In June 2008, the Canadian Payments Association introduced Rule H1 with respect to Pre-authorized Debits (PAD), mandatory effective date February 28, 2010. The spirit of the Rule is intended to protect consumers from situations whereby companies debit a consumer's account against their wishes and to provide consumers with their rights and recourses where such a scenario does occur.

Manufacturers have various methods to incorporate the provisions of the Rule into their current procedures by leveraging their account applications, simplified prospectuses, and transaction confirms and by creating stand-alone agreements. The only current process not covered by all of these efforts is that in which a dealer instructs a mutual fund company to set up a direct PAD with the dealer's client on a nominee account.

FundSERV has developed the attached agreement to allow for that current process to continue, by the dealer representing that they have provided the client with their rights and recourses under CPA Rule H1 with respect to the debit plan and that the mutual fund company is indemnified from that recourse, provided the mutual fund company has acted only upon the instruction provided by the dealer.

	Canadian Payments Association Rule H1 (Pre-Authorized Debits) Distributor Acknowledgement and Indemnity form PDF file, 247 KB, February 2010
	Participation in Canadian Payments Association Rule H1 PDF file, 16 KB, June 10, 2010

Last Updated: 2010/06/10