A Modern Framework for Credit Unions in Ontario: Reducing Red Tape and Increasing Investment

A consultation on the development of a new legislative framework for credit unions in Ontario by the Ministry of Finance

Message from the Parliamentary Assistant

The Credit Unions and Caisses Populaires Act, 1994 (CUCPA), the legislation that governs Ontario’s 79 credit unions and caisses populaires, was enacted in 1994 —25 years ago. Ontario’s financial sector has seen many changes in the ensuing years and, although piecemeal amendments have been made over the years, the CUCPA has not kept pace. Ontario’s Government for the People is working to finally bring the legislative framework for credit unions into the 21st century, and I am pleased to be leading this effort.

Credit unions and caisses populaires play an important role in Ontario’s economy by providing their 1.6 million members with access to financial services. With this consultation, we are reaching out to Ontario’s credit unions and caisses populaires, as well as other interested parties, to ensure that Ontario’s credit union legislation reflects the needs and expectations of the sector and those who rely on the products and services it provides. Your input is critical to this process, to ensure that the legislative framework for credit unions enables the sector to continue to grow and meet the changing needs of its members.

The government is working hard to eliminate excessive regulatory burden and red tape because we want to foster economic growth and a competitive business environment in Ontario. With your help, the new legislative framework for credit unions will support this mission by reducing regulatory burden and enabling increased investment while continuing to ensure that consumers are protected. Ontario is Open for Business.

Thank you for your input into this very important process. Together, we will create a new legislative framework that will help credit unions and their members continue to thrive across Ontario.

Doug Downey 
Parliamentary Assistant
Ministry of Finance

Contents

Executive Summary

We are inviting Ontario businesses and individuals to share their feedback on how to make it easier for credit unions and caisses populaires (“credit unions”) to do business in the province.

Credit Unions in Ontario

Credit unions are financial institutions that operate in accordance with co-operative principles. This means that, unlike banks, credit unions are owned and controlled by their members, and provide financial services primarily for the benefit of their members.

Ontario’s 79 credit unions form an important part of Ontario’s economy. Collectively, as of December 2018, Ontario credit unions held over $60 billion in assets, serving the needs of their 1.6 million members in communities across the province.

About the Consultation

The Credit Unions and Caisses Populaires Act, 1994 (CUCPA), the legislation under which Ontario credit unions operate, came into force in 1994 and has been criticized by sector participants as being outdated. The environment in which Ontario’s credit unions operate has changed significantly in the 25 years since the CUCPA was enacted, and numerous piecemeal amendments have led to an Act that can be challenging to navigate and interpret. An overhaul of the legislation is necessary to address these issues.

Currently, two Ontario government agencies oversee the credit union sector and enforce compliance with the CUCPA. The Financial Services Commission of Ontario (FSCO) monitors market conduct, while the Deposit Insurance Corporation of Ontario (DICO) oversees compliance with solvency rules and provides deposit insurance protection for deposits held in Ontario credit unions. In June 2019, FSCO will be replaced by the Financial Services Regulatory Authority of Ontario (FSRA), and DICO will be amalgamated into FSRA. This will result in one regulator being responsible for overseeing the credit union sector.  

The government will develop and introduce new, more modern legislation for the credit union sector, which, if passed, would replace the CUCPA. In developing the new legislation, the government is looking for opportunities to modernize the framework, find efficiencies and cut red tape so that credit unions can compete, grow and more effectively meet the needs of their members.

The policy questions we seek to address fall under three pillars:

  • Reducing Red Tape
  • Increasing Investment and Driving Competitiveness
  • Improving Consumer Experience

To ensure that we can deliver on this new legislation, we would like your input on:

Reducing Red Tap

  • Reducing regulatory burden for credit unions: We want to hear about how the government can make it easier for credit unions to do business and compete in Ontario, and about possible opportunities to reduce red tape in the sector.
  • Dispute resolution: We need to ensure that proper mechanisms are in place for credit unions to resolve disputes with regulatory authorities.
  • Centrals and leagues: Help us determine the regulatory treatment for centrals and leagues that would be most suitable for Ontario.

