Meeting summary

Credit Union Technical Advisory Committee (TAC) for Regulatory and Supervisory Initiatives

Date: February 9th
Time: 4:00 - 5:00 pm
Location: Virtual
Attendees: See Appendix A

This meeting of the Regulatory and Supervisory Initiatives TAC focused only on the Proposed Credit Union Rule for Unclaimed Deposits, that FSRA has begun work on.

Proposed Credit Union rule governing unclaimed deposits

Overview

FSRA opened the meeting by advising that they wanted to obtain the TAC’s input on the development of the Proposed Rule and seek their initial feedback on several elements of the Rule, to help inform its design.

FSRA presented its approach and rationale for developing a Rule for unclaimed deposits. FSRA advised that among other reasons the Rule was needed to successfully support the proclamation of s.147 of the Credit Unions and Caisses Populaires Act, 2020 (CUCPA 2020). FSRA provided a brief overview of the legislative framework for unclaimed deposits as outlined in s.147 of CUCPA.

FSRA communicated the key Rule elements it is considering and posed the following questions:

  1. How should Credit Units (CUs) pay unclaimed deposits to FSRA and with what frequency?
  2. What constitutes satisfactory evidence of a person’s entitlement? and
  3. Whether interest should be payable on transferred unclaimed amounts or specifying that no interest is payable?

FSRA also discussed other elements that may be included in the Rule such as:

  1. an expanded definition of the term “deposits” as it relates to unclaimed deposits that would be subject to the rule
  2. requirements for CUs around locating/notifying members of inactive/dormant accounts
  3. whether a dispute resolution mechanism should be available for claims to such deposits that are denied by FSRA

Summary of questions/discussion on the proposed rule for unclaimed deposits

  1. How should CUs submit unclaimed deposits to FSRA and with what frequency?
    • A member noted that remittances should not be done by cheque, and another recommended it be done electronically. One noted Quebec CUs submits deposits to Revenue Quebec through their Computerized Account Collection Service.
    • Most members stated that the deposits should be submitted on an annual basis. There was a varying viewpoint on when in the year CUs should submit the deposits.
      • When one member recommended deposits be submitted over a three-month period, to alleviate the pressure of other reporting requirements, other members supported this approach over just one point in the year (either Q.1 Jan/Feb/March or Q.4 Oct/Nov/Dec).
  2. What types of items should constitute satisfactory evidence and be required by FSRA to pay out a claim?
    • A member commented that FSRA needs to consider how to deal with an estate/administrator who would not have an ongoing relationship with the original claimant and may not have access to documentation. FSRA also needs to consider individuals who may have changed their names.
    • Another member summarized that the type of evidence submitted to advance a claim would depend and vary on if the claimant is a business, person, or estate.
    • One member correctly noted that this would not be a CU process as the deposits have been transferred to FSRA. It would be up to FSRA to gather the evidence needed to process a claim. They did note that FSRA should accept evidence digitally as this would be beneficial to the claimant.
  3. What, if any, requirements should be included in the Rule for CUs to contact/notify members who have inactive/dormant accounts (i.e., between 2-10 years of account inactivity)?
    • One member commented that FSRA should not impose a “best-efforts” standard to locate members, as this would be burdensome, expensive and would be an outlier when compared to other provinces. Best efforts would entail things such as hiring a detective and/ or publishing notices and would be too difficult for smaller CUs. Acknowledged it would be good for members but not CUs.

FSRA noted that it understood that best efforts could be burdensome but are there other reasonable measures that CUs already take or should take? For example, in the 1994 Act, the requirement was to contact members at the 2- and 5-year mark. Currently what are CUs doing?

  • Three members noted that their practice has been to continue contacting members every 2 and 5 years (even though this requirement is no longer in the new Act).
  • Another member noted that it would be appropriate to include the 2- and 5-year requirement in the Rule as this is member centric but noted that email should be an acceptable method of contact.
  • Other members commented that notification requirements should be tied to the dollar amount in the account (don’t increase requirements for low deposit accounts). Additionally, if notification requirements were to increase from 2 and 5 years then CUs should be able to charge members a reasonable fee given, they are expected to do more.
  • Another member noted that consumers also have a responsibility to notify CUs vs. the extra burden placed on CUs to make extra efforts to locate them.
  1. Should FSRA pay interest on unclaimed deposit once they have been transferred?
    • One member noted that if FSRA decides to pay interest there will be an administrative cost that needs to be considered.
  2. Should a dispute resolution provision be included in the Rule for claims that are denied.
    • One member noted that CUs do not have dispute resolution process between CUs and FSRA - would suggest that a broader framework would help this.
      • FSRA advised that they will be issuing a Dispute Resolution Guidance as part of our 5-year work plan. This Guidance will address what CUs can do if they do not agree with a decision that FSRA makes.
      • To clarify, the above question is in the context of FSRA denying an unclaimed deposit claim and whether a dispute resolution system for claimants should be available.
  3. Should FSRA consider expanding the definition of the “deposits” as part of the Rule?
    • One member noted that it would be interesting to add safe boxes & creditor balances to the definition of deposits.
    • A member wanted clarification on the survey results found on slide 4 and whether this included an expanded definition of deposits or the current definition.
      • FSRA advised that the survey results captured only the existing definition of deposits as defined in CUCPA 2020.

