Credit Union / Caisses Populaires Consultation Summary Report | Financial Services Regulatory Authority of Ontario

Feedback from the sector:

FSRA received four submissions from stakeholders in the Ontario credit union / caisses populaires sector, each of which provided feedback on FSRA’s proposed Statement of Priorities for fiscal 2023-2024 during the consultation period (October 13 to November 11, 2022).

FSRA thanks all stakeholders that took the time to comment. FSRA carefully considered all comments before finalizing and publishing the 2023-2026 Annual Business Plan.

Contributors:

The following stakeholders submitted comments on FSRA’s proposed SOP for fiscal 2023-2024:

Organization	Representative
1. Alterna Savings	José Gallant
2. Canadian Credit Union Association	Andrei Belik
3. Desjardins Group	Giuseppina Marra
4. Libro Credit Union	Stephen Bolton

Support for CU Priorities

Stakeholders	Summary of Stakeholders’ Feedback	FSRA’s Response
Alterna Savings Canadian Credit Union Association Desjardins Group Libro Credit Union	All stakeholders expressed broad support for FSRA’s proposed SOP as it relates to credit unions (CUs). Stakeholders commented on FSRA’s priority to achieve supervisory excellence: one noted that it must take into account the sector’s ability to keep up with increasing regulatory expectations; the other sought clarification as to its meaning.	FSRA thanks stakeholders for their submission and the support expressed for the key deliverables included in the proposed 2023-2024 Statement of Priorities and Budget. Supervisory excellence is FSRA’s objective for regulating and overseeing the CU sector, in a manner consistent with its statutory objects and principles and the dynamic environment in which Ontario CUs operate. As noted below, FSRA is developing a multi-year workplan for rules, guidance and other regulatory initiatives that will support FSRA’s priority to achieve supervisory excellence, while helping CUs to plan and allocate their resources.

Stakeholders

Summary of Stakeholders’ Feedback

FSRA’s Response

Alterna Savings
Canadian Credit Union Association
Desjardins Group
Libro Credit Union

All stakeholders expressed broad support for FSRA’s proposed SOP as it relates to credit unions (CUs).

Stakeholders commented on FSRA’s priority to achieve supervisory excellence: one noted that it must take into account the sector’s ability to keep up with increasing regulatory expectations; the other sought clarification as to its meaning.

FSRA thanks stakeholders for their submission and the support expressed for the key deliverables included in the proposed 2023-2024 Statement of Priorities and Budget.

Supervisory excellence is FSRA’s objective for regulating and overseeing the CU sector, in a manner consistent with its statutory objects and principles and the dynamic environment in which Ontario CUs operate.

As noted below, FSRA is developing a multi-year workplan for rules, guidance and other regulatory initiatives that will support FSRA’s priority to achieve supervisory excellence, while helping CUs to plan and allocate their resources.

Multi-year Workplan

Stakeholders	Summary of Stakeholders’ Feedback	FSRA’s Response
Desjardins Group Libro Credit Union	Stakeholders noted the importance of a comprehensive workplan for all major CU initiatives, to assist the sector in planning its resources and providing timely, comprehensive responses to FSRA’s requests. A stakeholder requested that FSRA consult on its planned regulatory activities for the next five fiscal years, so the CU sector has a complete picture of what is on the horizon, including timelines for implementation.	FSRA is developing a multi-year workplan for rules, guidance and other regulatory initiatives that will help CUs to plan and allocate their resources. Prior to finalizing the workplan, FSRA will seek input from the Technical Advisory Committee on Regulatory and Supervisory Initiatives and Stakeholder Advisory Committee, which are key CU stakeholders.

Stakeholders

Summary of Stakeholders’ Feedback

FSRA’s Response

Desjardins Group
Libro Credit Union

Stakeholders noted the importance of a comprehensive workplan for all major CU initiatives, to assist the sector in planning its resources and providing timely, comprehensive responses to FSRA’s requests.

A stakeholder requested that FSRA consult on its planned regulatory activities for the next five fiscal years, so the CU sector has a complete picture of what is on the horizon, including timelines for implementation.

FSRA is developing a multi-year workplan for rules, guidance and other regulatory initiatives that will help CUs to plan and allocate their resources. Prior to finalizing the workplan, FSRA will seek input from the Technical Advisory Committee on Regulatory and Supervisory Initiatives and Stakeholder Advisory Committee, which are key CU stakeholders.

