House Standing Committee on Finance (February 13, 2024)
ISSUE: Guideline enforceability

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 FCPF, such as the requirement that products be appropriate for consumers.
- For example, the Guideline expects that FRFIs to undertake an appropriateness assessment of mortgage relief measures, in accordance with FCAC’s Guideline on Appropriate Products and Services.
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.

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. How is FCAC monitoring compliance with its Mortgage Guideline?

All financial institutions that offer residential mortgage loans for principal residences must provide quarterly reports to FCAC on their compliance with the Guideline.
Financial institutions are expected to identify and report compliance issues related to the Guideline. FCAC actively monitors issues and expects FIs to take prompt action to address them.

For background (from SEB briefing note):

To date, 2 quarters worth of reporting have been provided to FCAC, as well as information on the development of policies and procedures intended to demonstrate the implementation of expectations set out in the Guideline, which was also recently submitted to FCAC.