Screening fund practices for conflicts may reduce civil liability, says Richard Austin, counsel at the Toronto office of Borden Ladner Gervais LLP who specializes in investment management and securities and capital markets.

National Instrument 81-107 – Independent Review Committee for Investment Funds came into force in 2006 to ensure that certain conflicts of interest in the management of funds offered to the public are properly addressed. 'Many smaller funds have argued, understandably,' Austin says, 'that such conflicts do not arise in their operations, and therefore impose a burden with little or no benefit. But consistent application many not only improve industry standards: it would likely have the effect of protecting fund managers from litigation.'