Month: January 2022
Jan 31, 2022 | Featured
In this bulletin:
- Getting More for Less – OSC Proposes Amendments to Fee Rule
- Third Time Lucky? The Latest on the CSA’s Derivatives Business Conduct Rule
- The CSA Proposes Modernizing Prospectus Filings for Investment Funds
- Wrapped, Tied and Tangled – OSC Consultation on Tied Selling and Other Anti-Competitive Practices in the Capital Markets
- Chim Cher-ee – OSC Product Review Sweep on the Restriction of Sales of Third-Party Investment Products
- My Name Is: Some Slim News on Not-so Shady Titles
- Changes to the Outside Business Activities (OBAs) Framework
- CSA Publishes Amendments to the Rules on Oversight of Foreign Audit Firms Performing Audits of Canadian Public Issuers
In Brief: CSA Releases New Guidance for Funds on ESG-Related Disclosure ▪ Nothing to Complain About – Regulators Propose Additional Amendments Regarding Complaint-Handling Procedures ▪ Blowing the Whistle – FCAC Consults on Proposed Whistleblower Guidelines ▪ CSA’s Proposed Investor Advisory Panel
BLG’s Resource Corner
Click the link to access a PDF of our full, monthly bulletin summarizing these recent developments. >> Monthly Bulletin | Snowy January Edition | January 2022
Jan 31, 2022 | Investment Funds, Regulatory Compliance
As the capital markets continue to evolve, the Ontario Securities Commission (the OSC) and its regulatory priorities have to change with them. The OSC charges market participants two types of fees: participation fees, which serve as a proxy for use of the Ontario capital markets and are based on the costs of a range of OSC services that can not be attributed to individual entities or activities, and activity fees which are generally charged when specified documents are filed with the OSC. To reflect the growth in Ontario’s derivatives over-the-counter (OTC) market activities, and with a view to reducing the regulatory burden on smaller and medium-sized businesses, the OSC is proposing amendments to OSC Rule 13-502 Fees, OSC Rule 13-503 (Commodity Futures Act) Fees and their related companion policies (collectively, the Fee Rule). The Fee Rule will introduce a new fee for entities that enter into OTC derivatives transactions but reduce participation fees for certain reporting issuers and registrants, and eliminate certain activity and late fees.
The new derivatives participation fee is intended to help fund some of the OSC’s multi-year initiatives, including a derivatives regulatory oversight program and technology modernization projects. The consultation draft for the Fee Rule notes that there is over $60 trillion of outstanding notional and over 3.7 million OTC derivative transactions outstanding, which is monitored and analyzed by the OSC, along with 2.4 billion records a year that they receive. In order to monitor systemic risk, including identifying vulnerabilities such as market fragmentation, access to liquidity and price formation trends, the OSC will add participation fees payable by entities engaged in the trading of OTC derivatives, which will be a tiered fee based on an entity’s outstanding average daily notional of all transactions that are required to be reported under OSC Rule 91-507 Trade Repositories and Derivatives Data Reporting over a one year period (provided the fee payer’s average outstanding notional is over $3 billion). It is anticipated that the new fee will mainly impact banks that are derivatives dealers. The tiers range from a $3,000 fee for entities with outstanding notional amounts from $3 billion to under $7.5 billion, to a whopping $1.9 million annual fee for entities with outstanding notional amounts of $10 trillion and over. The OSC expects to raise approximately $13.5 million annually through the new participation fee. The new fee will eliminate the cross-subsidization of regulatory oversight costs by other market participants.
On the other hand, the OSC expects that over 5,500 market participants will save approximately $5.6 million annually through reductions in specific fees, approximately $3.1 million of which would come from modest reductions in certain participation fees paid by registrants and reporting issuers. For example, the lowest participation fee tier for registrants with specified Ontario revenues for the year of under $250,000 would be reduced from $835 to $700. Of note, the fee payable on exempt distribution filings under National Instrument 45-106 Prospectus Exemptions (NI 45-106) would be reduced from $500 to $350, and the calculation based on gross proceeds for distributions of securities of an issuer using the offering memorandum exemption under section 2.9 of NI 45-106 would be replaced by the $350 fee. Certain infrequently used activity fees would be eliminated. Perhaps most welcome would be the proposal to permanently eliminate late fees on filings for certain registration form updates, including outside business activities (soon to be outside activities – see article below).