Increasing Investment And Driving Competitiveness

  • Business and investment powers: The landscape in which credit unions operate has shifted significantly since the CUCPA was enacted, but the restrictions on the kinds of businesses Ontario’s credit unions can invest in have not changed.
  • Securitization and funding framework: Help us develop a framework for how credit unions can fund their lending and other activities, enabling credit unions to effectively manage their liquidity needs.
  • Access to capital: Changes in securities law have opened the door to potential new options for capital raising that are not currently available to credit unions. Help us determine whether credit unions should have access to such options.

Improving the Consumer Experience

  • Consumer experience and protection: We want to hear your views on how we can help ensure that members of Ontario credit unions are well protected, to the same extent as customers of other types of financial institutions.
  • Unclaimed deposits: There should be clarity regarding a credit union’s responsibilities when a member whose deposit account has become dormant cannot be located. Help us create a clear and fair process for what to do with unclaimed deposits.
  • Corporate governance: Help us identify ways in which credit unions could be better enabled to self-govern.
  • Enabling Innovation: Technological innovation is leading to the development of new ways of delivering financial services. Help us understand the role technology will play in the future of credit unions.

Thank you in advance for having your say!

If you would like to learn more about these topics, you can read the entire consultation paper here or download the full PDF online at www.fin.gov.on.ca/en/consultations/cu-cp/cucpa-review.pdf

How to Participate

Interested parties are invited to make written submissions by August 16, 2019.

You may send comments by mail or email to:

Modernizing Credit Union Legislation
c/o Financial Services Policy Division
Ministry of Finance
95 Grosvenor Street, Frost Building North, 4th Floor
Toronto, ON M7A 1Z1
Email: David.Manley@ontario.ca

Phone: (647) 267-6602

Please note that this is a public consultation, and all submissions received are subject to the Freedom of Information and Protection of Privacy Act. All comments received will be considered public and may be used by the Government to help evaluate and revise the legislation. This may involve disclosing some or all comments or materials, or summaries of them, to other interested parties during and after the consultation. Personal information will not be disclosed without any parties’ prior consent.

If you have any questions about this consultation or how any element of your submission may be used or disclosed, please contact David Manley, Senior Policy Advisor, Financial Services Policy Division, Ministry of Finance by phone at (647) 267-6602 or by email: David.Manley@ontario.ca

Consultation

Introduction

Ontario’s credit unions play an important role in communities across the province by providing financial products and services to their 1.6 million members. Unlike banks, credit unions are co-operatives, owned by their members. This structure means that what is in the interest of depositors and borrowers is also in the interest of the credit unions and their owners.

As the Ontario government develops new legislation for the credit union sector, extensive feedback from the sector will be critical to ensure that the legislation not only reflects the realities faced by the credit union sector today, but also anticipates the continued evolution of the sector’s needs in the future.

Question

  • What are the top three strategic priorities that are essential to the success of Ontario’s credit union sector in the coming years, and how can a new legislative framework enable the credit union sector to achieve this vision?

Reducing Red Tape

Burden Reduction

The Ontario government is committed to making Ontario Open for Business, and a key element of that work is the elimination of red tape and excessive regulatory burden. To this end, as the government works to modernize Ontario’s legislative framework for the credit union sector, it will be important to ensure that outdated or duplicative regulatory requirements are updated or eliminated where needed.

Questions

  • What opportunities can you identify to minimize regulatory burden in a balanced way that ensures the sector is safe, stable and trusted by depositors as a viable alternative to banks?
  • Are there unnecessary and/or duplicative legislative or regulatory requirements that should be streamlined?
  • What considerations should be incorporated into new legislation to accommodate the use of digital technology and its potential to reduce burden?
  • Are there examples in the current framework of requirements that are too prescriptive, and if so, what would a more principles-based requirement look like?
  • Are there any regulatory barriers preventing you from providing financial services in smaller and/or more isolated communities? If yes, please elaborate.

