FSRA’s webinar on Unclaimed Deposits Rule and Guidance (April 22, 2024)

Wendy

00:05 Hello, everyone, and welcome to today's webinar, Unclaimed Deposits Rule Guidance Webinar. Before we get started, I would like to go over a few items so you know how to participate in today's event. You have the opportunity to submit text questions to today's presenters by typing your questions into the questions pane of the control panel. You may send in your questions at any time during the presentation. We will collect these and address them during the Q&A session at the end of today's presentation. I would now like to introduce Victoria Lesau, FSRA, Victoria.

Victoria Lesau

00:44 Thanks very much, Wendy. And hello, everyone. My name is Victoria Lesau. I'm the Director of Credit Union, Insurance Prudential and Pension Policy here at FSRA. Thank you very much for joining us for this webinar and our proposed Unclaimed Deposits Rule and Guidance, which are currently out for consultation, and we are very much looking forward to your feedback. Today is an opportunity to learn more about the rule and guidance and also ask questions that you may have. So next slide. Quick agenda. So today we'll start with some introductions and a land acknowledgement. Cover background information about the initiative, how PBR applies, key elements of the rule and guidance, as well as next steps. Next slide. We'll have a number of FSRA staff who will be joining today for the presentation and then the question-and-answer period at the end. For the presentation, I'm joined by Amber McNair, Senior Manager of Policy for Credit Union and Insurance Prudential. Amber and I will run through our presentation, and we'll have time at the end for questions and answers, as Wendy mentioned. And for those of you who are not able to join or who want to refresh your memory after the webinar, we'll be posting the webinar on the website in mid-May.

Victoria Lesau

02:01 Next slide. So we'd like to begin this webinar with the land acknowledgement. We acknowledge the land we're on is the traditional territory of many nations, including the Mississaugas of the Credit, the Anishinaabe, the Chippewa, the Haudenosaunee, and the Wendat peoples, and is now home to many diverse First Nations, Inuit, Métis peoples. We acknowledge that Toronto was covered by Treaty 13 with the Mississaugas of the Credit and the Williams Treaties signed with multiple Mississaugas and Chippewa bands. Next slide. So a little bit of background about this project. The genesis for the rule and the guidance is legislative. The Credit Unions and Caisses Populaires Act, 2020, which we fondly refer to as the CUCPA, was introduced in 2020 and contains an unproclaimed provision that once proclaimed would require credit unions to transfer unclaimed deposits to FSRA after 10 years of an account inactivity in accordance with a FSRA rule. FSRA's proposed unclaimed deposits rule and related guidance establishes a uniform process for administering those unclaimed deposits. And some of the key purposes of the rule are to prevent deposits in members' accounts and members inactive accounts from being eroded by an activity fees, provide clarity and information to both credit unions and their members regarding unclaimed deposits, require credit unions to attempt to find members that have inactive accounts over a 10-year period, and assist eligible persons for claiming their unclaimed deposits from FSRA. So before we jump into-- oh, next slide. Thank you. So before we jump into the details of the rule, I wanted to highlight how FSRA's principles-based regulation approach or PBR fits into this rule and guidance that we're talking about today.

Victoria Lesau

03:59 As many of you know, PBR is a regulatory approach that relies on broadly stated principles that are outcomes focused as opposed to prescriptive. And PBR gives regulators and stakeholders the flexibility to relatively quickly respond to market changes and innovations. PBR makes use of qualitative terms such as "fair" and "reasonable" to facilitate compliance as it allows regulated entities to honor the spirit of the law. And so the unclaimed deposits rule and the guidance are largely consistent with this principles-based regulatory approach. The rule sets out high-level requirements for credit unions, such as credit unions must submit material information to FSRA. Credit unions must take reasonable steps to locate their members. And the guidance further defines these general requirements and sets out high-level outcomes for credit unions to achieve. So with that, on the next slide, I'll hand it over to Amber to walk through the key aspects of the rule and guidance.

Amber McNair

05:00 Thanks, Victoria. So over the next few slides, we'll take a look at what we mean by unclaimed deposits, and then go into key elements of the proposed rule. And I'll speak to associated aspects of the proposed guidance. So what do we mean by unclaimed deposits? The CUCPA defines an unclaimed deposit as a deposit that has been made to a credit union, and it has been 10 years since the latter of the last transaction by the depositor or the last request for or acknowledgement of a statement of account by the depositor.

