Standing Senate Committee on Banking, Commerce and the Economy (BANC) (May 30, 2014)
ISSUE: Mortgage Guideline enforceability and reporting on compliance

Key points

• FCAC Guidelines establish best practices and standards that FCAC expects regulated entities to incorporate within their business operations.
• The Mortgage Guideline leverages the obligations that came into force with the Financial Consumer Protection Framework, such as the requirement that products be appropriate for consumers.
• FCAC is actively promoting and monitoring the compliance of financial institutions with the Guideline.
• All financial institutions that offer residential mortgage loans for principal residences must provide quarterly reports to FCAC on their compliance with the Guideline.
• In cases where FCAC is not satisfied that a financial institution is complying with the Guideline, FCAC will increase the intensity of its regulatory oversight.

Qs & As

1. If a financial institution does not comply with the Guideline, could it face a fine or penalty? What enforcement action could it face?

• FCAC’s Supervision Framework is based on three pillars: promotion, monitoring and enforcement.
• Guidelines are a tool to promote the compliance of regulated entities with FCAC’s regulatory expectations.
• In cases where FCAC is not satisfied that a financial institution is complying with the Guideline, FCAC will increase the intensity of its regulatory oversight and work with the financial institution to resolve the problem.
• FCAC may take enforcement action if an entity violates a consumer protection as set out in legislation or regulations, such as those included in the Financial Consumer Protection Framework.

If pressed on the compliance status of any institution…

• FCAC does not comment publicly on any ongoing supervisory work related to the compliance of regulated entities.
• However, FCAC also describes in its annual report its conclusions on the compliance of financial institutions and external complaints bodies with the consumer provisions applicable to them.

2. Are banks complying with the Mortgage Guideline?

• To date, FCAC has collected 3 sets of data from banks for the quarters ending September and December 2023 and March 2024. Based on these results so far, FCAC is satisfied, overall, with industry’s implementation of the Guideline thus far.
• Reporting indicates that banks are contacting consumers at risk and that relief measures are being implemented.
• Our data shows there are approximately 5 million mortgage accounts for first mortgages on principal residences, of those less than 1% have been identified as accounts at risk.
• Of those accounts identified as being at risk, approximately 13% have been reported to have benefitted from relief measures. In other words, there are about 33,000 mortgage accounts that are considered at risk, and approximately 4,300 accounts are benefiting from the relief measures outlined in our mortgage guideline.
• FCAC intends to release a public report on the implementation of the Mortgage Guideline later this year.