Dispute Resolution

Under the existing framework, there are two main avenues for dispute resolution available to credit unions: the Financial Services Tribunal (FST) and DICO’s Ombudsman’s office.

Under the CUCPA, credit unions can seek a hearing with the FST to appeal orders made by either FSCO or DICO. Proceedings before the FST are conducted at the request of affected persons to whom the decisions or proposed decisions have been directed.

The DICO Ombudsman’s office investigates complaints relating to regulatory issues between credit unions and DICO. DICO has reported that use of the Ombudsman’s services has been limited. A key element of regulatory burden reduction is ensuring that there is a satisfactory and efficient means of resolving disputes between a regulator and its regulated entities. As the new credit union legislation is developed, it will be important to ensure that an effective and efficient dispute resolution mechanism is in place.

Questions

  • Should FSRA have an Ombudsman to resolve disputes between credit unions and FSRA, and if so, how should its role and responsibilities be defined?

Centrals and Leagues

Credit union centrals and leagues receive and manage the liquidity reserves of member credit unions, and serve other functions for their members as well. The regulatory treatment of centrals and leagues varies widely across Canada. In some provinces, such as Manitoba and British Columbia, credit unions must satisfy liquidity requirements by holding deposits with a specific central. In others, such as Newfoundland and Labrador, membership in a Canadian central is required, but the specific central is not specified.

In Ontario, the current framework defines the liquidity requirements that credit unions must meet, but credit unions can exercise discretion in how they choose to meet the requirements. While many Ontario credit unions choose to hold their liquidity with a central, it is not required that they do so.

At the time that the CUCPA came into force, there were three main leagues incorporated under Ontario’s framework. 25 years later, there is now only one Ontario-incorporated league. Most Ontario credit unions are members of Central 1, a BC-regulated central. Ontario’s one existing league – la Fédération des caisses populaires de l’Ontario – has announced a proposal to merge its caisse populaire members to form one institution, using Caisse centrale Desjardins, a Quebec-regulated entity, as its central. In an environment where all Ontario credit unions are members of centrals that operate outside of Ontario’s regulatory environment, it may be necessary to consider a new model for overseeing centrals, in order to ensure that Ontario deposits are not vulnerable to liquidity events in other provinces.
Questions

  • Should Ontario credit unions be required to hold their liquidity with a central or league? Why or why not?
  • Should the new legislative framework contemplate Ontario-incorporated centrals or leagues, including setting out the required steps credit unions must take in order to establish such an entity?
  • Should centrals and leagues that are regulated extra-provincially be required to satisfy specific regulatory requirements in order to be permitted to have Ontario credit unions as members? If so, please specify the types of requirements that would be appropriate.
    • Should extra-provincial centrals and leagues be required to segregate deposits received from Ontario credit unions?

Increasing Investment and Driving Competitiveness

Business and Investment Powers

Traditionally, credit unions have been restricted from investing in businesses that were not seen as being related to the core business of a credit union. The CUCPA limits credit unions’ business activities to:

  • Providing financial services primarily to its members, depositors, subsidiaries and affiliates;
  • Holding and dealing with real property;
  • Acting as a custodian of property on behalf of its members, depositors, subsidiaries and affiliates;
  • Providing administrative, educational, promotional, technical, research and consultative services to its members, depositors, subsidiaries and affiliates; and
  • Making loans to officers and employees of the credit union.

Under the current framework, credit unions are not permitted to own more than a 30 per cent stake in a list of prescribed subsidiaries, enumerated in the regulation, all of which relate to the permitted business activities listed above. 

