Ontario Finance Minister Charles Sousa has just released Ontario's fiscal update, (the "Review") which contained details of the province's intention to create a new provincial Financial Services Regulatory Authority ("FSRA"). This announcement is part of the government's goal of enhancing financial protection for consumers and modernizing the regulation of pensions and financial services.
The FSRA will oversee credit unions, mortgage brokers, provincial pension plans and provincially regulated insurers and will include the creation of an Office of the Consumer, whose mandate will be to "ensure individuals' perspectives are considered".
The creation of a new regulator in Ontario was one of the key recommendations made by an expert panel on financial regulation in the province that had been assembled in 2015 by the government to address concerns over what Mr. Sousa deemed to be "a lack of appropriate governance and accountability" in the current regulatory scheme. The expert panel presented 44 recommendations, many of which have been adopted in the fiscal update.
The creation of the FSRA follows the spirit of recommendations made in the Ontario Auditor General's report of December 2014. After conducting an in-depth audit of the Financial Services Commission of Ontario ("FSCO"), the report suggested FSCO consider ways to transfer responsibility for protecting the public interest to another body and divest itself of responsibility for overseeing regulated financial sectors, including insurance companies.
Responsibility for the licensing and regulation of insurance agents will continue to fall under FSCO. The Review acknowledged the absence in Ontario of a "general framework" that "exists to regulate the activities of individuals who offer financial planning and financial advisory services". An independent committee of experts has been appointed to review the regulation of these services and its report is scheduled for release in early 2017. The Review did not explicitly presage the abolishment of either FSCO, the Financial Services Tribunal or the Deposit Insurance Corporation of Ontario.
The Ontario government will provide further details of how this transition of authority will occur and is preparing to draft a detailed implementation plan following the passing of the enabling legislation that must occur in order to establish the FSRA. This announcement by the Ontario government is intended to signal a serious intention to increase consumer confidence in the province's financial sector and ensure investor and pension-plan beneficiaries are adequately protected.
A full version of the "2016 Ontario Economic Outlook and Fiscal Review" can be found online
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