FSRA’s Costs

Stakeholders	Summary of Stakeholders’ Feedback	FSRA’s Response
Alterna Savings Canadian Credit Union Association	Stakeholders expressed concerns about FSRA’s increased costs, and appreciation for the fact that a significant portion of the increase in costs for fiscal 2023/24 is being offset by an allocation of FSRA’s surplus. A stakeholder noted that this surplus allocation is a one-time measure; another noted the significant cumulative impact of raising CUs’ assessment fees over the last three years.	FSRA thanks stakeholders for their comments and will continue to proactively manage its costs to ensure they are reasonable and commensurate with its necessary regulatory efforts.

Stakeholders

Summary of Stakeholders’ Feedback

FSRA’s Response

Alterna Savings
Canadian Credit Union Association

Stakeholders expressed concerns about FSRA’s increased costs, and appreciation for the fact that a significant portion of the increase in costs for fiscal 2023/24 is being offset by an allocation of FSRA’s surplus.

A stakeholder noted that this surplus allocation is a one-time measure; another noted the significant cumulative impact of raising CUs’ assessment fees over the last three years.

FSRA thanks stakeholders for their comments and will continue to proactively manage its costs to ensure they are reasonable and commensurate with its necessary regulatory efforts.

Staff Retention

Stakeholders	Summary of Stakeholders’ Feedback	FSRA’s Response
Canadian Credit Union Association Libro Credit Union	Stakeholders expressed concern with respect to the turnover of relationship managers and other staff and noted that this could have a negative impact on prudential and stakeholder engagement outcomes.	FSRA agrees that being able to attract and retain talented individuals is essential in order to achieve its mandate and will endeavour to mitigate any potential negative impact on the sector as new skilled staff are onboarded.

Implementation Timelines and Impact on CUs

Stakeholders	Summary of Stakeholders’ Feedback	FSRA’s Response
Alterna Savings Canadian Credit Union Association Desjardins Group Libro Credit Union	Stakeholders expressed concerns about the pace of change on account of significant recent legislative and regulatory developments impacting the CU sector. A stakeholder expressed appreciation for FSRA’s efforts to help proclaim the new Credit Unions and Caisses Populaires Act, 2020 (CUCPA 2020) and noted that the CUCPA 2020 will help CUs to compete in the modern economy and meet the needs of their members; however, it noted that increasing regulatory demands are diverting resources away from member service, growth and profitability.	FSRA is developing a multi-year workplan for rules, guidance and other regulatory initiatives that takes these concerns into consideration. FSRA thanks stakeholders for their support and contributions to the development of the CUCPA 2020.

Stakeholders

Summary of Stakeholders’ Feedback

FSRA’s Response

Alterna Savings
Canadian Credit
Union Association
Desjardins Group
Libro Credit Union

Stakeholders expressed concerns about the pace of change on account of significant recent legislative and regulatory developments impacting the CU sector.

A stakeholder expressed appreciation for FSRA’s efforts to help proclaim the new Credit Unions and Caisses Populaires Act, 2020 (CUCPA 2020) and noted that the CUCPA 2020 will help CUs to compete in the modern economy and meet the needs of their members; however, it noted that increasing regulatory demands are diverting resources away from member service, growth and profitability.

FSRA is developing a multi-year workplan for rules, guidance and other regulatory initiatives that takes these concerns into consideration.

FSRA thanks stakeholders for their support and contributions to the development of the CUCPA 2020.

Capital Adequacy Requirements (CAR) Rule review

Stakeholders	Summary of Stakeholders’ Feedback	FSRA’s Response
Canadian Credit Union Association Desjardins Group Libro Credit Union	Stakeholders expressed support for a review of the CAR Rule but requested that consultations not occur until 2024/25. A stakeholder expressed surprise that a review of the CAR Rule was being contemplated so soon after its introduction.	FSRA will take stakeholders’ views as to the timing of consultations on the CAR Rule review into consideration when developing the multi-year workplan (noted above). FSRA has received feedback from a number of CUs as they were implementing the CAR Rule, effective March 1, 2022. FSRA’s review would focus on additional clarifications to address this feedback, as well as identify opportunities to better align capital with risk. FSRA will continue to monitor developments related to capital requirements and time the review of the CAR Rule to address these developments in a timely manner.

