May 14, 2020
Ermanno Pascutto Executive Director FAIR Canada
36 King St. E. Suite 400 Toronto, ON M5C 3B2
It was good to talk with you last week. As indicated, we have been following with interest FAIR Canada’s appeal to the Ontario Securities Commission and the Canadian Securities Administrators to provide relief to group RESP subscribers. I am writing to you to outline the specific actions Knowledge First Financial has taken to provide support to Heritage Plans (group RESP) customers during COVID-19 and address some of the broader issues related to group RESPs that were raised in your appeal.
Before addressing the Heritage Plan, it is important to note that the majority of our customers are in Individual plans with maximum flexibility to start and stop payments and withdraw contributions and EAPs at their choice.
Especially during this time of uncertainty, Knowledge First Financial has reassured its customers that claims about cancellations, penalties and forfeitures due to missed contributions do not apply to the Heritage (Group) Plan. In particular:
Effective May 1, 2020, Knowledge First Financial no longer offers for sale group RESPs. This transition to individual RESPs started in 2012 with the launch of the Flex First Plan (Individual RESP). In 2014, Group rules were significantly relaxed to reduce forfeiture risks to consumers and finally, last year, we successfully obtained approval through subscriber vote to transfer assets in the Family Group Plan to an individual RESP.
We believe that generalized statements– including claims that certain groups are unable to make informed investment decisions or that a segment of RESP providers are not compliant with Know Your Client practices — do not help educate consumers on the RESP options available. At Knowledge First Financial, our KYC and suitability guidelines are clear and all sales go through a two-tier review process to ensure suitability. We follow guidelines set out by the Ontario Securities Commission, including the plain language format for prospectus and plan summaries – documents which are reviewed and approved annually by the regulator and are available publicly on our website.
All RESP providers have an obligation to help consumers make the best choice for their situation, to clearly explain costs associated with the investments, and to ensure they maximize the value of their RESP through all available government grants and tax-deferred growth. It’s a responsibility that Knowledge First Financial takes seriously. As part of that, we encourage consumers who are facing financial uncertainty, or have questions about their RESP, to speak with their provider for advice specific to their situation.
As discussed, we would be happy to make a presentation to your team on the changing landscape of Scholarship Plan Dealers and Group RESPs.
George Hopkinson President & CEO
Knowledge First Financial Inc.