These restrictions are seen by some credit unions as out of step with today’s technology and the emergence of financial technology (FinTech). Federally, the Bank Act has been amended to enable federally-regulated banks to invest in FinTech firms. To ensure that credit unions remain competitive with federally-regulated deposit-taking institutions such as banks, the business and investment powers available to Ontario’s credit unions should be re-examined.

Questions

  • What types of businesses and business activities which are currently prohibited do you believe credit unions should be able to invest in?
  • Would the business and investment powers contained in the federal Bank Act be appropriate to adopt for credit unions, or should credit unions have different/additional powers?
  • Are the existing requirements in the CUCPA relating to business and investment powers for credit unions clear, or are there ambiguities that should be clarified in the new legislation?
  • Do you believe that requirements relating to business and investment powers should be explicitly prescribed in the new framework, or should a principles-based approach be adopted, under which FSRA would approve such investments on a case-by-case basis?

Securitization and the Funding Framework

The primary source of revenue for credit unions is their lending activity, for which deposits are the largest source of funding. However, in order to accelerate their growth beyond what can be supported by deposits, some credit unions have started to turn to alternative funding sources. In particular, securitization of loans has become increasingly common in recent years.

Securitization involves the pooling of financial assets that provide periodic cash flows, then selling shares in the asset pool to investors in the form of a security. This can be a low-cost source of funding for credit unions, as an alternative to borrowing or participating in capital markets. To date, most securitization activity in the credit union sector has involved insured mortgages, arranged through programs under the federal National Housing Act, administered by the Canada Mortgage and Housing Corporation.  The credit union sector is increasingly engaging in securitization activities for funding, and the potential implications for the system are not clear.

Questions

  • From a risk management perspective, what do you believe is an appropriate funding strategy for a credit union?
  • In your opinion, are any funding sources unfairly prohibited or restricted under the current legislative framework? Please explain.
  • Should securitization be addressed in the new framework? And are there other funding sources that should also be addressed?
  • Should the new legislation mitigate the risks associated with overreliance on any single funding source (e.g., prescriptive requirements, principles-based approach)? Please explain.
  • How can the new legislation best account for the future emergence of new, innovative funding practices?

Access to Capital

The CUCPA currently provides a framework for credit unions to raise capital by selling securities to their members. In order to raise capital from their members, credit unions must file an offering statement with FSCO, in accordance with the CUCPA, or file a prospectus with the Ontario Securities Commission (OSC). The CUCPA offering statement framework was originally intended to be a less burdensome alternative to filing a prospectus with the OSC. However, securities laws have changed since that framework was introduced, and new exemptions from prospectus requirements were developed for securities issuers (the so-called “exempt market”).

The CUCPA does not contemplate credit unions raising capital in the exempt market and, as a result, credit unions have not been able to take advantage of the prospectus exemptions that are available to other securities issuers. Some credit unions have noted that, for certain issuances, the exempt market would be more cost-effective than the CUCPA’s capital raising framework. Eliminating red tape is a top priority for the Ontario government, and the Ministry of Finance is working to find ways to enable credit unions to raise capital in a cost-effective manner without sacrificing investor protections.

Questions

  • How could the existing offering statement framework be improved to reduce regulatory burden and better enable capital raising?
  • Should credit unions be permitted to raise capital under the Securities Act framework and its various exemptions (i.e., the exempt market framework)? If so, should there continue to be a separate capital-raising framework for credit unions?

Improving the Consumer Experience

Consumer Experience and Protection

The primary purpose of a credit union is to provide financial products and services to its members. As owners of the credit union, members are also decision-makers who have a say in the actions of the organization and the election of its board of directors. This enables members to have a say in the costs faced by depositors and borrowers, as well as how deposits are reinvested.

A consumer protection framework would provide credit unions with a clearer understanding of their obligations to their members, and would better enable recourse against bad actors within the sector. It would also promote greater confidence in the credit union system, as members would better understand that they are subject to protections similar to those enjoyed by customers of other types of financial institutions.
The existing consumer protection framework is laid out in regulations under the CUCPA. The existing framework focuses on ensuring that depositors and borrowers are properly informed of any applicable interest rates, how interest payable is calculated and the total cost of borrowing. The current framework also lays out how a credit union is required to receive and attempt to resolve complaints, as well as the role the regulator should play in resolving complaints.

