The practice area of Financial Institutions Lawyers who deal with regulatory issues is generally understood to encompass advice on regulatory matters affecting banks, insurance companies and trust and loan companies, including advice relating to new incorporations, new capital instruments, corporate finance, bank-holding company regime, insurance-holding company regime, corporate governance, amalgamations, business transfers, ownership rules, business and powers, investment rules, capital adequacy requirements, innovative tier one capital, related party rules, demutualization, establishing foreign banks or insurance branches in Canada, foreign bank regulatory rules (including near banks and true banks), regulatory issues on merger and acquisition transactions, and compensation fund issues (PACIC, CompCorp and CDIC).
Financial institutions lawyers are often dealing with the Office of the Superintendent of financial institutions, the primary regulator of financial institutions in Canada, and provincial regulatory authorities.
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Federally regulated financial institutions (FRFIs), such as banks, are regulated by multiple agencies or government entities. First, the Canadian Department of Finance stands as the overall federal overseer as to FRFIs. While the Department exercises other advisory and policy-making directives, it is also the main implementor of the Bank Act, which is the federal statute regulating banks in Canada, through the Minister of Finance.
There are also the other two federal agencies whose main mandate is regulation – the Office of the Superintendent of Financial Institutions (OSFI) and the Financial Consumer Agency of Canada (FCAC). These two independent agencies have different focus matters and may sometimes apply complementarily with other provincial and territorial regulating bodies.
Financial institutions lawyers in Ontario are experts with these regulatory bodies and the laws that make up these agencies. Generally, when these regulating entities may have overlapping or exclusive jurisdictions among each other, the financial institutions lawyers’ main job is to either assist new or existing financial institutions comply with the said government regulations and legislations.
This is on top of other financial transactions that these institutions partake which may have a different respective statute or regulation. Hence, Ontario-based financial institutions lawyers are knowledgeable on areas of banking laws, corporate laws, taxation, and insurance laws.
The OSFI is a federal independent agency which regulates FRFI’s financial safety and stability or financial soundness through crafting of general policies and for specific transactions, and through the interpretation of legislations and statutes relating to financial sector. OSFI runs on risk management and oversees the financial viability of the FRFIs, although, the OSFI is not directly engaged with the day-to-day or managerial operations of these FRFIs. The said agency works closely with the Department of Finance, and the Minister of Finance.
The FCAC is the federal agency which ensures that the statutory protection afforded to consumers with regards to their financial transactions, products, and services are followed by banks and other FRFIs. The Agency also ensures that the legal obligations, market conduct, and public commitments imposed on FRFIs is complied with. FCAC also implements these mandates through education of Canadians and through collaboration with these FRFIs to develop resources on financial literacy.
Federally regulated financial institutions (FRFIs) are a general term for these financial institutions which may be regulated by either the OSFI or the FCAC, in addition to other provincial or territorial statutes or regulating agencies, whichever’s applicable for these respective institutions. FRFIs are the following:
Financial institutions lawyers may focus with a specific FRFI, with regards to its governmental compliance. Thus, choosing the best lawyer to confer with is highly recommended.
The Financial Services Regulatory Authority of Ontario (FSRA) is another independent provincial regulatory agency, created by legislative enactments which specifically regulates the sectors mentioned below. The Authority is a self-funding agency, whose main objective is to furthermore protect the consumers of financial services and pension plan beneficiaries, by regulating these Ontario financial sectors, through the promotion of standards and transparency among these sectors. Financial institutions lawyers may assist consumers in their financial transactions with these sectors, or even the regulated sectors themselves and other third-party participants in complying with these regulations.
FSRA regulates credit unions or caisses populaires as this sector may offer financial services similar to a bank. Financial transactions with these unions, such as cash deposits, investments, among others, are insured through the Deposit Insurance Reserve Fund (DIRF).
The Financial Professionals Title Protection Act, 2019 (FPTPA) is a recent provincial legislation which considers the following titles of “Financial Planner” and “Financial Advisor” as protected titles in Ontario. Persons who would like to use the said titles must go through any of the FSRA-approved credentialing body, and only when these persons meet specific standards may be granted such titles.
This sector is regulated by the FSRA by licensing these service providers or rehabilitation clinics before they can accept direct payments from automobile insurers for their duly approved patients.
Service providers are typically health and rehabilitation clinics, as well as providers of assessments and examinations. Being licensed by FSRA allows them to receive direct payment from auto insurers for benefits claimed under the Statutory Accident Benefits Schedule (SABS).
Loan & Trust Companies
While the OSFI generally regulates loan and trust companies, they would have to also register with the FSRA for them to operate in Ontario. Additionally, FSRA enforces the Loan and Trust Corporations Act of Ontario, which is applicable to all corporations engaged in loans and trust services.
Before engaging business in Ontario, all mortgage brokers and their agents, are required to acquire their license before the FSRA. This would also include brokerages and administrators of mortgage brokers.
FSRA enforces Ontario’s Pension Benefits Act which is applied to all pension plans of employees in Ontario. The Authority ensures that an employee’s pension plan is compliant with the said Act, and may also receive complaints regarding said pension plan.
As for P&C, life, or health insurance, FSRA ensures that these companies comply with provincial licensing laws of Ontario, specifically the Ontario Insurance Act. Corollary with this, complaints can also be raised before the FSRA should there be any violations committed by these insurance companies.
In Ontario, banks are still under the regulations laid down by the Bank Act, which is the main federal legislation regulating banks throughout Canada. In addition to the said Act, these banks in Ontario are also regulated by the OSFI and the FCAC, noting that banks are main FRFIs regulated by these agencies. Complex applications of these legislations are best consulted with financial institutions lawyers.
Financial institutions in Ontario are provincially regulated by the Financial Services Regulatory Authority of Ontario (FSRA) along with other regulations imposed by the provincial government.
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