Also welcome news is the proposal to simplify the annual capital markets participation fee calculation. Currently, registrants are required to estimate their specified Ontario revenues, and adjust the filings if needed based on actual revenues. The proposals would instead accept a fee calculation based on the most recent completed financial statements – i.e. actual financial information based upon the most recently audited financial statements. The deadline for registrant firms to file would be moved from December 1 to anytime between September 1 and November 1. It should be noted that while some late fees would be eliminated under the proposal, the calculation of the late fees for those that will still be imposed would be calculated based on calendar days, and not business days.
If the Fee Rule moves forward, the fee changes are anticipated to become effective on April 3, 2023. Comments on the proposal will be accepted until April 21, 2022.
January 31, 2022
Jan 31, 2022 | Investment Funds, Regulatory Compliance
On January 20, the Canadian Securities Administrators (the CSA) published CSA Notice and Third Request for Comments on Derivatives Business Conduct (the Notice), the CSA’s draft publication setting out rules intended to better protect OTC derivatives market participants. The two earlier consultations were published on April 4, 2017 and June 14, 2018.
The Notice sets out Proposed National Instrument 93-101 Derivatives: Business Conduct and Proposed Companion Policy 93-101CP Derivatives: Business Conduct (collectively, the Proposed Instrument). The Proposed Instrument is intended to create a uniform approach to derivatives markets conduct regulation in Canada and promote consistent protections for over-the-counter (OTC) derivatives market participants, while also ensuring that derivatives dealers and advisers operating in Canada are subject to consistent regulation. The Proposed Instrument is also intended to meet IOSCO’s international standards.
The Proposed Instrument applies to a person or company if it meets the definition of “derivatives adviser” or a “derivatives dealer”, even if they are not required to be registered as such because they don’t meet the business trigger for registration (yes – “that” business trigger test), or can utilize an exemption in the Proposed Instrument. The Proposed Instrument would thus apply to federally regulated Canadian financial institutions.
The Proposed Instrument sets out a principled approach to regulating the conduct of participants in the OTC derivatives markets, including requirements relating to fair dealing, conflicts of interest, know-your-derivatives party, suitability, pre-transaction disclosure, reporting, compliance, senior management duties, recordkeeping, and the treatment of derivatives party assets. The CSA notes that many of these requirements are similar to the existing requirements applicable to securities dealers and advisers in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103). Further, similar to NI 31-103, the Proposed Instrument takes a two-tiered approach to investor protection by: a) having certain obligations apply in all cases when a derivatives firm is dealing with or advising a derivatives party, regardless of the level of sophistication of that derivatives party; and b) having certain additional obligations apply if the derivatives party is not an “eligible derivatives party” (EDP), and apply, but subject to being waived, if the derivatives party is an EDP that is an individual or a “specified commercial hedger”.
We wrote about the June 14, 2018 second consultation in our June 2018 Bulletin. The Notice includes a summary of changes to the Proposed Instrument since the 2018 consultation. These changes include, among others, the addition of a new foreign liquidity provider exemption for foreign dealers when they transact with derivatives dealers in Canada, a new exemption for foreign sub-advisers that is similar to the exemption for international sub-advisers in NI 31-103, a five year transition period to allow derivatives firms to treat existing permitted clients and similar entities as an EDP, a new exemption for registered advisers from certain requirements if they comply with corresponding requirements in NI 31-103 in order to leverage existing compliance systems, revisions to the rules around senior derivatives managers, and the application of a limited sub-set of requirements to certain derivatives dealers that are Canadian financial institutions with respect to short-term foreign exchange (FX) contracts in the institutional FX market. As an example of some of the changes, the proposed requirement to have a senior derivatives manager will now only apply to certain derivatives dealers with a specified notional amount of derivatives outstanding. Many of these changes are intended to address comments received on earlier consultations to the effect that there could be negative potential impacts on derivatives market liquidity as a result of the application of certain provisions. The complaint handling provisions and tied selling provisions, on the other hand, have been extended to apply to all derivatives parties.