Amber McNair

05:36 I want to note that the clock would not start at zero once the unclaimed deposits regime is put in place. There will be accounts that have been inactive for 10-plus years at the coming into fore state of the rule. In accordance with the transitional provisions of the rule, credit unions will have a 12-month grace period to notify members who hold unclaimed deposits and are not required to transfer unclaimed deposits to FSRA until after the 12 months have passed following the coming into fore state of the rule. An important point to note as well when considering what constitutes an unclaimed deposit is that the entire membership must be inactive, not just one account. So if a member has two different accounts, both must be inactive for the deposits to be considered inactive and transferred to FSRA. Online banking activity would count when considering account activity. The proposed guidance provides FSRA's interpretation of the definition of deposit as including the cash equivalence of the following items, checking account balances, savings account balances, guaranteed investment certificates, term deposits, official checks or drafts, non-negotiated certified checks, non-negotiated money orders. Examples of items that should not be transferred to FSRA include the contents of safety deposit boxes, securities, membership shares, other shares issued by a credit union, and mutual funds.

Amber McNair

07:11 Next slide. Sections 2(2) and 2(3) of the proposed rules state that the credit unions must take reasonable steps to locate and notify members in writing that their accounts have become inactive at three points. These are the two, five, and nine-year marks. The proposed guidance further specifies that in writing includes both written and electronic communication in accordance with member preferences. When FSRA considers if a credit union has taken reasonable steps, it will consider if it has, for example, notified the member in alignment with their communication preferences, taken further steps to locate or notify members proportionate to the deposit amount, attempted to contact members through alternative contact information, maintained documentation of all attempts to locate and notify members, and escalated efforts to locate and notify members depending on the interval. Credit unions would also need to submit to FSRA evidence of attempts made to locate and notify members. Next. When unclaimed deposits get transferred to FSRA is laid out in sections 2(5) and 2(6) of the proposed rule. If an unclaimed deposit becomes unclaimed between January 1st and September 30th of a calendar year, it should be transferred to FSRA. Anything falling outside of those dates would need to be submitted the following year. So an unclaimed deposit that meets the definition of unclaimed on October 1st would need to be transferred to FSRA the following year. The actual transfer of unclaimed deposits would take place between October 15th and December 15th of the same year that the deposits become unclaimed and would take place through electronic transfer.

Amber McNair

09:04 FSRA will be looking for a single electronic transfer that corresponds to the total value of the unclaimed deposits for that credit union. The guidance further states that FSRA will only accept payments of unclaimed deposits after credit unions have submitted all material information related to the unclaimed deposit. FSRA will confirm in writing within 30 days of receiving material information that all of the necessary information has been received. Only after receiving this confirmation should the credit union transfer the unclaimed deposit within the October 15th to December 15th submission window. Next. Sections 2(7) through 2(12) of the proposed rules speak to material information. For FSRA to accept an unclaimed deposit, a credit union must also submit all material information related to that deposit, including any personal information that would be necessary for FSRA to establish the identity of the member that would be entitled to the unclaimed deposit. The proposed guidance states that officers of the credit union must attest that the material information submitted is accurate, complete, and up-to-date. The proposed rule also states that credit unions must maintain original records of all information for as long as FSRA is required to hold the unclaimed deposit. Material information must be submitted electronically. Additionally, if a credit union fails to provide the required material information, then FSRA may reject payment. Until FSRA accepts payment, the credit union is still liable for the deposit under the CUCPA.

Amber McNair

10:47 Next. Sections 2(14) and 2(15) of the proposed rule state that any unclaimed deposits that are in foreign currencies will need to be converted to Canadian dollars. And the exchange rate used must be the same as that used by the credit union for their regulatory reporting for September 30th of the same year. Credit unions will also need to submit documentation of foreign currency conversions along with the unclaimed deposits. Next. Sections 3(1) to 3(4) of the proposed rule addressed the process for claiming unclaimed deposits. Claimants would need to submit an application that includes satisfactory evidence of their entitlement to a transferred unclaimed deposit. Applications and supporting evidence will be submitted through an electronic portal. FSRA will respond in writing within 120 calendar days from the date FSRA issues a receipt confirming a completed request. FSRA will either approve, deny, or require additional information from the claimant. The proposed guidance speaks to what is meant by satisfactory evidence. Satisfactory evidence includes identifying elements that will correspond to, confirm, or correct the material information provided by a credit union in relation to the unclaimed deposit. The more information that a person can provide that corresponds to or confirms the information that has been provided by the credit union, the more likely it is that FSRA can conclude that the individual is entitled to the unclaimed deposit. Another key point to note from the proposed rule is that FSRA will not pay interest to a person that has demonstrated entitlement to an unclaimed deposit.

Amber McNair

12:41 Next. Sections 4(1) to 4(6) of the proposed rule address the reconsideration process for those claiming an unclaimed deposit. If FSRA rejects a claim, a person may submit a written request for reconsideration. Requests must include a reasonable basis for FSRA to consider its original decision. FSRA will respond in writing to a completed request within 120 calendar days. FSRA's decision to confirm or reverse its original decision will be final and binding. Proposed guidance speaks to what we mean by reasonable basis. When deciding if reasonable basis has been demonstrated, FSRA will consider whether the claimant has included a valid reason for the original decision to be reconsidered and has offered evidence in support of that reason. Examples of reasons for reconsideration include that FSRA made an error in assessing the information when it initially decided a claim to entitlement, that FSRA failed to consider certain information when deciding a claim to entitlement, or that FSRA's decision was inconsistent with the provisions of the proposed rule or the CUCPA. The reconsideration of the claim will be conducted by a FSRA employee that is informed in a senior position and independent of the initial decision regarding entitlement. Next. In terms of next steps, you have the opportunity to comment on the proposed unclaimed deposit rule and guidance. FSRA will be accepting submissions on our website until Thursday, May 16th. FSRA will consider feedback in revising the unclaimed deposit rule and guidance as appropriate. And I will turn it over to Brad now for the Q&A session.

