On November 14, 2016, Ontario's Finance Minister, Charles Sousa, delivered to the Provincial Legislature the 2016 Ontario Economic Outlook and Fiscal Review (the "Outlook"). The Outlook includes information on the Government's plans to establish a new financial services and pensions regulator and to modernize the Credit Unions and Caisses Populaires Act, 1994 (the "Act"). The Outlook also included an update on the review of the regulatory framework relating to financial planning and financial advisory services and on plans to revise the regulation of the activities of mortgage brokers in respect of syndicated mortgages.
The Outlook outlined briefly the Government's plans to introduce legislation to create a new provincial Financial Services Regulatory Authority ("FSRA"). The FSRA will oversee credit unions, mortgage brokers, provincial pension plans and provincially regulated insurers (and agents) and will include the creation of an Office of the Consumer.
The creation of the FSRA was one of the key recommendations made by an advisory panel that was asked to review the mandates of the Financial Services Commission of Ontario ("FSCO"), Financial Services Tribunal and the Deposit Insurance Corporation of Ontario. In the Outlook Minister Sousa notes that the establishment of the FSRA would represent an important first step towards the panel's vision for modernizing and strengthening the regulation for financial services and pensions in Ontario.
The Outlook also outlined the Government plans to amend the Act to provide authority to set different deposit insurance limits for different insurable deposits, therefore enabling regulations to be proposed to set the deposit insurance coverage limit for non-registered deposits at $250,000; remove differentiated rules for small credit unions; and permit credit unions to enter into loan syndication agreements with credit unions in other provinces. In addition, the Government plans to propose amendments to regulations under the Act and other relevant statutes that would further implement the above measures and would permit credit unions to establish or acquire a corporation that is an insurance agent or a registered insurance broker; and address provisions in regulations under various statutes to include credit unions as permissible financial institutions.
In addition, Minister Sousa provided an update on the ongoing review by an independent committee regarding the regulatory framework relating to financial planning and financial advisory services. The Outlook indicates that the final report is expected to be released in early 2017.
Minister Sousa also announced that the Government is taking steps to ensure that strong investor protection is provided under the regulatory framework for syndicated mortgages. As an initial step, the Outlook noted that the Ministry of Finance recently established a working group, composed of representatives from the ministry and experts from the Ontario Securities Commission ("OSC") and FSCO. The Outlook indicates that, over the coming months, the working group will develop recommendations for the Government's consideration.
In his statement to the Provincial Legislature with respect to the Outlook, Minister Sousa prefaced his financial sector comments by noting that the Government was staying at the forefront of financial technology and that by embracing fintech and its disruptive technologies, Ontario can maintain its position as a global leader in the financial services sector. While the proposed changes discussed above respond to well considered issues relevant to financial sector and pension regulation, it is not clear how any of what is being proposed will accomplish the Minister's stated objective of embracing fintech and its disruptive technologies. The Outlook did acknowledge the important Lauchpad initiative of the OSC. However, we would expect the Government to develop and implement other policy initiatives related to fintech and disruptive technologies so Ontario can maintain its position as a global leader in the financial services sector.
With the largest financial services practice in Canada, we have expertise in each of the areas of policy and regulations that are the subject of this Bulletin and look forward to assisting existing clients and other parties position themselves successfully in this dynamic Ontario regulatory environment.