Stakeholders

Summary of Stakeholders’ Feedback

FSRA’s Response

Canadian Credit Union Association
Desjardins Group
Libro Credit Union

Stakeholders expressed support for a review of the CAR Rule but requested that consultations not occur until 2024/25.

A stakeholder expressed surprise that a review of the CAR Rule was being contemplated so soon after its introduction.

FSRA will take stakeholders’ views as to the timing of consultations on the CAR Rule review into consideration when developing the multi-year workplan (noted above).

FSRA has received feedback from a number of CUs as they were implementing the CAR Rule, effective March 1, 2022. FSRA’s review would focus on additional clarifications to address this feedback, as well as identify opportunities to better align capital with risk. FSRA will continue to monitor developments related to capital requirements and time the review of the CAR Rule to address these developments in a timely manner.

Deposit Insurance Reserve Fund (DIRF) Differential Premium Score (DPS) methodology

Stakeholders	Summary of Stakeholders’ Feedback	FSRA’s Response
Alterna Savings Canadian Credit Union Association Desjardins Group Libro Credit Union	Stakeholders requested that the implementation of the DPS methodology not occur until 2024/25 or before a “test year” had been conducted. A stakeholder thanked FSRA for its transparency, collaboration, and meaningful consultation on the DPS methodology; another cautioned against a hasty implementation, which could have a destabilizing effect on the sector. A stakeholder stated that increased deposit insurance premiums would be difficult for the CU sector to absorb, given the current economic environment, and impact competitiveness. A stakeholder expressed support for the DIRF review, adding that collaboration with the sector and effective implementation would be critical.	FSRA will continue to be transparent and collaborative and take a consultative approach with the CU sector in implementing the revised DPS methodology. The public consultation on the proposed DPS methodology started on November 23rd, 2022. As detailed in the consultation paper, a transition period for the implementation of the proposed methodology has been developed.

Stakeholders

Summary of Stakeholders’ Feedback

FSRA’s Response

Alterna Savings
Canadian Credit Union Association
Desjardins Group
Libro Credit Union

Stakeholders requested that the implementation of the DPS methodology not occur until 2024/25 or before a “test year” had been conducted.

A stakeholder thanked FSRA for its transparency, collaboration, and meaningful consultation on the DPS methodology; another cautioned against a hasty implementation, which could have a destabilizing effect on the sector.
A stakeholder stated that increased deposit insurance premiums would be difficult for the CU sector to absorb, given the current economic environment, and impact competitiveness.
A stakeholder expressed support for the DIRF review, adding that collaboration with the sector and effective implementation would be critical.

FSRA will continue to be transparent and collaborative and take a consultative approach with the CU sector in implementing the revised DPS methodology. The public consultation on the proposed DPS methodology started on November 23rd, 2022. As detailed in the consultation paper, a transition period for the implementation of the proposed methodology has been developed.

Emerging Risks and Trends

Stakeholders	Summary of Stakeholders’ Feedback	FSRA’s Response
Alterna Savings Canadian Credit Union Association	A stakeholder expressed the hope that FSRA would show a greater link between emerging risks and trends (e.g., open banking and environment, social and governance (ESG) issues) and planned supervisory activities. A stakeholder identified open banking as a “key development” that would be transformational, if successful, and requested that FSRA fully engage with the CU sector and in the upcoming open banking framework to ensure that CUs are not placed at a competitive disadvantage. A stakeholder suggested that FSRA issue a discussion paper on emerging risks.	FSRA is developing a multi-year workplan for CU rules, guidance and other regulatory initiatives. The prioritization of rules, guidance and other regulatory initiatives in FSRA’s workplan, which is currently under development, will reflect emerging risks and trends, among other things. FSRA is fully engaged with its federal counterparts and other regulators with respect to the upcoming open banking framework. FSRA will consider information and reports (e.g., regarding emerging risks) that it can develop and distribute to the sector.

Stakeholders

Summary of Stakeholders’ Feedback

FSRA’s Response

Alterna Savings
Canadian Credit Union Association

A stakeholder expressed the hope that FSRA would show a greater link between emerging risks and trends (e.g., open banking and environment, social and governance (ESG) issues) and planned supervisory activities.

A stakeholder identified open banking as a “key development” that would be transformational, if successful, and requested that FSRA fully engage with the CU sector and in the upcoming open banking framework to ensure that CUs are not placed at a competitive disadvantage.
A stakeholder suggested that FSRA issue a discussion paper on emerging risks.