In addition to comments on all aspects of the Proposed Instrument, the CSA is also seeking feedback on eight specific questions that include such topics as: the foreign liquidity provider exemption, the foreign derivatives dealer and adviser exemptions, the commercial hedge category of the EDP definition, exemption from the designation and responsibilities of a senior derivatives manager, short-term FX contracts in the institutional FX market, treatment of registered advisers under securities or commodity futures legislation, and conflicts of interest. The CSA is requesting comments to be submitted by March 21, 2022. Once the Proposed Instrument is released in final form, there will be a delayed effective date of one year.
Please contact a member of our team if you would like to discuss the Proposed Instrument or its potential impact on your business.
January 31, 2022
Jan 31, 2022 | Investment Funds, Regulatory Compliance
On January 27, the Canadian Securities Administrators (the CSA) published CSA Notice and Request for Comment – Proposed Amendments to National Instrument 41-101 General Prospectus Requirements, National Instrument 81-101 Mutual Funds Prospectus Disclosure, and Related Proposed Consequential Amendments and Changes and Consultation Paper on Base Shelf Prospectus Filing Model for Investment Funds in Continuous Distribution – Modernization of the Prospectus Filing Model for Investment Funds (the Notice). If you were able to get through reading the entire title of the Notice, you will already have a sense of its scope.
The Notice is divided into two parts, the first being proposed amendments to a number of national instruments that would reduce the frequency of prospectus filings for funds that are in continuous distribution by extending the lapse date period for pro forma prospectuses (collectively, the Proposed Amendments). As a result, a prospectus would be required to be renewed every two years instead of every year.
The stated purpose of the Proposed Amendments is to modernize the prospectus filing model without affecting the currency of the information available to investors to make an informed investment decision. There would be no change to when the Fund Facts or ETF Facts (as applicable) would need to be filed (i.e., annually) and delivered, and it is those documents which will continue to provide investors with the disclosure that changes from year to year. Funds will still be subject to the requirements relating to material changes if any take place prior to the next prospectus renewal. In addition, the CSA is proposing to repeal the requirement to file a final prospectus no more than 90 days after the issuance of a receipt for a preliminary prospectus for all investment funds. The CSA has determined that the 90-day limit to file a final prospectus is no longer required for investments funds; unlike corporate issuers that could be marketing off of stale data in a preliminary prospectus, investment funds do not generally market through a preliminary prospectus, nor do they usually contain material financial information that could become stale after 90 days.
As part of the Proposed Amendments, the CSA is seeking feedback on four specific questions relating to the proposed change to the prospectus filing requirements (i.e. the proposal to extend the lapse date from 12 months to 24 months). The Notice does indicate that the changes will be contingent on not having a negative impact on filing fees; in other words, it is expected that each jurisdiction will change their filing fees such that the annual filing of the Fund Facts/ETF Facts will incur filing fees instead of the prospectus filed every two years.
As part of a second stage of modernizing the prospectus rules, the CSA released a consultation paper which discusses the possible adaptations to the shelf prospectus filing model that could apply to investment funds in continuous distribution (the Consultation Paper).
In the Consultation Paper, the CSA seeks input from market participants to help them determine whether to publish proposed amendments to permit a base shelf prospectus filing model for investment funds in continuous distribution, similar to the regime set out for corporate issuers in NI 44-102 Shelf Distributions. It is noted that the lapse of a pro forma prospectus causes funds to incur the time and cost of renewal, despite the fact that much of the disclosure does not change on an annual basis. The current regime for corporate issuers includes mechanisms to ensure all material facts are disclosed and that liability is imposed on persons or companies required to certify that the prospectus does disclose all material facts. For investment funds, it is contemplated that the base shelf prospectus could have a lapse date beyond 25 months, and that certain disclosure documents such as the Fund Facts and ETF Facts would be incorporated by reference into the base shelf prospectus and be subject to primary market liability in the event of a misrepresentation. The CSA notes that in connection with any such proposal, it would also look to remove disclosure items from the base shelf prospectus that would not have to be updated annually and moved into documents that would be incorporated by reference.
