2015 Ontario Economic Outlook and Fiscal Review
Chapter I: Building Ontario Up — Progress for Prosperity

Section B: Strengthening the Financial Services Sector

The financial services sector is critical to Ontario’s economic prosperity. The government is taking action to support growth for the industry — and province — by taking a modern and flexible approach to regulation, strengthening consumer and investor protection, and promoting Toronto as a global financial services hub. Since the 2015 Budget, Ontario has taken steps to move forward with the Cooperative Capital Markets Regulatory System. The government has also established a steering committee to promote the increased representation of women on boards and in executive leadership.

The financial services sector helps Ontarians save and grow their hard-earned money, and remains essential for the growth of businesses of all sizes across all sectors of the economy. The sector remains the province’s second largest after manufacturing, based on output. In 2014, the sector created jobs almost twice as quickly as the overall Ontario economy, resulting in a total of 380,500 jobs.

The government is committed to strengthening this important contributor to Ontarians’ financial health and the overall economy through an ambitious strategy that includes the most significant set of changes in recent history.

The government’s strategy will build on the significant steps taken to date and focus on:

  • Taking a modern and flexible approach to regulation;
  • Strengthening consumer and investor protection; and
  • Promoting Toronto as a global financial services hub.

2015 Budget: Building Ontario Up

Steps taken prior to and including in the 2015 Budget include:

  • Playing a leadership role, working with other provincial and territorial jurisdictions and the federal government, towards the establishment of the Cooperative Capital Markets Regulatory System;
  • Initiating “comply or explain” disclosure requirements for TSX-listed issuers to promote increased representation of women on boards of directors and in senior executive officer positions;
  • Initiating a comprehensive review of the Credit Unions and Caisses Populaires Act, 1994;
  • Announcing the appointment of an expert advisory panel to lead the mandate reviews of the Financial Services Commission of Ontario (FSCO), the Financial Services Tribunal (FST) and the Deposit Insurance Corporation of Ontario (DICO); and
  • Announcing the appointment of an expert committee to review the regulatory framework relating to financial advisory and financial planning services.

Progress since the 2015 Budget

Modernizing Financial Services Regulation

An efficient and effective regulatory framework will protect consumers and investors, while improving the competitiveness of Ontario’s financial services sector. Since the release of the 2015 Budget, the government has made significant progress.

Establishing the Capital Markets Regulatory Authority

The participating jurisdictions have:

  • In July, named William A. Black, former Maritime Life president and CEO, as chair of the Capital Markets Regulatory Authority’s board of directors.
  • In August, published the revised consultation draft provincial/territorial capital markets legislation and draft initial regulations for comment. These items are intended to modernize and harmonize the capital markets law frameworks in the participating provinces and territory.

Supporting More Women in Executive Leadership

  • Following the implementation of “comply or explain” disclosure requirements relating to gender diversity, 15 per cent of companies listed on the Toronto Stock Exchange (TSX) have added more women to their boards this year. To continue this momentum, the government is establishing a steering committee that will be co-chaired by Tracy MacCharles, Minister Responsible for Women’s Issues, and Charles Sousa, Minister of Finance. The committee will work to improve the representation of women on boards and in senior executive positions.

Reviewing the Credit Unions and Caisses Populaires Act, 1994

  • The government completed its review of the Credit Unions and Caisses Populaires Act, 1994. Following an extensive consultation process, Parliamentary Assistant Laura Albanese finalized her recommendations and delivered her report to the Minister of Finance in November. The Minister is currently reviewing the recommendations and will release the report in the near future.

Reviewing the Mandates of FSCO, FST and DICO

  • In March, the expert advisory panel released a consultation paper inviting input on changes to the agencies’ mandates, operations and governance structures. In July, seven sector roundtable sessions were held, seeking additional input. In November, the panel released a preliminary position paper to facilitate further consultation. The panel will deliver its final recommendations to the government in early 2016.

Strengthening Consumer and Investor Protection

Ontario is pursuing a pro-consumer agenda that includes a number of initiatives to protect and educate consumers in the financial services sector.

In April, the government announced the members of the expert committee reviewing the regulatory framework relating to financial advisory and financial planning services. In September, the committee concluded its initial consultations, and it will issue an interim report with preliminary recommendations in the near term.

The Province is also moving forward on a number of initiatives to help improve Ontarians’ financial literacy, including the Ontario Securities Commission’s newly integrated Investor Office. Its consumer-oriented materials and website are helping Ontarians make more informed investment decisions with greater confidence. Ontario has embedded financial literacy learning in the curriculum, from Grades 4 to 12. The Ministry of Finance continues to explore other opportunities for Ontarians to access the tools and resources they need to increase their overall financial literacy.

Protecting Consumers in Ontario’s Auto Insurance System

The government is committed to continuing to improve Ontario’s auto insurance system. As part of this commitment, in October, the Province appointed David Marshall as an adviser on auto insurance and pensions. Beginning on February 1, 2016, Mr. Marshall will apply expertise he developed as president and CEO of the Workplace Safety and Insurance Board to identify additional opportunities for reforms that will lead to better health outcomes, lower costs and more affordable auto insurance.

The 2015 Budget announced significant reforms to Ontario’s auto insurance system, including a number of consumer protection measures that will ensure Ontario’s 9.5 million drivers pay a fair price for auto insurance coverage. The reforms included a requirement that insurers offer a discount for the use of winter tires and a prohibition against rate increases for minor at-fault accidents. The government also lowered the interest rate for monthly payment plans, so that for standard 12-month policies renewed after June 1, 2016, the maximum interest rate an insurer may charge on monthly payments will be 1.3 per cent, compared to a maximum of three per cent prior to the reforms.

The reforms also introduced new coverage options for Ontario consumers. As a result of adopting these reforms, the government expects auto insurance rates to continue to decline, and Ontarians will remain protected by the most generous auto insurance system in Canada among comparable jurisdictions.

The province has a very competitive market for auto insurance, and consumers are encouraged to shop around to better understand their options and find the best possible rates and coverage to meet their needs.

Promoting Toronto as a Global Financial Services Hub

Work through public–private partnerships, such as the Toronto Financial Services Alliance (TFSA), successfully supports the growth of Toronto’s financial services sector. Recent achievements include:

  • Minister of Finance Charles Sousa travelling to China and Japan in September to meet with leaders of the financial services, banking and manufacturing sectors to promote Ontario as a sound investment destination.
  • Working with the City of Toronto and private-sector partners to establish organizations such as TFSA’s Centre of Excellence in Financial Services Education — a research and outreach organization focused on strengthening Toronto’s talent pipeline to attract new talent and promote the region’s educational and professional strengths.
  • Working with the federal government, TFSA and the financial services sector to create the Global Risk Institute in Financial Services. It provides a unique opportunity to capitalize on Ontario’s financial sector’s global reputation for safety and soundness by promoting best practices and education in financial risk management and leading-edge applied research.
  • Toronto recently moving up to eighth place in Z/Yen Group’s Global Financial Centres Index, and is now ranked second in North America, behind only New York.1

[1] Mark Yeandle, “Global Financial Centres Index 18,” Z/Yen Group, (September 2015).