The Canadian Credit Union Association (CCUA) recently released a Market Conduct Code (MCC), which could be considered in the context of a new consumer protection framework for credit unions. The MCC could be compatible with either a self-regulatory enforcement approach or an enforcement approach administered by a regulatory authority, such as FSRA.

Questions

  • Should the MCC be incorporated into the new legislation in some way, or should it remain outside of the legislative framework and serve only to complement legislated consumer protection provisions?

Unclaimed Deposits

Under the CUCPA, after two years (and again after five years) have elapsed since the last transaction took place on a depositor’s account, or since a statement of account was last requested or acknowledged by the depositor, the credit union is required to notify the depositor that the deposit remains unpaid. After 10 years have elapsed, the deposit is considered to be unclaimed, and must be paid by the credit union to the Minister of Finance, in accordance with the Minister’s directions, beginning on a day specified by the Minister. To date, there have been no Minister’s directions, nor has the Minister specified a day on which payments are to begin. As such, the credit union sector has argued that the CUCPA does not provide sufficient clarity with regard to the requirements for unclaimed deposits.

In principle, when a deposit account is inactive for an extended period of time, the institution has a responsibility to make reasonable efforts to locate the depositor. In addition, it is important to ensure that unclaimed deposits are protected for a reasonable period of time, so that they are available to be claimed by their owners and are not eroded by administrative fees. Most jurisdictions across Canada, including the federal jurisdiction, have programs in place for unclaimed deposits, which are administered by third-party custodians, in order to ensure that these principles are upheld. The Ministry of Finance will consider these principles, as well as how to clarify the requirements, in developing a proposed framework for unclaimed deposits under the new credit union legislation.

Questions

  • Do you think it is appropriate for FSRA to be the custodian of unclaimed deposits owned by credit union members/depositors? If not, please identify your concerns and any alternative recommendations.
  • What information regarding a depositor should be provided to the custodian upon transfer, in order to ensure that potential future claims could be validated?
  • Are the time periods after which credit unions are required to notify depositors of account inactivity (two years and five years) appropriate? If not, please explain.
  • Would requiring credit unions to transfer unclaimed balances to the custodian after ten years of inactivity, as is the case for federally-regulated banks, be appropriate? If not, please explain.
  • Are there specific deposit account types that should be exempt from this requirement?
  • What costs do credit unions incur when holding unclaimed deposits?
  • Should a minimum balance threshold exist for triggering unclaimed deposit requirements? If so, what would be an appropriate threshold? Please explain.

Corporate Governance

Corporate governance is broadly described as the rules, processes and procedures used to manage the business of a corporation. Corporate governance encompasses the responsibilities of an enterprise’s Board of Directors (“board”), which include providing leadership to set the corporate vision and strategy and providing strategic guidance to executives in their day-to-day management of the business. The board’s responsibilities also include compliance with the legislation and reporting to members on their stewardship. Credit union governance is distinct from the day-to-day operational management, and is critical to ensuring that credit unions operate in their members’ best interests.

Currently, Ontario’s governance framework for credit unions consists of requirements under the CUCPA and its regulations, as well as standards set out in guidance and by-laws issued by DICO. Under the current framework, the effectiveness of a credit union’s corporate governance practices is considered to be one indicator of the institution’s level of risk. As such, a measure of governance is included in the calculation of risk-based premiums that credit unions pay annually for deposit insurance coverage.
Questions

  • Do you believe that Ontario’s credit union governance framework is aligned with current best practices in corporate governance for other financial institutions? If not, what do you see as the main opportunities to modernize the framework?
  • Are there any specific credit union corporate governance issues that should be addressed in the new legislation? If so, please elaborate.
  • Should the current mix of instruments that set out governance requirements/standards for credit unions (e.g., legislation, regulations, regulatory guidance, etc.) be maintained, or should different instruments be used (e.g., rules developed by the regulator)?
  • In 2018, amendments made to the Office of the Superintendent of Financial Institutions (OSFI) Corporate Governance Guideline moved OSFI to a more principles-based approach to board oversight, and clarified the delineation between board and senior management responsibilities. What do you see as the potential advantages and drawbacks of a similar approach to the oversight of credit union corporate governance?