As part of the Consultation Paper, the CSA is also seeking feedback on a number of specific questions, including with respect to the appropriate disclosure to include in the equivalent of a base shelf prospectus for a group of investment funds, any adverse impacts such a prospectus may have on the disclosure required by investors, or any adverse impacts it could have on current liability rights.
The CSA is seeking comments on the Proposed Amendments and Consultation Paper by April 27, 2022. If you would like to discuss these proposals, please contact a member of our team.
January 31, 2022
Jan 31, 2022 | Corporate Finance, Investment Funds, News, Regulatory Compliance
On November 19, 2021, the Honourable Peter Bethlenfalvy, Minister of Finance of Ontario, requested that the Ontario Securities Commission (the OSC) undertake an analysis of questions regarding the practice of tied selling raised by the Capital Markets Modernization Taskforce (the Taskforce) in their consultation in 2020. In response, on November 30, the OSC issued OSC Staff Notice 33-753 OSC Consultation on Tied Selling and other Anti-Competitive Practices in the Capital Markets (the Notice).
The Notice requested submissions and supporting evidence and analysis from issuers, dealers and other market participants as well as from investors and other stakeholders in order to establish the extent to which tied selling may be impeding competition. More specifically, the Taskforce identified concerns that certain commercial lenders might be engaging in practices that impede competition such as where a lender requires issuer clients to retain the services of a dealer or adviser affiliate of the lender for their capital raising and/or advisory needs as a condition of entering into a commercial transaction, or vice versa.
The Notice included a series of specific questions that the OSC would like feedback on from academic and regulatory experts and professional advisors. The OSC asked to receive submissions in response to the Notice by January 10, 2022. The OSC then plans to incorporate the submissions in its report to the Minister by February 28.
January 29, 2021
Jan 31, 2022 | Client-Focused Reforms (CFRs), Corporate Finance, Investment Funds, Regulatory Compliance
Related to OSC Staff Notice 33-753 OSC Consultation on Tied Selling and Other Anti-Competitive Practices in the Capital Markets, on December 7 the Ontario Securities Commission (the OSC) commenced a desk review, also known as the OSC Product Review Sweep (the Sweep), of many large Ontario-based financial institutions and some independent firms. The Sweep was initiated following a Letter of Direction from the Honourable Peter Bethlenfalvy, Minister of Finance of Ontario, to the Chair of the OSC. The Letter of Direction expressed concerns about some of Ontario’s largest financial institutions halting sales of third-party investment products. The letter noted that some financial institutions had signaled that the measures to restrict shelf space were in response to the Client Focused Reforms.
In response to the Letter of Direction, the OSC commenced the Sweep and requested detailed information from the targeted firms by January 6, 2022. The information request included questions on general business information about the firm, related products, third-party products, shelf composition, and managed solutions. The OSC also provided a detailed template of information to be completed with the review. The OSC plans to incorporate the information in its report to the Minister by February 28.
January 31, 2022
Jan 31, 2022 | Regulatory Compliance
As reported in our November 2021 Bulletin, the CSA’s rules on titles for registered individuals who interact with clients changed effective December 31, 2021 as part of the client-focused reforms to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103). In connection with those changes, several large financial institutions applied for exemptions from the requirements in connection with their businesses. The Ontario Securities Commission (the OSC) granted a number of such exemptions on December 31, 2021, generally with the following facts and conditions, amongst others: 1) the restricted titles include: “Senior Vice President”, “Vice President”, “Director”, and “Managing Director”; 2) the restricted titles are only used with clients who are non-individual “permitted clients” or non-individual “institutional clients” (as defined by IIROC Rule 1201); and 3) without the exemption, the firms would face significant operational and human resource challenges in complying with the rule on titles in section 13.18 of NI 31-103.