Brad Hodgins

14:41 Thank you very much, Amber. I'd like to welcome all the panelists and the people who will be answering questions. So John Caldwell from our legal department, Shamaila Mian from our policy department, and Victoria come back on screen, please, as we head through the questions. So the first question that we have today is going to be for Victoria, please. And that question is - bear with me a moment here - does the deposit definition include registered deposits?

Victoria Lesau

15:12 That's a great question. Thank you for that. And I think where it stems from is that the CUCPA definition of a deposit is that a deposit includes money deposited with a credit union under a federal or provincial registered savings plan or fund. So it does have reference to that registered component. So we would know that this definition is not exhaustive, so a deposit includes, and there could be other things that could be included in a definition of deposits. So FSRA interprets this non-exhaustive definition of a deposit under our guidance. And that includes things like checking, savings accounts, checks for the purposes of the unclaimed deposits regime specifically. Some forms of deposits, such as registered products, such as RSPs or TFSAs, are not listed in the guidance as definitive forms of deposits because our intention is to only accept transferred unclaimed amounts, the unclaimed deposit amounts that have been paid by a credit union to FSRA. So in other words, we're not intending to hold a deposit in a vehicle. The original vehicle that the credit union held it in, we're not intending to hold the TFSA or RSP vehicle. But rather, we can hold the cash value of those vehicles as unclaimed deposits. We recognize that there's tax implications with both RSP and TFSAs that don't necessarily lend themselves to be transferred in cash value. For example, if those accounts have securities or other interest earning investments, they may not be able to be liquidated without a member's consent, or they may not be able to be liquidated into cash values. So that's why they're not included under our framework.

Brad Hodgins:

17:08 Great. Thanks, Victoria. The next question I'm going to hand over to Amber. The question is, how long is FSRA required to hold an unclaimed deposit?

Amber McNair

17:19 Oh, thank you for the question. FSRA is required to hold unclaimed deposits that are in the value of $1,000 or less for 40 years and for 100 years for those that are over $1,000.

Brad Hodgins

17:33 Great. Thank you. Next one is for Shamaila, please. Are outstanding vendor payment checks included? Please confirm that an outstanding check that has been replaced is not included in this rule.

Shamaila Mian

17:47 I don't believe that that is included in the rule, but we can confirm and get back to the person that asked that question.

Brad Hodgins

17:57 Great. All right. The next question is for Victoria. And you touched on this a little bit earlier. So the GICs and other products that may mature after the 10-year period and end up having a member losing interest and paying penalties, do we have any more details about this question?

Victoria Lesau

18:17 Yeah, another great question. And we're open to feedback in terms of how it can be clarified or how to best administer this. So similarly to registered products, we would not be accepting the GIC as an instrument to be administered. We're accepting the unclaimed amount that is equivalent to the GIC and the money that was-- the GIC and the interest that was earned on it. And so we appreciate there may be kind of overlaps where the GIC is not yet mature but the member is inactive. And we're open to feedback in terms of how to best clarify that in the rule and guidance.

Brad Hodgins

18:59 Great. Thank you, Victoria. Next question for Amber, please. Electronic claims portal. Will there be an alternative for claimants that do not have access to electronic means?

Amber McNair

19:09 Oh, that's a great question. We haven't contemplated that at this point. We are focused on thinking about how to operationalize the portal at this point, but it's very good feedback, and I think we'll take that back. Thank you.

Brad Hodgins

19:24 Perfect. Another one for Victoria, please. What happens to the fund if FSRA rejects the claim?

Victoria Lesau

19:35 So this is if an unacclaimed deposit-- is this from a perspective of a depositor or a credit union if-- in terms of claims being submitted by credit unions to FSRA, we would look at the material information that's been submitted by credit union to FSRA prior to accepting the unclaimed deposit. And if we see that the material information is insufficient, we would work with the credit union to make sure that there's sufficient material information to be able to support the unclaimed deposit. From the perspective of an eligible person who comes forward to FSRA to claim an unclaimed deposit, we require that satisfactory evidence is provided so that we can ensure that we discharge a deposit and give a deposit to an individual who has the rights to it and that they identify themselves properly. So if there's a case in which FSRA rejects a claim made by an individual, there's a reconsideration process where we can consider other evidence by the individual and that could potentially lead to the unclaimed deposit being paid. For example, if FSRA made an error in considering the evidence, if some of the evidence provided by the credit union or some of the information that was provided by the credit union was incorrect, we could reconsider the claim. So we would look at it on a case-by-case basis.