Enabling Innovation

Financial technology (FinTech) firms are businesses that leverage technology to improve the provision of financial services and offer new options for both consumers and businesses.

Open banking is a collaborative model in which banking data is shared between two or more unaffiliated parties to deliver enhanced capabilities to the marketplace.

FinTech innovation and the potential emergence of open banking are likely to fundamentally transform financial services around the world in the coming years. While they may represent a disruption to traditional approaches to business, these forms of innovation may also represent an opportunity for agile credit unions to compete in new ways.

Questions

  • To what extent do you think credit unions are or should be engaged on FinTech?
    • Does your credit union have a technology or FinTech strategy? Please elaborate.
  • Are there ways the new legislative framework could better enable credit unions to innovate and work with FinTech firms?      
  • Is the prospect of open banking an opportunity or a threat to credit unions?
  • How should the new legislative framework contend with open banking? Do you see a role for the province in setting data protection and privacy standards?

Miscellaneous

Questions

  • Under the current legislation, DICO is required to maintain a Deposit Insurance Reserve Fund, with a funding target that is set by DICO’s board. Under the new legislation, should FSRA’s board be given this authority or should the funding target be set out in a FSRA rule, developed in consultation with the sector?
  • Are there any other elements that the government should consider including in a legislative framework for credit unions, above and beyond those that have been specifically raised in this paper?
  • Do you have any concerns with how credit unions are impacted by other Ontario legislation, beyond the CUCPA?

Summary of Consultation Questions

Introduction

  • What are the top three strategic priorities that are essential for the success of Ontario’s credit union sector in the coming years, and how can a new legislative framework best enable the credit union sector to achieve this vision?

Reducing Red Tape

Regulatory Burden Reduction

  • What opportunities can you identify to minimize regulatory burden in a balanced way that ensures the sector is safe, stable and trusted by depositors as a viable alternative to banks?
  • Are there unnecessary and/or duplicative legislative or regulatory requirements that should be streamlined?
  • What considerations should be incorporated into new legislation to accommodate the use of digital technology and its potential to reduce burden?
  • Are there examples in the current framework of requirements that are too prescriptive, and if so, what would a more principles-based requirement look like?
  • Are there any regulatory barriers preventing you from providing financial services in smaller and/or more isolated communities? If yes, please elaborate.

Dispute Resolution

  • Should FSRA have an Ombudsman to resolve disputes between credit unions and FSRA, and if so, how should its role and responsibilities be defined?

Centrals and Leagues

  • Should Ontario credit unions be required to hold their liquidity with a central or league? Why or why not?
  • Should the new legislative framework contemplate Ontario-incorporated centrals or leagues, including setting out the required steps credit unions must take in order to establish such an entity?
  • Should centrals and leagues that are regulated extra-provincially be required to satisfy specific regulatory requirements in order to be permitted to have Ontario credit unions as members? If so, please specify the types of requirements that would be appropriate.
    • Should extra-provincial centrals and leagues be required to segregate deposits received from Ontario credit unions?

Increasing Investment and Driving Competitiveness

Business and Investment Powers

  • What types of businesses and business activities which are currently prohibited do you believe credit unions should be able to invest in?
  • Would the business and investment powers contained in the federal Bank Act be appropriate to adopt for credit unions, or should credit unions have different/additional powers?
  • Are the existing requirements in the CUCPA relating to business and investment powers for credit unions clear, or are there ambiguities that should be clarified in the new legislation?
  • Do you believe that requirements relating to business and investment powers should be explicitly prescribed in the new framework, or should a principles-based approach be adopted, under which FSRA would approve such investments on a case-by-case basis?

