See also:

Message from Brian Gore, FundSERV's new president and CEO

FundSERV piloting customized automation solutions

Alan Hutton retires from FundSERV

From Bermuda's beaches to FundSERV Inc.

FundSERV Network Performance

All articles

By Michael Critchley

The investment fund industry depends on many things to keep it sustainable and healthy. But none is more important than accuracy.

A key element of FundSERV's success is knowing and understanding its customers, and having its customers understand FundSERV. The latter has recently posed a degree of concern for FundSERV.

In a review of some customer prospectuses and other public filing documentation, FundSERV noted more than a few incorrect or potentially misleading references to its services, leading to speculation there could be more.

FundSERV found the following to be the most common errors:

• Being described as providing "clearing and settlement" services, when in fact FundSERV is merely a conduit that facilitates payment through Royal Bank;
  
  
• Being referred to as an issuer or a seller of funds, or implied to be a party to a purchase or redemption, when in fact it is a facilitator through which transactions and information flow between manufacturers and distributors;
  
  
• Being used as an endorsement, when in fact being on the FundSERV network does not imply any qualitative assessment of a product or a commentary on its value or risk.

To address this issue, FundSERV decided the best approach would be to inform all its customers of these inaccuracies and provide some guidance on how its name or services should be properly referenced.

In August, a letter was sent to all customers outlining examples of the improper positioning and offering alternative wording such as:

Incorrect:		"FundSERV (product name)."
Correct:		"FundSERV-enabled (product name)."
Incorrect:		"The (product name) may be purchased, settled and otherwise dealt with in accordance with the clearing and settlement services operated by FundSERV Inc."
Correct:		"Use the FundSERV network to facilitate order flow and payments of the (product name)."
Incorrect:		"...purchased through FundSERV Inc."
Correct:		"...purchased from a distributor on the FundSERV network."
Incorrect:		"The FundSERV Closing Price."
Correct:		"The Closing Price posted on FundSERV."
Incorrect:		"Place and clear orders through FundSERV."
Correct:		"Use the FundSERV network to facilitate order flow and payments."

FundSERV hopes this letter will build industry awareness of this issue, and avert any potential problems down the road.

"We realize that it's not our customers' intent to misrepresent us, but they have to understand that using inaccurate descriptions of FundSERV's services could have serious consequences or pose reputational risk to us and to them," says Ian Cook, vice president, corporate services and CFO. "I'm confident that by bringing this issue to light, our customers will take every precaution to ensure our services are properly referenced going forward."

FundSERV is asking its customers to check their online and print materials for incorrect references and ensure — if they are incorrect — that they are amended for future printing.

Any questions or concerns regarding this issue can be directed to Carol Walker, director of industry relations and corporate communications: carol.walker@fundserv.com

Table of Contents