Member questions

  1. A member wanted clarity on transitional provisions. They wanted to know whether the day after the Rule comes into force will all CUs need to transfer $18.4 M immediately to FSRA?
    • FSRA advised that the Rule would contain a transitional provision that would give CUs a reasonable timeframe over which CUs would be required to submit any subject unclaimed deposits. The Rule will clearly identify which deposits need to be submitted, how and when.
  2. A member asked how important is it for FSRA to put in place a Rule that is harmonized with other jurisdictions?
    • FSRA advised that we want to be aligned with best practices but also want to ensure we are doing something that makes sense for Ontario credit unions. There is alignment between jurisdictional practices in some elements, but divergence as well. FSRA will look at things from an outcomes-focused standpoint (i.e., what is the policy outcome). As we are in the preliminary stages of policy development it is important to get your feedback and thoughts as this will help us consider whether our requirements should diverge from other jurisdictions or align with them.
  3. One member wanted to know if an expedited member expulsion process can be considered after the deposits are transferred to FSRA? Section 41(2) of the CUCPA would allow FSRA to provide for it in the Rule, as subjecting these cases to the standard process could be unpractical.
    • FSRA has not considered this issue. FSRA can take away this comment and will consider it further.
  4. A member asked for clarity on language in the presentation that implied that no fees should apply to inactive member accounts.
    • FSRA clarified that it is not saying CUs should not charge fees on dormant/inactive accounts. Instead, this is advanced as a policy reason for unclaimed deposits to be transferred to FSRA. Once FSRA holds these deposits there will be no fees charged and this will prevent deposit balances from being diminished. Additionally, there will be no administrative costs for CUs to continue having to hold these accounts.
  5. One member commented that they would like a longer consultation period given this is a Rule and there is a lot of associated operational detail that needs to be considered.
    • FSRA clarified that Rules have a 90-day consultation period. The longer consultation period is given so that stakeholders have ample time to gather and submit their feedback.
  6. A member wanted to know if the TAC can see a copy of the draft Rule before it goes out for formal consultation.
    • FSRA advised that if there is a desire, we can take that away and discuss it and get back to the group.
  7. One member wanted more clarity on the interplay between the FSRA Rule and the Ministry of Finance proclaiming s.147 in the CUCPA 2020?
    • FSRA advised that given that s.147 was dependent on what is in the Rule, it would not be practical for it to be proclaimed into force until the Rule is ready. However, the Rule can’t come into force until the legislative provision is proclaimed as the authority to make the Rule is contained in the legislative provision. FSRA will develop the draft Rule and once we finalize it, it will go to the Minister for approval. If and when the Rule is approved by the Minister, then the government will decide when s.147 will be proclaimed into force.  It is likely that the Rule will be drafted in a manner so that it becomes effective upon proclamation of s. 147 of the CUCPA.

Next steps

FSRA would like CUs to submit any further comments/feedback they may have on any of the questions posed today or any other considerations. FSRA looks forward to receiving further input on operational details from CUs on the proposed Rule elements.

FSRA plans to begin drafting the Rule outline this Spring and will reach out to the TAC before a draft Rule is ready to be shared for public consultation.

Appendix A: Attendance record

Invited/Attended

Company name

Attendance status
(A)ttended; (R)egrets; (S)ubstitute;
John Caldwell FSRA A
Jason Harris FSRA A
Bradley Hodgins FSRA A
Hussein Lalani FSRA A
Chris Georgakopoulos FSRA A
Daniel Padro FSRA A
Mai Vo FSRA A
Mehrdad Rastan FSRA A
Naile Piranaj FSRA A
Grace Wen FSRA A
Joanna Wearing FSRA A
Adam Barett MoF A
Kasra Kazemi-Ashtiani MoF A
Nathan Fahey MoF A
Allison Kasper Copperfin Credit Union A
Andre Belik CCUA A
Angie Sorrenti Northern Credit Union A
Anita Saar Northern Birch Credit Union R
Bhuwan Singla DUCA A
Dany Proulx Desjardins A
Emily Vanderkruk Northern Birch A
Federico Tyrawskyj Desjardins A
Gracie Vadim BDO Canada LLP A
Guillaume Muller Desjardins A
Janet Johnson Libro Credit Union A
Jose Gallant Alterna Credit Union A
Kaitlyn Stadey Copper Fin A
Luc Racette Caisse Alliance A
Mike Howard Picuz Solutions R
Mohammed Tazi Mezalek Desjardins A
Richard Adam Northern Credit Union A
Riz Ahmad DUCA Financial Credit Union A
Sunny Sodhi Meridian Credit Union A
Tony D’Errico Italian Canadian Savings A
Sandy Ferguson Mainstreet Credit Union A