry,” says a regulatory consultant. “The way this dispute is resolved will set the tone for years to come. It’s time for regulators to listen to the concerns of industry stakeholders and work together to create a regulatory framework that is effective, sustainable, and conducive to growth.”

SIMA is urging CIRO to reconsider the proposed fee increase and engage in a meaningful dialogue with industry stakeholders. The association remains committed to working with regulators to create a regulatory framework that protects investors while fostering innovation and growth. The organization is also calling for a broader review of regulatory costs and a commitment to greater transparency and accountability.