ARCHIVED - Compliance Framework: Possible compliance concern: legislative provision

From: Financial Consumer Agency of Canada

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The Compliance Framework is archived.  The Supervision Framework came into effect on October 1, 2018.

Possible compliance concern: legislative provision

FCAC is responsible for supervising the compliance of FRFEs and external complaint bodies with the applicable consumer provisions located in legislation governing federally regulated financial entities.

In addition, FCAC is responsible for supervising the compliance of payment card network operators with the provisions of the Payment Card Networks Act and any corresponding regulations.

Investigation and evaluation

Investigation and evaluation is a process undertaken by CEB once a compliance concern has been identified. The financial entity involved is contacted in order to provide further details required for the investigation (e.g. copies of documents or recordings of conversations).

In accordance with Section 5 of the FCAC Act, the Commissioner may collect any personal information considered necessary to determine whether FRFEs are in compliance with the various legislative provisions. Furthermore, FRFEs must provide the Commissioner with this information at the time and in the form that the Commissioner may require for the purpose of administering the FCAC Act and legislative provisions.

Unless otherwise indicated, the FRFE will normally have up to 30 calendar days to respond to the initial investigation request.

If the investigation reveals no underlying compliance concerns, the investigation is closed and the FRFE is notified.

However, if the investigation highlights a compliance concern, CEB will analyze the compliance concern based on numerous factors such as:

  • harm to consumers
  • risk of reoccurrence
  • controls in place/actions taken to prevent the issue
  • level of communication with FCAC

Compliance report or proposal

A compliance report or proposal is prepared by CEB once it has concluded that there is a strong likelihood that a FRFE has contravened a legislative requirement and the situation is evaluated as substantive.

The report defines the key compliance issue(s) identified, provides the key legislative provisions in question, sets out all the evidence, and provides an analysis of the compliance concern and the recommendation for addressing the compliance issue (e.g. compliance agreement, on-site examination, violation, etc).

A draft may be forwarded to the FRFE for comments when it is deemed necessary to verify specific facts surrounding the compliance concern. The financial entity typically has 30 calendar days to make comments on the facts of the draft report.

The report provides the FCAC Commissioner with the information required to render appropriate determinations regarding a particular compliance concern.

To Commissioner for evaluation

The Commissioner will review the compliance report or proposal in order to determine which measures, if any, should be applied. The Commissioner may choose to promote compliance, implement compliance or enforce compliance based on the compliance issue at hand, what led to the issue, and how it was handled by the FRFE. Once a determination has been made, FCAC will notify the FRFE about any resulting actions.

The Commissioner may delegate the evaluation of the Compliance Report or Proposal to the Deputy Commissioner.

Representations

If a FRFE receives a Notice of Violation with respect to its legislative obligations to consumers, the FRFE has the right to make representations with respect to the violation and any proposed administrative monetary penalty within 30 days, in accordance with Section 23 of the FCAC Act

If the financial entity does not make representations and/or pays the administrative monetary penalty, the violation is deemed to have been committed.

To Commissioner for decision

Subject to Section 23 of the FCAC Act, after the FRFE makes representations in accordance with the Notice of Violation, the Commissioner shall issue a Notice of Decision and decide, on a balance of probabilities, whether the FRFE committed the violation and, if so, may impose the proposed administrative monetary penalty, a lesser penalty or no penalty.

Subject to Section 31 of the FCAC Act, the Commissioner may make public the nature of the violation, who committed it and the amount of any applicable administrative monetary penalty.

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