If you would like to discuss the exemptions in more detail, please do not hesitate to contact any member of our team.
January 31, 2022
Jan 31, 2022 | Regulatory Compliance
On December 16, 2021, the Canadian Securities Administrators (the CSA) announced that amendments to legislation clarifying the “Outside Activity” (OA) reporting framework and modernizing registration information requirements (the Amendments), have been finalized and will be coming into force on June 6, 2022.
Generally, the Amendments will involve changes to National Instrument 33-109 Registration Information (NI 33-109) (and its Companion Policy and related forms) and National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) (and its Companion Policy). The initial proposed changes were previously discussed in an AUM Law Bulletin. Overall, the Amendments are meant to address issues identified by CSA Staff and registrants by providing clarifications on submitting registration information that is frequently incorrect, and to reduce regulatory burden.
In regard to the OAs, the Amendments change the term from “Outside Business Activities” to “Outside Activities” and establish a new framework for reporting outside activities to regulators. Appendix C of the Companion Policy to NI 33-109 outlines and provides examples for the following 5 categories of activities that are considered OAs:
- Activities with another registered firm
- Activities with an entity that receives compensation from another registered firm for the registrant’s registrable activity
- Other securities-related activities
- Provision of financial or finance-related services
- Positions of influence
The guidance also stresses that firms are responsible for conflicts of interest arising from all OAs, even if they are not reportable to regulators.
Other key takeaways are that the guidance relating to OAs that can be considered positions of influence will now be codified in section 13.4.3 of NI 31-103, and activities with an affiliate are to be reported as OAs.
Currently, registrants are required to file OBA disclosure within 10 days of a new OBA or a change to an existing OBA. The Ontario Securities Commission is extending its moratorium on fees related to overdue OBA filings until the Amendments come into force on June 6, 2022. Registrants must still disclose OBA information, but no fees will be charged for overdue filings while the moratorium is in effect. After June 6, 2022, the Amendments mandate that registrants will be required to file OA disclosure within 30 days.
Although the Amendments will be coming into force on June 6, 2022, the CSA clarifies that they do not expect registrants to update their information, such as reporting the OAs under the new framework, until there has been a change in the registration information previously provided. If there has been a change, the registrant will be expected to review and update all information, to make sure it is compliant with the new requirements in the Amendments.
A requirement unrelated to the OAs worth mentioning is that firms will now be required to report the business titles and professional designations used by registered individuals, likely to provide a way for regulators to monitor firms’ compliance with the new titles requirements.
For the CSA’s summary of the changes see the CSA’s notice of Amendments. The full Amendments can be found here.
If you have additional questions about the above, please contact your usual lawyer at AUM Law to discuss. We would also be happy to discuss updating your policies and procedures to reflect the Amendments, as well as potential training opportunities for your employees.
January 31, 2021
Jan 31, 2022 | Corporate Finance, Regulatory Compliance
On January 13, 2022, the Canadian Securities Administrators (the CSA) published CSA Notice of Publication – Amendments to National Instrument 52-108 Auditor Oversight (the Notice), containing the final amendments introducing new rules intended to regulate the conduct of certain audit firms performing audits of Canadian public issuers (the Amendments).
The Amendments are intended to address challenges that the Canadian Public Accountability Board (CPAB) faces in accessing audit work performed by audit firms that are not directly subject to Canadian regulatory oversight. Such challenges could arise, for example, in circumstances where the main audit firm (the audit firm that issues the audit report, or the “participating audit firm” or “PAF”) retains the services of a foreign audit firm to complete a portion of the audit. Under the current regime, CPAB experiences difficulty accessing the audit materials and records of such foreign auditors.
The Amendments introduce a new definition of a “component auditor”, having the same meaning as it does in Canadian GAAS, which essentially refers to an auditor that performs an audit over a “component” (e.g. a foreign subsidiary of the public issuer). A “significant component auditor” is a component auditor where:
- the component auditor performs audit work involving financial information related to a component of the reporting issuer;
- the reporting issuer being audited has the power to direct the component on its own or jointly with another person; and
- the component auditor meets one of the quantitative metrics relating to hours of work, fees paid, or relative size of the component’s assets or revenue set out in the Amendments.
