FSRA Stakeholder Advisory Committee for Credit Unions

Summary of the meeting on November 4, 2024
Via Microsoft Teams

Stakeholder Advisory Committee members present:

Allison Chenier - Kawartha Credit Union
Jay-Ann Gilfoy - Meridian Credit Union 
John Klassen - Kindred Credit Union 
Jon Dessau - Kingston Community Credit Union 
José Gallant - Alterna Savings Credit Union
Lea Matyuska - Bay Credit Union
Michal Kasprzak - St Stanislaus-St Casimir's Polish Parishes Credit Union Limited
Pierre Dorval - Caisse Alliance
Shawn Good - Libro Credit Union
Steve Boucouvalas - FirstOntario Credit Union 
Tammy Buchanan - Northern Credit Union 
Tomo Matesic - Mainstreet Credit Union  
William Boucher - Desjardins Ontario Credit Union

FSRA staff present:

Antoinette Leung - Head, Financial Institutions and Mortgage Brokerage Conduct, Market Conduct
Ayesha Zubair - Senior Manager, Credit Union Policy
Bradley Hodgins - Director, Risk Governance and Financial Stability
Dan Oprescu - Head, Prudential Supervision, Credit Union and Insurance Prudential
Daniel Padro - Head, Policy - Core Regulatory
David Maxwell - Head, Regulation and Strategic Initiatives, Credit Union and Insurance Prudential
Flavia Popa - Director, Data, Surveillance & Reporting, Credit Union and Insurance Prudential
Glen Padassery - Executive Vice President, Policy & Auto Insurance
Jane Albright - Executive Vice President, Corporate Services
Jordan Solway - Executive Vice President, Legal and Enforcement
Meghan Kilty - Chief Public Affairs Officer
Mehrdad Rastan - Executive Vice President, Credit Unions and Insurance Prudential
Paul Reid - Chief Financial Officer
Rhonda Mauricette Pollard - Chief Human Resources Officer
Steve Kokaliaris - Director, Approvals and Supervisory Practices
Victoria Lesau - Director, Policy, Credit Union, Insurance Prudential and Pensions

Ministry of Finance staff present:

Armaan Sahgal
Awais Mojai

Statement of Priorities (SOP) process overview

FSRA’s management provided an overview of the SOP process and stated that consultation with the Credit Union (CU) sector would commence in approximately two weeks. There were no questions from the SAC members regarding this timeline.

Environmental scan

FSRA’s management provided a high-level summary of an environmental scan related to the CU sector under the following themes: Economic Outlook, Technological Advancement and Innovation, and Emerging Issues and Trends.

There was a discussion with the SAC relating to Emerging Issues and Trends:

  • Pan-provincial Credit Union activities
    The SAC was interested in hearing FSRA’s view regarding these types of activities by CUs. FSRA’s management noted that CUs operating across provinces can create opportunities and provide efficiencies and FSRA is supportive. However, such expansion comes with the need for enhanced supervision by the regulator.

  • Potential in-sourcing of services within the Ontario sector
    A member of the SAC asked for more detail on in-sourcing of services within the Ontario sector. FSRA’s management stated that some smaller CUs can not afford similar capabilities as larger CUs in relation to middle and back-office services. There is interest from smaller CUs to access services which have been developed by the larger CUs in Ontario.

  • Climate change risk
    One member of the committee queried if FSRA anticipated the issuance of guidance related to climate change. FSRA’s management stated that there were no immediate plans to issue such guidance. However, FSRA is having discussions on how climate related risk can be incorporated into the broader Enterprise Risk Management Framework. FSRA’s management also said that the Capital Adequacy Requirements (CAR) Rule and the Internal Capital Adequacy Assessment Process (ICAAP) guidance are currently under review and including climate change as a material risk is being considered. FSRA’s management further iterated that even though guidance related to climate change was not a current priority that if in the future FSRA decided to issue such guidance, the CU sector will be provided with a consultation process.

  • Cybersecurity Risk and Fraud Risk
    One member of the SAC questioned how secure FSRA’s resources are to fight cybersecurity risk, as CUs provide FSRA with significant amounts of confidential information and data.