Brad Hodgins

21:12 Great. Thank you, Victoria. The next question for John, please. When will this new rule come into effect?

John Caldwell

21:20 Yeah, that's a good question. The longer answer is there are a few legislative processes that need to be completed. So the rule is currently out for public consultation. After the consultation ends, we will take any feedback we received from the public process and make material changes if necessary. If necessary, a second public consultation will be held. At the end of the road, a rule will be approved by the Minister of Finance and the provisions in the CUCPA will come into force. And the short answer is once the provision comes into force, the rule will also come into effect. We don't have a firm date on that yet. I think we're planning near year end, but please anyone on the panel, correct me if I'm wrong there.

Victoria Lesau

22:02 Yeah. I think it depends on the nature of the feedback from the first consultation and whether we'll need to do a second consultation period depending if material changes are required to the rule. So timing is TBD.

John Caldwell

22:14 Yeah. I would also flag again what Amber mentioned earlier in the presentation that there will be a 12-month grace period, a transitional period for credit unions to be able to adhere to some of these new requirements. So understanding that as soon as the rule comes into force, there won't be immediate compliance required of credit unions. There will be a grace period. Thanks.

Brad Hodgins

22:39 Great. Another question for Victoria. Can you please comment on the records retention periods that apply to credit unions and how they impact deposits that have been unclaimed for many years or decades?

Victoria Lesau

22:52 Yes. So the proposed rule stipulates that credit unions must maintain the original records of all the information for unclaimed deposits for as long as FSRA is required to hold the unclaimed deposits, which is 40 years for amounts under 1,000 and 100 years for amounts over 1,000, and that's set out in the legislation. We understand that this record retention policy could be challenging for credit unions. And ultimately, the objective of this is to ensure that individuals that come forward to FSRA and claim entitlement are appropriately matched to their deposits. So in other words, individuals who are entitled to unclaimed amounts should be able to apply to FSRA within the legislated windows, which is 40 and 100 years, and be able to provide satisfactory evidence that will confirm the information provided by a credit union. And if, for example, a claimant approaches FSRA at the 39-year mark and there are questions about the correctness of the information they have provided, the intention of this record retention policies that FSRA could be able to confirm that information with the credit union. So that's the purpose of the retention periods.

Brad Hodgins

24:08 Great. So I have another question here. This one for you again, please, Victoria. The question is saying, presuming that we will work with the estate of a deceased member. Quick answer to that one would be yes. Yes, I guess I'll answer that one. Try to give you a moment to rest, yes. The expectation is that we will end situations where, unfortunately, a member has passed on. The estate may be claiming the deposits, and we will have to work with the estate in that situation. And to the point that was just made by Victoria, this is where additional information may be required to prove the individual so that funds are being distributed to the appropriate estate or understanding what is responsible within that estate to ensure that the beneficiaries are actually getting the funds that they're supposed to as per the final wishes of the member. All right, the next question I'm going to hand it over to John. That question is, could you please provide some clarity with relation to the definition of inactive membership? The nature of credit union membership is that they are subscribed to and not closed until a member decides, even if they have not acted on their accounts.

John Caldwell

25:24 Yeah, that's a great question. So I think Amber kind of touched on this during the presentation. When we're considering whether or not an account is inactive, we look to the entire membership of the particular member. So there could be a case, for example, where a member holds a savings account that they haven't touched in 10 years, but they have another more active joint savings account. In such a case, we wouldn't consider the savings account that hasn't been touched in 10 years to be inactive. We look to the entire membership profile of a particular member. So in that sense, we do rely on credit unions at the two-, five-, and nine-year marks to get in contact or notify these members who are holding accounts that have been inactive for those timeframes. It could be as simple as a credit union reaching out to member and having a simple acknowledgement of a statement of account at the two-year mark, at which point a member's account wouldn't be considered inactive from FSRA because the member has gotten into contact with the credit union and acknowledged that, "Although I haven't touched this account in a certain amount of time, it's not inactive," and it's been acknowledged. Hopefully that answers the question.

Brad Hodgins

26:31 Great. Thanks, John. The next question I'll hand over to Victoria. How are the contents of safety deposit boxes going to be addressed and what are we supposed to do with them now and how will they be addressed in the future?

Victoria Lesau

26:46 That's a great question. So safety deposit boxes are not currently included under the definition of a deposit in the proposed guidance. And the idea being that this rule is really focused on unclaimed deposits. And so things like the contents of a safety deposit box, anything that may be contained in a safety deposit box, which is not necessarily a cash deposit, or even securities, are out of scope from this proposed rule.