Securitization and the Funding Framework

  • From a risk management perspective, what do you believe is an appropriate funding strategy for a credit union?
  • In your opinion, are any funding sources unfairly prohibited or restricted under the current legislative framework? Please explain.
  • Should securitization be addressed in the new framework? And are there other funding sources that should also be addressed?
  • Should the new legislation mitigate the risks associated with overreliance on any single funding source (e.g., prescriptive requirements, principles-based approach)? Please explain.
  • How can the new legislation best account for the future emergence of new, innovative funding practices?

Access to Capital

  • How could the existing offering statement framework be improved to reduce regulatory burden and better enable capital raising?
  • Should credit unions be permitted to raise capital under the Securities Act framework and its various exemptions (i.e., the exempt market framework)? If so, should there continue to be a separate capital-raising framework for credit unions?

Improving the Consumer Experience

Consumer Experience and Protection

  • Should the MCC be incorporated into the new legislation in some way, or should it remain outside of the legislative framework and serve only to complement legislated consumer protection provisions?

Unclaimed Deposits

  • Do you think it is appropriate for FSRA to be the custodian of unclaimed deposits owned by credit union members/depositors? If not, please identify your concerns and any alternative recommendations.
  • What information regarding a depositor should be provided to the custodian upon transfer, in order to ensure that potential future claims could be validated?
  • Are the time periods after which credit unions are required to notify depositors of account inactivity (two years and five years) appropriate? If not, please explain.
  • Would requiring credit unions to transfer unclaimed balances to the custodian after ten years of inactivity, as is the case for federally-regulated banks, be appropriate? If not, please explain.
  • Are there specific deposit account types that should be exempt from this requirement?
  • What costs do credit unions incur when holding unclaimed deposits?
  • Should a minimum balance threshold exist for triggering unclaimed deposit requirements? If so, what would be an appropriate threshold? Please explain.

Corporate Governance

  • Do you believe that Ontario’s credit union governance framework is aligned with current best practices in corporate governance for other financial institutions? If not, what do you see as the main opportunities to modernize the framework?
  • Are there any specific credit union corporate governance issues that should be addressed in the new legislation? If so, please elaborate.
  • Should the current mix of instruments that set out governance requirements/standards for credit unions (e.g., legislation, regulations, regulatory guidance, etc.) be maintained, or should different instruments be used (e.g., rules developed by the regulator)?
  • In 2018, amendments made to the Office of the Superintendent of Financial Institutions (OSFI) Corporate Governance Guideline moved OSFI to a more principles-based approach to board oversight, and clarified the delineation between board and senior management responsibilities. What do you see as the potential advantages and drawbacks of a similar approach to the oversight of credit union corporate governance?

Enabling Innovation

  • To what extent do you think credit unions are or should be engaged on FinTech?
    • Does your credit union have a technology or FinTech strategy? Please elaborate.
  • Are there ways the new legislative framework could better enable credit unions to innovate and work with FinTech firms?      
  • Is the prospect of open banking an opportunity or a threat to credit unions?
  • How should the new legislative framework contend with open banking? Do you see a role for the province in setting data protection and privacy standards?

Miscellaneous

  • Under the current legislation, DICO is required to maintain a Deposit Insurance Reserve Fund, with a funding target that is set by DICO’s board. Under the new legislation, should FSRA’s board be given this authority or should the funding target be set out in a FSRA rule, developed in consultation with the sector?
  • Are there any other elements that the government should consider including in a legislative framework for credit unions, above and beyond those that have been specifically raised in this paper?
  • Do you have any concerns with how credit unions are impacted by other Ontario legislation, beyond the CUCPA?

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