Expert Advisory Panel – FSCO/FST/DICO Mandate Reviews
Ministry of Finance
Financial Institutions Policy Branch & Income Security & Pension Policy Division
Frost Building North, Room 424
95 Grosvenor Street, 4th Floor
Toronto, ON M7A 1Z1
Email: fipbmandatereview@ontario.ca
Subject: Review of FSCO, FST and DICO Mandates – Preliminary Position Paper
Dear Messrs. Cooke, Daw, and Ritchie:
CAFII is pleased to provide feedback on the recommendations made in your Preliminary Position Paper.
Overall, we would support the establishment of a Financial Services Regulatory Authority (FSRA) as outlined in the Paper but we are of the view that many of the recommendations would be valuable whether or not the government implements the structural model you outline in section II.4 Our Preliminary Recommendations. In addition, we agree with the underlying goal of creating a nimble, flexible and innovative regulator which ensures that consumers have a consistently high level of service and protection, without burdening market participants with undue regulatory costs or complexity.
With respect to the specific recommendations on the proposed new regulatory agency, we agree in particular with the proposals that
- its mandate should incorporate, within the agency’s constituting statute, a specific statement of principles; a specific statement of purpose; and express statutory authorities for enforcement;
- the mandate should strike a balance between strong and effective consumer protection and fostering a strong, vibrant and competitive financial services sector;
- the mandate should include a commitment to encourage innovation and transparency within the regulated sectors;
- it should be required by statute to take a risk-based and outcomes-based approach to regulation, through which the policy objectives and likely outcomes are considered and explicitly articulated;
- if the FSRA’s Board is granted rule-making authority, rules should be drafted with significant stakeholder/public input and dialogue and be subject to a rule-making process set out in the statute and to timely review by the Minister of Finance;
- it should only act as a prudential regulator for a limited and defined class of entities (for example, those that operate solely in Ontario), and efforts should be made to transfer the oversight of others to the federal Office of the Superintendent of Financial Institutions (OSFI); and
- its role in national regulatory bodies should be incorporated within its mandate, with a requirement that the work done by these groups be reported back to its governing body.
With respect to Recommendation 4(c), we do not oppose adherence to the OECD’s G20 High-Level Principles on Financial Consumer Protection being referenced. However, we strongly urge that, with respect to insurance regulation, the mandate should be informed by the International Association of Insurance Supervisors’ (IAIS) Insurance Core Principles.
If the FSRA is given authority over, and responsibility for, the oversight of self-regulatory bodies (Recommendation #9), we would like to restate our position that should any such bodies be created by the FSRA (e.g. an Insurance Council), they should be “channel neutral”. That is, any such SRO or Council should be designed such that the interests of all distribution channels are well-served and the representatives of any particular channel are not in a position to make decisions which could negatively affect or disadvantage competing channels.
Thank you for the opportunity to share CAFII’s comments in response to the recommendations put forward in your Preliminary Position Paper. We applaud the Panel for doing such a thorough job and for reflecting the views of many diverse stakeholders. We recognize that this is a first step in the process and look forward to providing additional input as the journey towards mandate renewal for FSCO, FST, and DICO continues.
Should you require more information or clarification from CAFII or wish to meet with our Association as you prepare your final recommendations for the Minister of Finance, please contact Brendan Wycks, our Executive Director, at brendan.wycks@cafii.com or 647-218-8243.
Sincerely,
Greg Grant, MBA, FLMI, ACS
Board Secretary and Chair, Executive Operations Committee
Canadian Association of Financial Institutions in Insurance
c.c. David McLean, Policy Advisor, Financial Institutions Policy Branch, Ontario Ministry of Finance