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Ontario: proposal to combine pension and financial authorities

On November 4, 2015, an Expert Review Panel (the “Panel”) appointed by the Ontario Ministry of Finance to review the mandates of the Financial Services Commission of Ontario (FSCO), the Financial Services Tribunal (FST), and the Deposit Insurance Corporation of Ontario (DICO) released a Preliminary Position Paper (the “Position Paper”).

Among the Position Paper’s 37 recommendations is the establishment of a new regulatory agency called the Financial Services Regulatory Authority (FSRA). The FSRA would replace both FSCO and DICO. Key features of the proposed FSRA include:

  • A governance structure comprised of an independent expert board of directors to oversee FSRA operations, and a Chief Executive Officer that reports to the board;
  • A self-funded FSRA that operates outside of the Ontario Public Service as a way to support operational independence, and to improve the FSRA’s ability to recruit professionals and industry expertise;
  • The FSRA would operate as an integrated regulator of financial services with distinct market conduct, pensions, and prudential regulatory functions organized by divisions;
  • Each FSRA division would be led by a Superintendent. For instance, the Superintendent of Pensions would be operationally accountable to the CEO;
  • The FSRA would have the authority to levy administrative monetary penalties in the pension and other sectors it regulates;
  • The FSRA board would be required to meet with the sectors it oversees at least once a year;
  • The FSRA would create a separate ‘Office of the Consumer’ to consider the perspective of consumers in all of its policy-making and actions; and
  • The Pension Benefits Guarantee Fund (PBGF) would be administered and overseen by an entity that is separate from, but accountable to, the FSRA.

In addition, highlights of recommendations concerning the FST included:

  • The FST would operate separately from FSRA, with its own budget;
  • The FST would have the power to recruit professional resources with experience in the regulated sectors;
  • A mechanism would be established to appropriately allow and encourage policy-level discourse between the FST and FSRA’s board; and
  • Legislative or other means should be implemented to ensure that the courts give deference to the FST on policy or matters within its subject-matter expertise.


The proposed changes in Ontario are intended to provide operational flexibility to regulators, encourage a flexible and consumer-oriented regulatory approach and clarify and streamline the regulator’s mandate. The proposal to authorize the new financial regulator to impose administrative penalties (i.e., levy fines without mounting a prosecution in the courts) would be a significant expansion of authority.

Public comments are invited by December 14, 2015.