FSRA to begin imposing summary administrative penalties for late regulatory filings
On August 13, 2019, the new Ontario pension regulator, the Financial Services Regulatory Authority of Ontario (FSRA), announced that it intends to commence imposing summary administrative monetary penalties (AMPs) effective for filings due on or after September 30, 2019. FSRA will work with plan administrators who have outstanding late filings that were due prior to September 30, 2019, in order to bring plans into compliance. If plans with outstanding late filings are brought into compliance by October 31, 2019, FSRA will not issue summary AMPs.
The Ontario Pension Benefits Act was amended effective January 1, 2018, to permit the issuance of administrative penalties for violations of certain legislative requirements. The previous Ontario pension regulator, the Financial Services Commission of Ontario (FSCO), issued an Administrative Monetary Penalties Guideline (the AMP Guideline) in November 2018. The AMP Guideline was discussed in the December 2018 News & Views.
There are two types of AMPs: general and summary. A summary AMP relates to a late regulatory filing, in relation to matters such as annual information returns, audited financial statements, actuarial valuation reports, and investment information summaries. Summary AMPs accrue daily with penalties of $100 or $200 for each day of non-compliance. AMPs are capped at $10,000 per contravention or failure to comply for individuals, and $25,000 for corporations or other groups such as boards of trustees.
FSRA’s new approach to summary AMPs
Although FSCO had the authority to issue AMPs, it took a relatively flexible approach pending the transition to FSRA. With this announcement, FSRA indicates that it intends to begin applying the AMP provisions in the legislation and following the approach set out in the AMP Guideline beginning for filings due on or after September 30, 2019. Filings with earlier due dates will have until October 31, 2019, to come into compliance without being subject to a summary AMP.
The AMP Guideline states that, upon identifying a late filing, the regulator will send a Letter of Warning giving the plan administrator a set amount of time to correct the issue without a summary AMP being issued.
If the issue is corrected within the specified deadline, a summary AMP will not be issued. If the issue is not corrected, FSRA will send a Letter of Proposed Action proposing to issue a summary AMP but offering an opportunity to present mitigating circumstances. It appears that mitigating circumstances will be primarily external factors such as emergencies, strikes and other business disruptions.
The FSRA announcement places a greater onus on plan administrators to make regulatory filings on time or to request extensions, if it is not possible to meet the deadlines. If a regulatory deadline is not met, the administrator must be ready to meet the deadline soon thereafter or, absent mitigating circumstances, should expect to be issued a summary AMP.
The FSRA announcement does not affect general AMPs, which can be issued based on non-compliance with substantive legislative provisions of the Pension Benefits Act.