Brad Hodgins

27:18 Great. So the next question I will take myself, which is, does the credit union have to convert GICs and other accounts before they submit the funds to FSRA? The answer is yes. We will only be accepting the cash amount after the instrument has been dissolved or collapsed. And then those funds will be kept just as a single amount under that member's name within the FSRA claim deposit system. Next question I will hand over to Amber. What format of documentation will FSRA expect or accept for material information? Would it be narrative summary of information we have about the member, i.e. the member lived at such-and-such an address, their family members are such and such, or will there be a template and specific format that we will need to use?

Amber McNair

28:14 Thanks, Brad. So yes, we will be looking to receive information in as uniform a way as possible across depositors and across CUs. The intent is that we will be using EDC to be receiving the information. So there will be discrete and defined data fields so that we can sort of get that information consistently. Will there be functionality to attach documents or include narrative components, for example? I think those are things we're not quite there yet in terms of our development and implementation, but we'll certainly share that information once we have it.

Brad Hodgins

28:56 Great. Thanks, Amber. The next one is for Victoria, please. Is there any consideration to a dollar threshold being incorporated such as not including unclaimed deposits, say under $100? It appears to be a great deal of effort required for such small unclaimed deposits.

Victoria Lesau

29:14 Thank you. Yeah. So the current rule and guidance don't have a minimum threshold under which the regime would not apply. And partially this is because the actual CUCPA sets out the thresholds where FSRA must hold on claim deposits for 40 years for anything under $1,000 and 100 years for anything over $1,000. So we didn't have a minimum threshold. But definitely open to feedback. To the extent you have an idea for what kind of threshold could be used for minimum, please submit that as part of the consultation feedback.

Shamaila Mian

29:54 I can add one thing to that. In regards to smaller deposits, we have taken that into consideration for the reasonable steps. So the expectation would be for smaller deposits that credit unions wouldn't have to take as onerous steps in locating and contacting members, and that's set out in the interpretation guidance.

Brad Hodgins

30:20 Great. Thank you. The next question I'm going to hand over to John, please. And that question will be, how are credit union members and/or their estates informed of any funds being transferred to FSRA? And how would they go about recovering those funds?

John Caldwell

30:38 Right. So one of the big picture goals we have with this unclaimed deposit regime is requiring credit unions to locate and notify members who have inactive accounts at the two-, five-, and nine-year marks. If those marks go past and an unclaimed deposit is transferred to FSRA, we are in the process of creating an online public-facing portal where members or states can look up whether or not FSRA holds a transferred unclaimed amount that's been sent by a credit union. So first part of that question, we hope that the funds never come to us and that a credit union notifying their member takes care of accounting activity and nothing need come to us. Second part of that question is that once it does come to FSRA, there will be a public-facing portal where members can look up their name, and it'll give a result saying that FSRA holds a certain deposit in a certain name, at which point the member or a state can apply with the claim to entitlement to that transfer and claim amount. And that requires, again, submitting some satisfactory evidence of FSRA, and FSRA staff will work back and forth with that member to make sure that the money is transferred to who is properly entitled to it. Thanks. That's a good question.

Brad Hodgins

31:52 Thank you, John. Next question, I will ask Victoria to answer. What does a credit union do with the membership shares after the account is closed?

Victoria Lesau

32:12 That's a great question. And I think we can clarify that in the rule and guidance. So the unclaimed deposits regime, as I mentioned previously, it applies only to the deposits that are laid out in the guidance. And that would exclude membership shares or investment shares or any other types of securities. Yes, so those would not be included and transferred to FSRA. So that's really good feedback. We can clarify that in the future.

Brad Hodgins

32:46 Thank you. John, this one's for you. Is insufficient material deemed as non-compliance under the act?

John Caldwell

32:56 That's a good question. I think practically the answer to that is that FSRA is going to work with credit unions to ensure that enough material information is being provided before FSRA even accepts a transferred unclaimed amount. The act is very clear that once a transferred unclaimed amount is accepted by FSRA that the credit union is absolved of all liability for that particular amount of money. So before that happens, before FSRA accepts the liability for the transfer unclaimed amount, we need to make sure that all material information has been provided to us to allow us to turn around and review any claims to entitlement and ensure that it goes to who is properly entitled to the amount. So shorter answer is not necessarily non-compliance under the act, but FSRA will not accept a transfer unclaimed amount until material information has been provided. And again, we want to be flexible and recognize that information may not be available in all cases or circumstances, but working back and forth with credit unions and the regulators to ensure that enough material information has been provided to allow that subsequent providing of the amount to whoever is entitled to it down the line.

Brad Hodgins

34:04 Perfect. Next question I will take, which is, what happens after the 40- and the 100-year mark retention periods have passed? Those funds would then be transferred to the ministry of finance coffers to the province of Ontario at that point, similar to what happens in the federal system. Next question, I'm going to ask Victoria. Once this rule comes into effect, how do we provide evidence of contact after the two-, five-, and nine-year periods if the new rule is retroactive to past accounts being inactive? Sorry.