The Amendments then require a reporting issuer to give written notice to a significant component auditor permitting it to provide access to records relating to its audit work to CPAB, and to enter into a “CPAB access agreement” with CPAB if CPAB issues a notice that it was unable to access the significant component auditor’s records.
If the significant component auditor fails to enter into such an agreement, the PAF will be prohibited from using the significant component auditor in future.
In coordination with the publication of the Notice, CPAB released its own publication, entitled Guidance regarding CPAB’s process for requirements in NI 52-108 related to access to working papers of significant component auditors in foreign jurisdictions (the Guidance).
In the Guidance, CPAB states that, when deciding whether to request access to a significant component auditor’s records, it will consider factors including:
- the number of component auditors and the relative significance of their audit work to the inspection focus areas;
- the nature and extent of the audit work;
- the oversight by the PAF; and
- the evidence retained in the group audit file.
Furthermore, CPAB clarifies that it will only request access to a significant component auditor’s working papers that directly relate to its review of the PAF audit file, and not seek access to inspect the component auditor’s system of quality controls.
If there is a memorandum of understanding or similar agreement in effect with the local audit regulator of the significant component auditor’s jurisdiction, CPAB will first utilize such mechanism before resorting to the process set out in the Amendments.
These mechanisms ultimately leverage the relationships that the public issuer has with the PAF and the significant component auditor to achieve the objectives of access to relevant records.
If you have any questions about the Amendments, the Guidance or about how the new rules may affect you, please do not hesitate to contact any member of our team.
January 31, 2022
Jan 31, 2022 | Investment Funds, Regulatory Compliance
On January 19, 2022, the Canadian Securities Administrators (the CSA) released Staff Notice 81-334 ESG-Related Investment Fund Disclosure, which provides guidance on the disclosure practices of investment funds as they relate to environmental, social and governance (ESG) considerations. As specifically mentioned in the notice, no new legal requirements are being created (or amended), but managers of funds whose objectives or strategies reference ESG factors should take note and read the guidance carefully with a view to understanding the current regulatory requirements and best practices in respect of ESG disclosure. Staff is particularly concerned about disclosure that is misleading or could be considered “greenwashing”.
Some of the areas covered in the notice include the appropriate use of ESG references in the name, investment objective and investment strategies of a fund. For example, it is noted that a fund that uses an ESG strategy as a material aspect of the fund must disclose those strategies as an investment objective. Staff would encourage funds that intend to generate a measurable ESG outcome (e.g. reducing carbon emissions) to clearly state the intended outcome as part of the fund’s investment objectives. Staff also believe that investment strategy disclosure should identify and explain any ESG factors used and identify how those factors are evaluated and monitored. The notice provides further guidance on a number of other disclosure matters, including ESG related risk disclosure by both ESG related funds and all other funds.
With respect to continuous disclosure, the CSA includes reference to a best practice for funds that have ESG related investment objectives of disclosing, as part of the summary of the results of operations in a fund’s MRFP, the ESG related aspects of those operations. There is also a very comprehensive discussion about permitted sales communications to ensure they accurately reflect the extent to which a fund is focused on ESG, and the particular aspect of ESG that the fund is focused on, to ensure it is not misleading. The discussion includes references to permitted use of fund-level ESG ratings, scores and rankings.
The notice is also a worthwhile read for those interested in an overview of common ESG-related terms and strategies and an understanding of global and domestic developments in the area.
Our colleagues at BLG will be publishing their analysis of the guidance shortly, as noted in BLG’s related bulletin article referenced in the BLG Resource Corner below.
