AG conducts value for money audit on FSRA
The Office of the Auditor General of Ontario ( AG) has conducted a value for money audit of FSRA, the first since being launched in June 2019.
The report is a snapshot in time that offers some recommendations to FSRA and the Government of Ontario. Many of the AG’s recommendations will be addressed by initiatives that are already planned for or underway at FSRA
FSRA has changed the regulatory oversight model for Ontario financial services sectors it inherited by implementing a principles-based, outcome-focused approach to regulation, supervision, and enforcement. This has required a fundamental shift in assessing regulatory effectiveness, one that does not focus on the number of inspections or the amount of administrative penalties imposed but by carefully assessing the regulatory and public protection outcomes based on evidence and relevant information.
FSRA was established to take over the responsibilities of FSCO and DICO following a review of their mandates by a government-appointed Expert Panel that made numerous recommendations intended to create a more effective regulator with enhanced powers and more effective governance by having a skills-based Board of Directors. While FSRA has been given, and has in some cases already used, new regulatory and supervisory tools such as rule-making, as identified by the Auditor General, FSRA lacks regulatory authority in a number of areas, such as the automobile insurance and pension sectors, and looks forward to working with the government to address these policy matters to improve consumer protection and public confidence.
Despite a pandemic within a year following FSRA’s launch and the need to recruit new employees, the regulator has made important strides in its first 1,000 days, including:
- The enactment of the new Unfair or Deceptive Act or Practices Rule, which has given FSRA greater ability to define proper industry practices based on actual outcomes for insurance consumers;
- The enactment of three new rules in the credit union sector to improve prudential oversight and regulatory effectiveness;
- A new sector-wide whistle-blower program;
- A new risk-based supervisory framework and approach for credit unions;
- Revitalization of our conduct supervisory practices and focus;
- A new risk-based approach to supervision for pensions; and
- Building a new culture and hiring over 200 staff.
FSRA agrees with the Auditor General that many systems which it assumed remain outdated, impeding FSRA’s ability to be proactive and efficient. That is why FSRA will be spending over $30M revamping its systems. This includes upgrading portal and data systems to make them more efficient and ensuring that FSRA generates information that informs its regulatory strategy by measuring outcomes.
FSRA agrees with the Auditor General that it is “a work in progress” and there is still work to be done. After just over three years FSRA has developed a strong foundation with excellent staff, a solid governance model, rule-making powers and a well-defined mandate. FSRA will continue to build on that foundation to better protect consumers and improve public confidence going forward.
See FSRA’s responses to the Auditor General’s recommendations: Value-for-Money Audit: Financial Services Regulatory Authority: Regulation of Private Passenger Automobile Insurance, Credit Unions and Pensions Plans