Victoria Lesau

34:50 Great. So the rule has some transitional provisions, and we appreciate that the clock doesn't start at year zero, right, in terms of unclaimed deposits. So you wouldn't have provided notices to members at year two, five, and nine, or at least not all credit unions. So we have a transitional provision in the proposed rule that states that after the rule comes into effect, whenever that is, there will be a 12-month period during which a credit unions should notify members that have unclaimed deposits that may be transferred to FSRA-- that those deposits will be transferred to FSRA. So that will be the evidence that we will require as part of the transitional period in the first few years.

Brad Hodgins

35:44 Great. This one's for Shamaila, please. How will a person be able to find out if there's an unclaimed deposit in their name that may have been forgotten about for many, many years?

Shamaila Mian

35:57 So I think Amber had referred to this as well. FSRA will establish a searchable function where a person can type in their name and it will indicate whether there is a deposit that they might be entitled to. And then once that search function comes up, there'll be additional information on steps that they can take to make a claim for that specific deposit.

Brad Hodgins

36:23 Great. John, this one's for you. Is a credit union inhibited from proactively paying funds out to a member for their inactive accounts as inactivity deadlines approach?

John Caldwell

36:37 Is the credit union inhibited from paying funds out to a member-- that's a good question. I assume that if a credit union is able to pay out funds to a member, there must be some consent or notice given to that member, at which point it wouldn't technically be an active account per the definition under the act. Yeah, I would point that question-- the answer to that question, I would point towards the definition of unclaimed deposit under the act as well as the requirements under the rule. If it's technically an unclaimed deposit that a member hasn't acknowledged a statement of account or just hasn't been active on the account, it's required to be transferred to FSRA after the 10-year mark of inactivity. If during that time there is some sort of acknowledgement of statement account between a credit union member, then no, it would not be required to be sent to FSRA, is what the short answer is.

Shamaila Mian

37:29 There's also a provision in the guidance that takes that situation into effect. So if something becomes unclaimed and the individual comes before the amount has been transferred to FSRA, the credit union is supposed to work with that individual to get them their funds back. And that's set out in the guidance.

Brad Hodgins

37:56 Thank you both. The next question is for Victoria. If a member successfully makes-- actually, we've answered that one. Sorry. It's come up a few times now. This one's for John, please. If FSRA does not accept the unclaimed amounts and sufficient material is not available, does the credit union maintain these deposits? What happens next?

John Caldwell

38:28 Short answer is yes. So FSRA will not accept any transfer on unclaimed amounts until material information has been provided. The important thing to note there is that the credit union remains liable for those amounts. FSRA is trying to avoid a situation where money is transferred to us and there's no way of reuniting that amount with whoever is entitled to it. So if that situation comes up, the credit union will have to hold on to that deposit. And again, FSRA is going to work back and forth with credit unions to ensure that enough material information is provided. There may be scenarios where 99% of information is provided, but there's still not 100% certainty who it's properly entitled to. FSRA's going to work back and forth to ensure that enough information is provided to enable proper transfer to whoever is entitled to those amounts subsequently.

Brad Hodgins

39:20 Thanks, John. Next question is for Amber, please. Can you explain why the eligibility of deposits to be remitted is divided into two periods during the year? Why not wait until the end of the year and postpone it to the following quarter to simplify the application of the rule?

Amber McNair

39:38 Sorry, Brad, do you mind repeating that? I didn't quite catch the beginning part of the question.

Brad Hodgins

39:42 Sure. Can you explain why the eligibility of deposits to be remitted is divided into two periods during the year? Why not wait until the end of the year and postpone it to the following quarter to simplify the application of the rule?

Amber McNair

39:57 So we've got a window. We've defined one window when we'll be receiving deposits during the year. So we decided on that timeline in response to feedback that we had heard during discussions with our technical advisory committee. And so we will be receiving the information in the early part of the fall and then receiving the deposits following that at a single point, but providing a window so that there's some flexibility there for credit unions. If there's additional considerations around that, please do submit it during the consultation, and we'll be happy to take a look at that.

Brad Hodgins

40:46 Great. Thank you. A lot of questions are coming up the same. I'm just trying to find a new one here. Great questions. Thank you, everyone, for the questions that you're submitting. And if you're not getting an answer to your question today, please make sure that you submit those questions to us through the consultation and include them as part of your response to us because there may be certain aspects while we're going through the rule that we hadn't contemplated. And as being the frontline individuals that you all are, you're helping us to understand where we may have to make some improvements along the way. So that being said, let's hop into the next question.

John Caldwell

41:29 Brad, before you do that, I just want to circle back on one of the earlier questions about the safety deposit box contents. That was a good question, and there wasn't a very clear answer. I don't think so. The contents of a safety deposit box, despite being held in a "deposit box," quote-unquote, it does not constitute a deposit if FSRA won't be accepting the contents of that box. They are assets that belong to the member. They're not assets that belong to the credit union. They can be liquidated into a transferred unclaimed amount. So again, the materials of a safety deposit box are just held by the credit union as a storage device. They're not required to be transferred in any dollar amount to FSRA. So just wanted to make that point clear. Carry on. Sorry.

