Canadian Securities Administrators has ruled that Morningstar Canada’s ratings system is “reasonable and appropriate” and is a viable alternative to the ratings system of the Canadian Investment Funds Standards Committee, The Globe and Mail reports.

In April of last year, Morningstar withdrew from the CIFSC, an organization of mutual fund data and research companies, when it decided the group wasn’t adapting to changes in the marketplace. In October, when Morningstar launched its own classification system, the CIFC warned members not to use those ratings, telling them doing so could be in breach of securities regulations.

“We split up from CIFSC because they weren’t updating their categories. They were dragging their feet,” said Scott Mackenzie, CEO of Morningstar Canada and founder of CIFSC.

For example, Mackenzie said, the government has dropped the 30% foreign content limit in retirement savings plans, but the equity fund category has not reflected that. Another example, he continued, is that Morningstar views income trust as high-yield equity and so has eliminated that category, while the association continues to use it.

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