Consultation summary: FCAC Supervision Framework and Publishing principles for FCAC Decisions
In October 2016, the Financial Consumer Agency of Canada (FCAC) called for public comment on its proposed Supervision Framework (Framework) and the Publishing Principles for FCAC Decisions (Publishing Principles). The summary below recaps the comments received from stakeholders and provides FCAC’s responses to those comments.
FCAC thanks all stakeholders who submitted comments during the consultation. Stakeholder feedback helps improve FCAC’s ability to fulfill its mandate.
Overview of stakeholder comments
FCAC received and considered comments from a wide range of stakeholders, including regulated entities, industry groups and individual Canadians. Stakeholders also provided numerous comments that FCAC will consider during implementation of its revised Framework.
The Framework and Publishing Principles were generally well-received by stakeholders. In particular, stakeholders welcomed the clear and comprehensive format of the Framework, the publication of the guiding principles and the description of the three pillars of supervision that frame FCAC’s approach to supervision.
Based on stakeholder comments, FCAC amended the Framework in several areas. For example, FCAC clarified the distinction between tier 1 and tier 2 regulated entities and clarified the connection between tier 1 entities and the importance of their Market Conduct Profiles for determining the intensity of supervision. In addition, FCAC revised the list of factors that the Commissioner may consider when making public the name of a regulated entity that has committed a violation.
The final version of the Supervision Framework is available on FCAC’s website.
The Publishing Principles for FCAC Decisions will be published at a later date.
Summary of submissions
Section 1: Introduction
Comment 1: FCAC should clarify what is meant by market conduct, market conduct obligations and market conduct risk.
Response 1: The wording was amended to address the stakeholder’s comments.
Comment 2: FCAC compliance management and governance guidelines should consider existing OSFI Guidelines in an effort to minimize duplication, enhance efficiencies and avoid inconsistencies.
Response 2: FCAC will consider this comment as the Guidelines are drafted.
Section 2: Guiding principles
Comment 3: FCAC should provide more details in its Guiding Principles.
Response 3: The wording was not amended. However, FCAC will endeavor to share additional details as the Framework is implemented.
Section 3: Supervision process
Comment 4: FCAC should consider adding additional tiers or categories for the various types of regulated entities to reflect the differences in their business models, number of market conduct obligations and levels of inherent risks. Imposing the same requirements and the intensity of supervision is inappropriate for all tier 1 entities. FCAC should clarify there will be a difference between entities and the intensity will vary.
Response 4: The wording was amended to address stakeholder’s comments. FCAC clarified how Market Conduct Profiles will be used to differentiate the risks among tier 1 entities and adjust the level of supervision accordingly.
Comment 5: Include a statement that insurance companies (who do not enter into credit agreements, as defined by the Insurance Companies Act.) are regulated provincially for market conduct and are therefore considered tier 2.
Response 5: The wording was amended to address the stakeholder’s comments.
Section 4: Tools for promotion
Comment 6: FCAC should provide greater clarity around which tools apply to legislative obligations, voluntary codes of conduct or public commitments.
Response 6: The wording was amended to address the stakeholder’s comments.
Comment 7: FCAC should consider broadening the definition of Rulings to include FCAC-initiated interpretations or FCAC expectations about the applicability of a market conduct obligation. FCAC should not limit the tool for preapproval.
Response 7: The wording was amended to reflect the stakeholder’s comments.
Section 5: Tools for monitoring
Comment 8: The description of the Market Conduct Profile should clarify it only applies to tier 1 entities.
Response 8: The wording was amended to address the stakeholder’s comments.
Comment 9: Monitoring the effectiveness of a PCNO’s oversight functions (e.g. corporate governance) is outside the scope of FCAC’s mandate for PCNO’s.
Response 9: The wording was amended to address the stakeholder’s comments. FCAC maintains a market conduct profile for all tier 1 entities, including PCNO’s, as part of its on-going work to better understand relative risk and levels of compliance.
Section 6: Tools for enforcement
Comment 10: FCAC should clarify if the paths in figure 3 are mutually exclusive. Can FCAC issue a compliance report resulting in a violation and also require the regulated entity to enter into a Compliance Agreement?
Response 10: Figure 3 was amended to address the stakeholder’s comments.
Comment 11: FCAC should clarify when full reports and regular updates are required for Action Plans and Compliance Agreements.
Response 11: The wording was amended to address the stakeholder’s comments.
Comment 12: FCAC should clarify what factors will determine if a Notice of Breach or a Compliance Report is issued.
Response 12: The wording was amended to address the stakeholder’s comments.
Comment 13: When a violation is committed, FCAC should make public the regulated entity's name, with rare exceptions. Therefore, the list of factors is unwarranted.
Response 13: The wording was not amended. The Commissioner considers making public the name on a case-by-case basis, based on the facts of the case and any other relevant considerations and factors.
Comment 14: In section 6.5, provide further detail about egregiousness and impact, and how it aligns with the AMP amount.
Response 14: The wording was not amended. The Commissioner considers egregiousness and impact on a case-by-case basis, based on the facts of the case and any other relevant considerations and factors.
Comment 15: In Section 6.5 "consumer protection mandate" is unclear.
Response 15: The wording was amended to address the stakeholder’s comments.
Comment 16: Include a comprehensive list of factors that the Commissioner will consider when making public the name of a regulated entity.
Response 16: The wording was amended to address the stakeholder’s comments. The Commissioner considers on a case-by-case basis whether to make public the name of a regulated entity that has committed a violation, based on the facts of the case and any other relevant considerations and factors.
Comment 17: State whether the default will be to make public the name of a regulated entity or maintain anonymity when a violation has been committed.
Respones 17: The wording was not amended. The Commissioner considers on a case-by-case basis whether to make public the name of a regulated entity that has committed a violation, based on the facts of the case and any other relevant considerations and factors.
Comment 18: All relevant criteria should be considered when the Commissioner considers whether to make public the name of a regulated entity that has committed a violation.
Response 18: The wording was not amended. The Commissioner considers on a case-by-case basis whether to make public the name of a regulated entity that has committed a violation, based on the facts of the case and any other relevant considerations and factors.
Comment 19: The list of factors in section 6.5 should be revised. It is unclear what factors mean or how they will be applied.
Response 19: The wording was amended to address the stakeholder’s comments.
Publishing principles for FCAC Decisions
Comment 20: FCAC should set out criteria for determining when there should be a press release.
Response 20: The wording will be amended to address the stakeholder’s comments.
Comment 21: FCAC should disclose the rationale for naming or not naming a regulated entity that has committed a violation.
Response 21: The wording will be amended to address the stakeholder’s comments.
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