Brad Hodgins

42:19 Thanks, John. That's great. I have another question for you, John. If a statement of account is mailed to a member and is not returned by Canada Post, can it be deemed as acknowledged by the member and not considered to be inactive or unclaimed?

John Caldwell

42:33 That's a fantastic question. That takes me back to law school. And what does deem notice mean and the postal rule and all that? That's a fantastic question. I don't have a very clear answer. That's something that we're going to need to take back and consider. But again, I'd point to there needs to be some sort of acknowledgement by the member. A lack of acknowledgement and deeming that as being acknowledged may be problematic, but I don't want to speak conclusively on this question. We're going to take that back and clarify it if it's not already clarified in the guidance, I think.

Brad Hodgins

43:03 Yeah, so I'm seeing a series of questions here about safety deposit boxes and how credit unions should be handling them. Some questions about how they should be taken into credit union revenue. How should they be dispersed? So we'll have to take that away. That was not part of the scope of this rule, so we'll have to figure out what can be done around that point. So yeah, thank you for all those questions. There's a series of questions along the same vein that I'm seeing here. So thank you for that. Right. So here's a question for Victoria. Will credit unions receive reports when funds are distributed so that they know that they no longer need to retain documentation for these accounts?

John Caldwell

43:49 Yeah, so that's a really great point. And I think we can take that into consideration. It's not specified in the rule in terms of when-- in terms of the reporting of amounts that FSRA pays out.

Brad Hodgins

44:08 Okay, this one's for you, Amber. Can FSRA please confirm whether this legislation will also extend to business accounts?

Amber McNair

44:19 Thanks for the question. Yes, I believe that it also does apply to business accounts. We can consider clarifying that in the next round. Thank you.

Brad Hodgins

44:34 Yeah, so there's some additional questions about registered accounts. All registered accounts are not to be transferred. So the deposits within a registered account, whether that be an RDSP or RSP, all the RRs and TFSAs are not expected to be transferred as part of this unclaimed deposit regime or program. Let's see here now. If official checks are issued, so I guess this is-- I guess this is official checks from the credit union. I'm not sure if I can't tell, but it just says official checks are issued. But yeah, any checks that are outstanding would be considered funds that need to be transferred to FSRA. We will make sure that the definition of deposits is clearly articulating all of the deposits that we expect to be transferred. Sorry, I'm going through these as fast as I can here. Will there be something--?

Brad Hodgins

45:52 Sorry, they're coming in fast and furious. So I read and then they move. So I apologize for that. So Victoria, this one's for you. Will there be something provided by FSRA if a credit union member tries to look up an unclaimed amount on the website and they find nothing? Is the credit union then responsible to determine if anything was transferred? Who is responsible to investigate?

John Caldwell

46:17 So that's a great question. And I think that's part of the operational planning that we're considering in terms of how the portal would work and how those scenarios would be dealt with. So that's a great question, and we can take it back to consider.

Brad Hodgins

46:36 Thank you. Amber, please. I thought I saw something mentioned about account fees and charges. How are account charges treated in the context of unclaimed deposits?

Amber McNair

46:47 Thanks for the question. So once the account is confirmed unclaimed, then fees and charges can no longer be charged. So once it becomes an unclaimed account, all of those cease.

Brad Hodgins

47:05 Perfect. Victoria, a question for you. As a summary, since there is a 12-month grace period, does this mean that funds will not need to be transferred until 2025?

Victoria Lesau

47:18 Depending on when the final rule is published and subject to minister of finance approval, of course, and subject to proclamation of the provision in the CUCPA. So once the rule becomes effective, there would be a 12-month period from that date to notify members that will have unclaimed deposits transferred to FSRA. And so yeah, so the following year would be the year when the unclaimed amounts would have to be paid by credit unions to FSRA. So I think the question maybe is assuming that the rule will come into effect this year. And so I think in that case, actually, the unclaimed amounts will not have to be transferred until 2026, right, because of the 12-month notification period. And then FSRA has the submission window in the fall. So it's about, I think, a year and a half until the amounts have to be transferred.

Brad Hodgins

48:24 So here's another question for Amber. Does automatic renewal of a GIC count as a transaction with respect to identifying an inactive member?

Amber McNair

48:34 Ah, that's a very good question. I think that's something that we're going to have to take back and discuss, and we can get back, well, to everybody, I guess. Yeah.

Brad Hodgins

48:47 Great. Okay. What's been asked? Could the rule have-- oh, this is for Victoria, please. Could it be that the rule states that the account can be closed once the deposit is sent to FSRA?