FSRA is developing a multi-year workplan for CU rules, guidance and other regulatory initiatives. The prioritization of rules, guidance and other regulatory initiatives in FSRA’s workplan, which is currently under development, will reflect emerging risks and trends, among other things.

FSRA is fully engaged with its federal counterparts and other regulators with respect to the upcoming open banking framework.

FSRA will consider information and reports (e.g., regarding emerging risks) that it can develop and distribute to the sector.

Enhanced Data Collection (EDC) Initiative

Stakeholders	Summary of Stakeholders’ Feedback	FSRA’s Response
Alterna Savings Canadian Credit Union Association Desjardins Group Libro Credit Union	Stakeholders commented on FSRA’s EDC initiative. They acknowledged the linkage between FSRA’s objective of improving its risk-based supervisory approach and enhanced data collection. A stakeholder advised that EDC data requests have been challenging due to their volume and short deadlines. Stakeholders cautioned that data collection needs to be reasonable, necessary, take CU members’ privacy into consideration, proportional to the benefit to be gained, and comparable to that collected by other regulators.	FSRA will continue to work collaboratively with the CU sector to implement the EDC initiative, in compliance with all applicable laws, including privacy laws, in a manner that does not create an undue burden on CUs. Aligned with the principle of proportionality, FSRA will adjust its expectations accordingly for CUs that are smaller and/or less complex. The EDC data that will be collected is information that CUs should already have as part of adequate and modern risk management practices. OSFI has been collecting similar data since 2014 and BCFSA has been doing the same since 2017.

Stakeholders

Summary of Stakeholders’ Feedback

FSRA’s Response

Alterna Savings
Canadian Credit Union Association
Desjardins Group
Libro Credit Union

Stakeholders commented on FSRA’s EDC initiative. They acknowledged the linkage between FSRA’s objective of improving its risk-based supervisory approach and enhanced data collection.

A stakeholder advised that EDC data requests have been challenging due to their volume and short deadlines.
Stakeholders cautioned that data collection needs to be reasonable, necessary, take CU members’ privacy into consideration, proportional to the benefit to be gained, and comparable to that collected by other regulators.

FSRA will continue to work collaboratively with the CU sector to implement the EDC initiative, in compliance with all applicable laws, including privacy laws, in a manner that does not create an undue burden on CUs. Aligned with the principle of proportionality, FSRA will adjust its expectations accordingly for CUs that are smaller and/or less complex.

The EDC data that will be collected is information that CUs should already have as part of adequate and modern risk management practices. OSFI has been collecting similar data since 2014 and BCFSA has been doing the same since 2017.

Structural Liquidity

Stakeholders	Summary of Stakeholders’ Feedback	FSRA’s Response
Alterna Savings Libro Credit Union	Stakeholders expressed support for FSRA’s efforts to secure access for CUs to emergency lending assistance (ELA) from the Bank of Canada (BOC) in the event of unexpected shocks and events.	FSRA thanks stakeholders for their support and will continue to work with the Bank of Canada and other involved stakeholders to promote access to sufficient emergency liquidity facilities for Ontario CUs.

Unclaimed Deposits

Stakeholders	Summary of Stakeholders’ Feedback	FSRA’s Response
Desjardins Group Libro Credit Union	A stakeholder expressed support for a proposed rule governing unclaimed deposits but suggested that it should be broadened to encompass the related issues of account closures and member termination. The stakeholder also suggested various timelines for notifying CU members of account inactivity before their deposits become “unclaimed”. Another stakeholder expressed support for FSRA’s development of an unclaimed deposits registry that CU members can access.	FSRA thanks stakeholders for their support of the proposed unclaimed deposits rule (and related registry) and will consult with the sector and the public on the contents of the proposed rule.

Stakeholders

Summary of Stakeholders’ Feedback

FSRA’s Response

Desjardins Group
Libro Credit Union

A stakeholder expressed support for a proposed rule governing unclaimed deposits but suggested that it should be broadened to encompass the related issues of account closures and member termination.

The stakeholder also suggested various timelines for notifying CU members of account inactivity before their deposits become “unclaimed”.
Another stakeholder expressed support for FSRA’s development of an unclaimed deposits registry that CU members can access.

FSRA thanks stakeholders for their support of the proposed unclaimed deposits rule (and related registry) and will consult with the sector and the public on the contents of the proposed rule.