FSRA, Ontario’s new pension regulator, takes over from FSCO
On June 8, 2019, the Financial Services Regulatory Authority of Ontario (FSRA) assumed the regulatory duties of the Financial Services Commission of Ontario (FSCO) in respect to pension plan regulation in Ontario, as well as the duties of other financial regulators. In connection with the announcement, FSRA released a Newsletter setting out some of its top priorities as it takes control of pension plan regulation and the regulation of other sectors.
FSRA’s initial priorities
FSRA intends to employ principles-based regulation and permit registrants to determine their own path, providing they achieve the desired regulatory outcome. According to the Newsletter, FSRA’s two over-arching priorities are burden reduction and regulatory effectiveness.
In order to reduce regulatory burdens, FSRA will review inherited guidance, data collection, filing requirements, and service standards to ensure they are relevant, provide value and support its mandate. FSRA intends to review all existing regulatory direction and guidance. However, all existing FSCO regulatory direction will remain in force until FSRA has issued new regulatory direction.
In respect of pension plans, FSRA will establish advisory groups and hold broader consultations in the areas of missing pension plan members, asset transfers and family law matters.
FSRA is permitted by legislation to make rules in respect of certain areas over which it has authority. While FSCO issued guidance indicating how it would interpret applicable law and regulation, rules made pursuant to FSRA’s rule-making authority have the force of law.
FSRA’s first official rule, affecting regulatory assessments and fees for regulated sectors including pensions, came into force on June 8, 2019.
The creation of FSRA was recommended by an expert panel in 2015 and included in Bill 70 in 2016 (see the December 2015 and December 2016 News & Views). The creation of FSRA was intended to provide operational flexibility to the regulator, encourage a flexible and consumer-oriented regulatory approach and clarify and streamline the regulator’s mandate.
FSRA is a self-funded Crown corporation created by statute. FSRA is governed by a Board of Directors comprised of directors who are appointed on the recommendation of the Ontario Minister of Finance. FSRA’s Chief Executive Officer, who is appointed by the Board of Directors, is responsible for the management and administration of FSRA.
While FSRA has new executive leadership, many employees of FSCO who were involved in pension plan regulation on an operational basis have been hired by FSRA.
For the time being, FSCO’s website continues to operate and existing FSCO guidance continues to be in force. Over time, FSCO’s operations will migrate to the FSRA website and FSRA can be expected to put its own stamp on pension regulation. Ontario pension plan administrators and others in the Canadian pension sector will be interested to see how FSRA alters pension plan regulation to achieve its stated goals of burden reduction and regulatory effectiveness.