Victoria Lesau

49:12 Great question. We can consider that. I think it depends on what is in the account. So if it's a checking or savings account and the amounts have been transferred to FSRA, I imagine the credit union can discharge the liability. And yes, the amount would be transferred to FSRA and those accounts can be closed. If there's related securities accounts or things that cannot be transferred to FSRA, I think those would have to remain open. But we can consider clarifying that in the rule or guidance.

Brad Hodgins

49:49 So here's a question for you, Victoria. It's a long one, so please bear with me. In the absence of provincial unclaimed deposit regime, there will be some very old unclaimed deposits from an era prior to banking systems and few AML know your client requirements and from credit unions that have long ago been merged into others where surviving identifying information is poor. Do I take it that FSRA will not accept these legacy unclaimed deposits?

Victoria Lesau

50:18 That's a great question. So yes, we appreciate that the rule will come into effect, and it would be looking back 10 years, and there's been a lot of activity that happened in the last 10 years. I think we'd consider it on a case-by-case basis. So we're happy to work with the credit union to consider what types of unclaimed deposits may be in that category and may be more difficult to track. So we're open to working with the credit union in those situations.

Brad Hodgins

50:52 I'm seeing a number of questions about the retention period, questions about privacy and PIPEDA. And there was also some questions that were coming in about the Appendix A and the list of requirements as laid out in Appendix A. What we would like credit unions to do or anybody who would like to send a submission as part of this consultation is to help us understand how do we manage the amount of upfront requirements from the credit union. So enough identifying requirements for an individual so that FSRA is comfortable that we have enough information at this point to identify the individual while not asking for all of those things all at once, but the credit union retains the originals of many of these items such that if it's required at a later date that it can be requested from the credit union. So trying to temper the amount of information that's required at the outset versus what might need to be kept by the credit union in the event that the member comes forward and claims those unclaimed deposit amounts. So that's some of the advice that we are-- some direction that we would like from the sector as well to help us to temper that what appears to be a very large request at day one versus having a more manageable list at the outset to accompany the actual transfer of the funds and then keep the rest of the other information at the credit union in the event that they are needed at a later date.

Brad Hodgins

52:25 Okay. Yeah, there's some questions here that are outside the scope of this rule and guidance at this point, so I won't address those at this point, but. Here's a question for you, Victoria. Would FSRA consider 10 full calendar years of inactivity to be considered unclaimed rather than 10 years from the last transaction or acknowledgement of account?

Victoria Lesau

53:07 So I'm not sure if I fully understand the question. I think, 10 full calendar years of inactivity, I understand that as being 10 years of no activity online or in written form in the member's group of accounts, which I think is what is in the guidance and rule. But happy to consider another way of calculating that if the individual can clarify the question.

Brad Hodgins

53:40 Okay. Here's a question for you, Victoria. Will FSRA assist credit unions with the language on notices to members at the two-, five-, and nine-year intervals so that there is uniformity and messaging to members across credit unions as remitting unclaimed deposits to a regulatory body will be a new development?

Victoria Lesau

54:06 Yeah, another great question. I think, currently the way that the guidance is written and the rule there are the kind of principles based. And so the concept we include there is that credit unions should take reasonable steps to notify members. And the reason we have this concept of reasonable is that we appreciate different situations for different types of accounts. But in terms of having some uniform language for the notices, we can consider that. Thanks for the feedback.

Brad Hodgins

54:41 So the question coming, I'll handle this one. If we have been identifying and notifying members prior to this rule coming into effect, are we still able to start the claiming sooner? So yes, as we said earlier, the timeframe did not start again or does not come into-- when the rule comes into force, the clock does not reset to zero. So however long it's been, if it's been one year, six years, nine years, that clock continues to run until you get to the 10-year period. And then the requirements as laid out of the two-, five-, and nine-year period would be required to be met as the inactivity period continues for each of those individual accounts. So here's a question for Victoria. To confirm, dormant or inactive fees can be charged up to year 10 of inactivity. Only after year 10 is the credit union required to cease charging any fees, pay any interest on these accounts. Is this correct?

Victoria Lesau

55:42 Yes. Yeah. So up until a deposit becomes an unclaimed deposit, a credit union can charge reasonable fees to locate the member or any other fees that would be required for those accounts. And then once it becomes an unclaimed deposit at year 10, yes, those fees cannot be charged. And that unclaimed deposit would be transferred to FSRA in the fall per the timing laid out in the role.

Brad Hodgins

56:12 Great, Victoria. Well, thank you for all the questions that have come in today. I apologize if it took me a little bit longer to read some of these very detailed questions, but they were all very wonderful. And I hope that the answers have provided some more clarity to individuals who asked the questions as well as everybody else on this call today. Once again, I'd like to remind everyone that the consultation closes on May the 16th. Please provide all of your comments and submissions through the FSRA website under the consultation banner. And thank you once again for your time and thank you to all the panelists today. And I hope you have a great rest of the day. Bye for now.

Victoria Lesau

56:48 Yeah.