January 31, 2022
Jan 31, 2022 | Regulatory Compliance
Regulators continue to review best practices relating to complaint-handling procedures. On January 13, the Investment Industry Regulatory Organization of Canada (IIROC) released proposed amendments respecting reporting, internal investigations and client complaint requirements. Many of these amendments impact IIROC’s current ComSet reporting, and some requirements under the Universal Market Integrity Rules, which are meant to clarify regulatory expectations, reflect best practices and reduce duplicative reporting. The amendments would introduce a definition for “serious misconduct”, and among other prescriptive reportable actions (such as material breaches of client personal information, suspected fraud or theft), dealers would be required to report actions if there is a reasonable risk of material harm to clients or the capital markets, or material non-compliance with IIROC requirements, securities laws, or other applicable laws. If the proposed amendments proceed, dealers would be required to conduct internal investigations and report to IIROC if they become aware the dealer, an Approved Person or an employee may have engaged in serious misconduct within prescribed time frames. Some of the best practices IIROC wishes to adopt include removing the distinction between verbal and written complaints, setting time limits for internal dispute resolution, as well as prohibiting the use of the term “ombudsman” for internal dispute resolution services to help avoid client confusion with external dispute resolution services. If a dealer discovers systemic issues, they will have to consider whether it is fair and reasonable to proactively conduct any redress or remediation. IIROC believes the proposals will allow it to better prevent and address material harm to investors and clients. Amendments are also proposed to Rule 9500, to remove the restrictions on information IIROC can receive from the Ombudsman for Banking Services and Investments (OBSI). The comment period will end on April 14, 2022.
In addition, the Financial Services Regulatory Authority of Ontario (FSRA) released a Complaints Resolution Policy Framework and Best Practices, which is intended to guide its future policy work on complaints resolution while staff reviews the current ecosystem. The guideline runs through FSRA’s research on how other jurisdictions deal with complaints resolution, and summarizes its conclusions regarding some best practices. These practices include financial entities having both an internal and external dispute resolution process, with only one external dispute resolution body for any one particular financial service sector. Another best practice noted is the ability of external dispute resolution mechanisms to secure redress for consumers. While the guideline itself was not the subject of consultation, FSRA has asked a number of specific discussion questions with respect to suggestions for any additional best practices, or issues FSRA should explore in future in the context of its work on complaints resolution. If you have any questions, please reach out to us. Comments are due by February 15.
January 31, 2022
Jan 31, 2022 | Regulatory Compliance
While not directly impacting all registrants, it is interesting to note that the Financial Consumer Agency of Canada (the FCAC) is consulting on the Proposed Guideline on Whistleblowing Policies and Procedures for Banks and Authorized Foreign Banks which sets out its expectations for the new provisions of the Bank Act (Canada) regarding an employee’s ability to report on wrongdoings (defined in the Act to include a breach of the Act or an internal policy, for example). The agency expects that a bank’s policies should be effective, easy to access, understand and use, and protect employees from retaliation. The FCAC notes policies should include an organizational commitment to encourage reporting, and banks should be able to demonstrate they are allocating sufficient resources (including employee training) on this aspect of the banks’ policies. Employees should be made aware of resources available to them to support them in reporting, including confidential advice from an appointed senior officer or an external, independent body. Employees should also be made aware that they can report instead directly to the FCAC or OSFI (or any other governmental body with jurisdiction). We will follow the outcome of the proposals with interest; the comment period closed on January 29.
January 31, 2022
Jan 31, 2022 | Regulatory Compliance
The CSA released Staff Notice and Request for Comment 11-343 Proposal to Establish a CSA Investor Advisory Panel, to obtain the views of retail investors more formally and methodically through a pan-Canadian panel. The panel is intended to include a diverse range of investor interests, as well as be independent from (and funded by) the CSA. The panel’s focus would be to provide feedback on proposed CSA rules and polices, and is intended to be comprised of 5-9 members who would receive a small fee for their work. The proposal sets out the terms of reference for the panel, including meeting frequency, annual reporting, attendance at the CSA Chairs’ meeting, the membership selection process and expectations for disclosure of conflicts. The comment period on the terms of reference ends on February 1.
January 31, 2022
Jan 31, 2022 | News, Regulatory Compliance
Our colleagues at BLG have written a number of articles we thought might interest our readers, including the following:
For more information, please visit the BLG website.
January 31, 2022
