Court to consider RESP dealer settlement

A Quebec court will consider a proposed settlement with three of the six scholarship plan dealers that are being sued in a class action alleging that they charged excessive fees.

In 2021, the Superior Court of Quebec certified a proposed class action against six group RESP providers that alleged they “acted unlawfully” by charging fees of more than $200 per plan and that investors that cancelled their plans before maturity were hit with excessive early cancellation penalties of more than 20% of their contributions.

The allegations have not been proven.

However, a proposed settlement has now been reached with three of the firms. And, on Aug. 29, the court will hold a hearing to decide whether to approve the deal, which was made with Children’s Education Funds Inc., Knowledge First Financial Inc. and Heritage Education Funds Inc.

The proposed settlement, and its plan for distributing the proceeds to class members, would pay $634,072, less court-approved fees and expenses, to Quebec-based investors in the plans between July 2013 and the end of 2024 that were hit with the allegedly excessive charges addressed in the action.

The proposed class action against the three remaining defendants that are not covered by the proposed settlement — CST Consultants Inc., Kaleido Growth Inc. and Global RESP Corp. — is continuing.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.