Purpose of the consultation:

DIRF adequacy is essential to sector stability. FSRA recognizes that there is a cost to the sector since funding the DIRF is a use of capital that cannot otherwise be deployed to service a credit union’s members and/or grow the institution. Accordingly, FSRA, in consultation with the credit union sector, is seeking to develop better tools and information sources to better balance the need for a DIRF that is sufficient to ensure deposit protection and stability while not putting undue economic burden on the sector. FSRA has established and consulted with a Technical Advisory Committee on Data Strategy and Digital Transformation prior and during the formal sector consultation. 

The purpose of this consultation is to provide the sector with the results of the 2020 DIRF adequacy assessment review and seek input on the future approach and model features. FSRA’s proposed approach to assessing DIRF adequacy is based on transparency, proportionality and engagement with the sector. 

The assessment and consultation process will continue to be refined on an ongoing basis, which will include improving the data, identifying scenarios and other evolving factors that may affect the analysis and conclusions of adequacy.

Feedback and engagement:

FSRA continues to engage with the Technical Advisory Committee for Data Strategy and Digital Transformation. In addition, FSRA released a consultation paper to the sector and the public. 

FSRA received four submissions in response to the paper during the consultation period of August 3, 2021 to September 9, 2021.  

FSRA thanks the Technical Advisory Committee and all commenters for their feedback. 


The following stakeholders took the time to share their perspectives with FSRA:





Canadian Credit Union Association

Nick Best


First Ontario Credit Union

Lloyd Smith



Desjardins Group


Libro Credit Union

Stephen Bolton


Summarized Comment

FSRA Response

Support for Framework for Assessing DIRF Adequacy

All commenters indicated support for the approach to building a robust framework to assess DIRF adequacy.

FSRA thanks stakeholders for their support and contributions to this work.


Commenters stated that, when complete, the stress testing model will more effectively determine DIRF adequacy by more comprehensively capturing risks that credit unions face.


Commenters stated that credit unions are willing to assist FSRA in the development of enhancements to the stress testing model.    


Commenters recommended that the stress testing model be “open sourced” to allow credit unions to use the model in the management of their portfolios.

FSRA thanks the sector for their interest in providing input into the various components of the stress testing model.  Building a robust model that appropriately assesses the adequacy of the DIRF under plausible scenarios is the goal of the assessment process.


FSRA will continue to work with the Technical Advisory Committee on Data Strategy and Digital Transformation to identify areas where credit unions may benefit from FSRA data and digital transformation improvements.

Data Requirements for Stress Testing

Commenters acknowledged the need for data from the Ontario credit union sector to replace the use of industry proxies and expert judgment currently used in the stress testing model. They are supportive of FSRA’s need to gather and utilize sector data and will work with FSRA to provide the data, where appropriate, and where data security measures are in place to protect the data.


Commenters recommended the use of data for a full economic cycle, including the identification of the start date and end date of the cycle used. This being said, a commenter recommended only collecting data going forward due to the expenses associated with gathering historical data.

FSRA thanks stakeholders for their alignment with the need to collect the necessary risk data from credit unions to enhance the quality of the assessment model results.


FSRA, through the Data Strategy Technical Advisory Committee on Data and Digital Transformation, is working through how best to get the data into the FSRA data systems.


FSRA agrees with the need to have a robust data management framework in place to ensure the security of the credit union data is maintained.


FSRA agrees that it is important to have the historical data over a complete economic cycle to best calibrate the model parameters thus enhancing the quality of the analysis results. This was discussed with the Technical Advisory Committee for Data Strategy and Digital Transformation as well and FSRA is looking in to using other data sets.

Stress Testing Scenarios

Commenters expressed concern about the scenarios used for the “base”, “adverse” and “severe” stressed cases in the 2021 assessment program. They requested more transparency in the development of the scenarios so that credit unions can provide feedback to the scenarios. Credit unions must have confidence that the scenarios (including the probabilities associated with each scenario) are credible.
Some commenters provided suggestions about the scope and considerations to be used in the development of stress scenarios.

The stress scenarios developed for the 2021 assessment mandate were developed with the involvement of third party economists and used industry best practices in the development of the scenarios.  FSRA shared high level scenarios with the sector with the TAC and during formal consultation and FSRA believes that as the model evolves scenarios will be part of this evolution, 
Going forward, FSRA will be soliciting the sector’s input into the development of the scenarios used in the modelling.

Use of the Actuarial Model

Commenters made the recommendation to use the actuarial model to assess the adequacy of the DIRF until the stress testing model has been further enhanced and includes the necessary risk data from the Ontario credit union sector to remove the dependency on “industry proxies” and “expert judgment”.

The economic parameters of the actuarial model have not been updated since 2015 and adequacy of the DIRF has not been assessed using this model since 2019. Also, such an approach is not consistent with the objective of this project to develop a more robust stress testing model and, as such, FSRA cannot justify the costs that would be required to update the actuarial model.  FSRA has discussed its rationale for moving away from the actuarial model, during our engagement with the Technical Advisory Committee (TAC) composed of various credit union stakeholders.


DIRF Target and Premiums

A commenter recommended that FSRA abandon the 100-bps target and that deposit insurance premiums paid by credit unions be reduced to levels to maintain the current deposit insurance coverage level, provided it is adequate as per the actuarial model test (defined as the DIRF does not go into a deficit position at any point during the 20-year assessment period for any iterations of the stressed scenarios). 


A commenter recommended a much stronger correlation between a credit union’s deposit insurance premiums and its risk profile. The aim should be an equitable, not equal, sharing of the financing burden of the DIRF based on the degree of risk that a credit union imposes on the fund, and on the level of capital available within the credit union, especially in the event of a recalibration of the annual premium amounts. This approach would provide more incentives for a credit union to better manage its risks while continuing to serve its members

The actuarial model cannot be used to assess the adequacy of the DIRF without incurring material expenses to update the model.  Updating the actuarial model would be inconsistent with FSRA’s objective to develop a more robust stress-testing model and, therefore, the costs required to do so could not be justified. 


FSRA conceptually agrees with  strengthening the tie between the risk profile of the individual credit unions and the level of deposit insurance premiums. FSRA will take this suggestion under advisement as part of its next review of the Differential Premium Score Determination model (currently set out in FSRA’s draft Statement of Priorities for 2022/2023 fiscal year).

Other Comments

A commenter recommended FSRA obtain a legal opinion on the use of individual financial records that have been subject to anonymization that encompasses all applicable legislation/regulations for all participants due to privacy concerns.

FSRA will consult internally on the appropriate legal strategy to address this comment. In addition, FSRA is consulting through the Technical Advisory Committee for Data Strategy and Digital Transformation on all aspects of data security and efficiency.