    FSRA’s management responded that there is a comprehensive three-year cybersecurity strategy, which is updated every year. FSRA utilizes both systemic and individual approaches to cybersecurity. It was also stated that the Enhanced Data Collection (EDC) project provides a safer, more accurate, centralized channel for data collection.

    Another issue raised by the SAC was whether FSRA would enhance the role of cybersecurity in Ontario’s CU sector and be an aggregator of individual CU cybersecurity. FSRA stated that this was not a current priority, but it could be considered in future years.

Credit Union strategic priorities for fiscal year 2025/2026

FSRA’s management described the three strategic pillars for the Credit Union and Insurance Prudential (CUIP) Division relating to Supervision, Regulation and Resilience.

FSRA’s management provided a brief overview of the 2025/26 strategic priorities for the CU sector, the intended outcomes and the key activities that will support each priority. FSRA’s management further stated that the 2025/26 priorities are a continuation of the work for the current fiscal year’s priorities and linked each priority back to one of the three strategic pillars.

  • Meetings with CU boards
    One committee member asked FSRA’s management to provide additional information regarding regular engagement with the Boards at CUs, particularly FSRA’s expectations in these meetings. FSRA’s management stated that it wants to build strong relationships with CU Boards, similar to the relationship that exists between FSRA and CU management. Following its assessments of CUs, FSRA issues recommendations and requirements to the Board, and FSRA’s management wants to discuss these with the Board who have responsibility for the oversight of CUs and ensuring that the gaps identified are dealt with.

    The Committee agreed that Board engagement was a good idea but cautioned FSRA not to inhibit the free flow of dialogue which takes place at Board meetings as the regulator is present during the discussions. FSRA’s management stated that they attend and will continue to attend these meetings at the invitation of the Boards.

  • Enhanced Data Collection (EDC)
    One member of the SAC queried whether a dashboard of key statistics created from the EDC initiative could be shared with CUs so that they can utilize the dashboard to assess its performance in relation to the overall sector. In response, FSRA’s management stated that it is its intention to use the more granular data provided by the EDC as inputs into the Early Warning System to indicate vulnerabilities and provide useful feedback to individual CUs. Additionally, FSRA will provide summary results for all thematic reviews and EDC output to enable better decision making by CUs.

  • Burden reduction
    FSRA’s management reiterated that its focus regarding the development of rules and guidance is to prioritize necessary areas only, with consideration for not overburdening the sector with consultation and additional requirements. FSRA has developed its 5-year workplan in collaboration with the sector and will continue to execute on that workplan, with periodic updates as necessary. FSRA’s principles-based guidance approach uses proportionality as a key principle, which allows for principles and outcomes to be applied appropriately to smaller institutions.

  • Capital Adequacy Requirements (CAR) Rule review
    One member asked for clarification on the timeline for the CAR Rule review process and queried the expected dates for the consultation period and implementation of the new rule. FSRA’s management stated that the consultation is expected to take place in 2025 and that FSRA intends to engage the Technical Advisory Committee for Supervisory and Regulatory Initiatives over the next few months. FSRA is targeting a 2026 date for the issuance of updated CAR Rule, but this is dependent on the nature of feedback and whether a second consultation is needed.

  • Townhall meetings
    One committee member queries if townhall meetings will take place via zoom or in person. FSRA’s management responded that the meetings would continue to be done as a webinar and that FSRA will send invitations to these meetings to the Boards and CEO at the CUs.

    Another member suggested that more time be allocated during the townhall meetings for the question-and-answers. FSRA will take this under consideration when planning future townhall meetings.

Financial plan

FSRA’s management presented the proposed financial plan for the 2025/26 fiscal year.

One member queried whether CUs could expect to see stability of the fees going forward and if the fees would be based on a pure cost recovery model. Another member of the Committee echoed this point and questioned if fees will remain consistent over next three years and could this be communicated to CU Boards. FSRA’s management responded by saying that the fees are forecasted to remain stable subject to any unforeseen regulatory needs for the sector.

A member of the SAC queried if additional fees are expected from the Bank of Canada’s Emergency Lending Assistance (ELA) program, and if those fees would be related to the size of the Deposit Insurance Reserve Fund (DIRF). FSRA’s management responded that there is no relationship between the size of the DIRF and the ELA.