The Ontario Securities Commission (OSC) has endorsed new mutual fund sales practice rules based on voluntary guidelines created by the Investment Funds Institute of Canada (IFIC), that country's mutual fund trade group.

The guidelines call for strict limitation of sales incentive programs for fund managers, distributors, salesmen and dealers. Under the new code, bonuses and trips based on sales contests and incentive programs are prohibited.

However, because the rules are voluntary and the IFIC, which oversees them, has little enforcement power, the OSC was less than happy to give the guidelines its stamp of approval.

"Rules are only as good as the strength of enforcement," says Glorianne Stromberg, a director of the OSC. "There are too many ways to get around these."

The OSC has criticized the voluntary code for some time, but came around to supporting it after it became apparent that the Ontario Ministry of Finance, the overseer of the OSC, was in agreement with the fund community, which favored voluntary guidelines.

"This has been a three-year political tug of war between the fund industry and the OSC. And the funds have won," says a Bay Street insider.