On March 27, 2023, the Financial Services Regulatory Authority of Ontario (FSRA) released draft guidance (the Draft Guidance) for public consultation setting out FSRA’s approach to imposing Administrative Monetary Penalties (AMPs). The Draft Guidance is intended to assist stakeholders in understanding how FSRA exercises discretion when imposing AMPs and determining AMP amounts in order to support transparency, fairness, consistency and better decision-making by persons/entities on whom AMPs are imposed.
As part of FSRA’s enforcement mandate, it has the power to impose AMPs if it is satisfied that a person or entity has contravened or is not in compliance with certain statutory requirements. The two types of AMPs that FSRA may impose are general administrative penalties (General AMPs) and summary administrative penalties (Summary AMPs). General AMPs tend to be available for a broad range of contraventions and are subject to significant regulatory discretion, within statutory maximums. Summary AMPs are available under some of the FSRA sector statutes for more technical violations (such as non-filing and inappropriate record keeping) and the amounts are usually prescribed.
The Draft Guidance sets out FSRA’s position on the interpretation of, and approach to, the application of the statutory and regulatory provisions dealing with the following aspects of AMPs:
- The purpose for which AMPs can be imposed under the sector statutes;
- The criteria for determining the amount of General AMPs imposed under the sector statutes; and
- The considerations for determining whether a General AMP is “punitive” and requires adjustment, or whether the amount of penalty imposed is consistent with the purposes for imposing AMPs.
Prior to imposing an AMP, FSRA must believe it will satisfy at least one of the enumerated statutory purposes, being: (i) to promote compliance with statutory requirements or (ii) to prevent a person or entity from deriving economic benefit (which includes non-monetary benefits such as time saved from non-compliance) as a result of the contravention.
The Draft Guidance includes FSRA’s interpretation of the following statutory criteria that it must consider when exercising discretion to determine the amount of a General AMP:
- Degree to which the contravention or failure was intentional, reckless or negligent;
- Extent of the harm or potential harm to others resulting from the contravention or failure to comply;
- Extent to which the person tried to mitigate any loss or take other remedial action;
- Economic benefit derived or reasonably expected to be derived by the person or entity from the contravention or failure to comply; and
- Prior history of contraventions or failures to comply.
The consultation period is open until May 31, 2023, and feedback can be provided through FSRA’s website.
April 28, 2023