ID
2024-001

Type
Policy
Sector
Credit Unions and Caisses Populaires
Status
Public comment closed
Date
Comment Due Date

Thank you for providing your feedback on FSRA’s proposed Guidance on commercial lending.

The request for submissions is now closed.

We appreciate the comments and questions received to date and look forward to sharing with you the final Guidance. Stay up to date on Guidance releases on our newsroom. Follow us on LinkedIn and subscribe to our mailing list for quick updates.

FSRA is taking steps to promote reasonable credit union commercial lending practices to ensure that their members are protected.

FSRA has developed Commercial lending Guidance that establishes outcomes credit unions must achieve to manage and mitigate risks associated with commercial lending.

The guidance outlines responsibilities of a credit union’s Board and Senior Management to:

  • develop and maintain policies, standards and procedures for commercial lending activities
  • manage and protect the systems and technology required for the activities
  • manage and mitigate associated risks effectively

FSRA is consulting on this guidance for 60 days and welcomes all stakeholders to submit their feedback by March 1st, 2024.

Learn more

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Sector Comment Date posted
Credit Unions and Caisses Populaires
[2024-001] Giuseppina Marra, CPA auditor, ICD.D - Desjardins
Credit Unions and Caisses Populaires
[2024-001] Sandy Ferguson Mainstreet CU - Mainstreet Credit Union Limited
December 29, 2023
(Acknowledgement email sent Jan 8 to Sandy)

After reading the draft Commercial Lending Guidance there are a couple points we think require some clarification or additional parameters put in place.
In general, there reads an expectation that CU’s will have a robust portfolio management software/system in place that includes automation, collection, monitoring, reporting, stress-testing among other things. We certainly don’t have this in place now and could be a challenge for CU’s under $1B to absorb these added costs. We would recommend that language be amended to speak of systems in place in more general terms.
Below are specific areas where the language could be adjusted or amended.
• Principal 2 (pg 5.)
o “a portfolio analysis of delinquencies and other breaches, including root causes”
 Some concern about root causes based on portfolio as this seem to be very ubiquitous.
• Principal 2 (pg. 6)
o “have automated information management systems that support the underwriting, monitoring, and reporting needs of the CU’s Commercial Loan portfolio”.
 Concerns about the automated information management systems for mid/small CU’s
• Collection of Information, Documentation, and Data Infrastructure (pg. 11
o “a data system that supports the identification of early warning signs of potential increased risk to a Commercial Loan or the portfolio of loans”.
 More talk of data system could be possible however lots of analysis since this is on an individual loan basis.
• Industry Risk Rating and Concentration Risk (pg. 20)
o “ A prudent risk rating system considers, among other things, environmental, social and governance (“ESG”) factors and incorporates such factors into industry risk ratings, credit concentration limits and business strategy reviews (see Appendix 1)”
 While we would support this in many instances for small/micro business borrowers this would add complexity where it provides very little value
 Would recommend language be changed to include some sort of materiality of either the industry or the borrower.
Credit Unions and Caisses Populaires
[2024-001] Riz Ahmad - DUCA
DUCA consultation response letter attached
Credit Unions and Caisses Populaires
[2024-001] John Trivieri - Meridian Credit Union
Please see attached document with Meridian Credit Union's comments on the proposed Commercial Lending Guidance. Thank you.
Credit Unions and Caisses Populaires
[2024-001] Brent Furtney - Canadian Credit Union Association (CCUA)
Please find attached CCUA's full response on behalf of the Ontario credit union sector. Thank you.
No questions have been asked about this consultation yet.