Canada: Year In Review: Legislation And Guidance For Financial Institutions In 2015

Financial institutions in Canada witnessed yet another year of significant growth in legislation and regulatory guidance impacting their operations, while the financial marketplace is continuing to adapt to the impact of fintech and emerging use of innovative technologies in delivering financial services. The key initiatives introduced or implemented in 2015 are outlined in our annual regulatory overview.


Proposed New Operational Risk Guideline

On August 20, 2015, the Office of the Superintendent of Financial Institutions (OSFI) published a new draft Guideline E-21: Operational Risk Management (Guideline E-21) for comment. The draft Guideline E-21 aims to provide a "comprehensive view of operational risk management and related OSFI guidance" across all federally regulated financial institutions, other than the branch operations of foreign banks and foreign insurance companies, and fills what OSFI perceives to be a gap in existing guidance. Financial institutions will be expected to establish and maintain an enterprise-wide framework of operational risk management controls, consistent with four guiding principles that are set out in the draft Guideline. These four guiding principles were discussed by Assistant Superintendent Neville Henderson in his remarks delivered to the 2015 Life Insurance Invitational Forum on December 1, 2015. The comment period for the draft Guideline E-21 ended on October 9, 2015 (see our September 2015 Blakes Bulletin: What Does Operational Risk Management Draft Mean for Federally Regulated Financial Institutions?).

Revisions to OSFI Capital Framework for Life Insurers

On January 5, 2015, OSFI issued a Policy Paper: Life Insurance Capital Framework – Standard Approach (Policy Paper) describing the principles and concepts supporting the development of key components of a potential new life insurance capital framework. The Policy Paper was prepared by the Standard Approach Advisory Group, a joint committee of OSFI, l'Autorité des marchés financiers of Quebec and Assuris. As part of the process for developing potential methods for determining requirements for specific risks under the future capital framework, OSFI conducted a series of Quantitative Impact Studies (QIS) in the past few years. The Policy Paper contains a summary of the rationale and basis for the methodologies tested in the 6th QIS in November 2014. On October 22, 2015, OSFI requested life insurers to participate in a 7th QIS. OSFI's commonly asked questions on QIS 7 can be found here. The QIS 7 worksheets must be completed and returned by January 29, 2016. While awaiting the results of QIS 7, OSFI is planning to conduct two "test-drive" runs for the framework in 2016 and 2017 to validate the expected new capital test and help insurers gear up for the updated regulatory compliance requirements under the future framework, according to Assistant Superintendent Neville Henderson. A final guideline on the future capital framework is expected in mid-2016 with implementation planned in early 2018.

In remarks delivered to the Accounting Standards Oversight Council on October 23, 2015, Deputy Superintendent Mark Zelmer also commented on the development of future insurance contract standard, International Financial Reporting Standard (IFRS) 4 Phase II. According to the Deputy Superintendent, while OSFI supports the International Accounting Standards Board's effort to develop a global set of accounting standards for insurance contracts, OSFI "appreciate[s] that the Canadian model has served us well and that the proposed changes must work for Canadian insurers." The Deputy Superintendent also noted that OSFI decided to move ahead with its future capital framework based on the Canadian Asset Liability Method and will consider adjustments based on IFRS 4 Part II after that standard is finalized and implemented.

While the work on the future life capital framework continues, on November 27, 2015, OSFI published a revised version of its current capital guideline for life insurers — Guideline A: Minimum Continuing Capital and Surplus Requirements (MCCSR Guideline). The revised MCCSR Guideline came into effect on January 1, 2016 and now requires that:

  • Retained earnings be adjusted for a property that is re-classified (between investment and owner-occupied and vice-versa) so that it will be the same as if the property had originally been classified into its re-classified category from the outset
  • The deduction of non-life, solvency-regulated financial corporations be floored at zero
  • A zero per cent credit risk factor for a foreign, public-sector entity be allowed only if the public-sector entity's sovereign is eligible for a zero per cent factor based on its rating

It also addresses the treatment of subsidiaries that write a mixed business consisting of life and property and casualty (P&C) insurance within the same legal entity.

OSFI also made conforming changes to Guideline E-19: Own Risk and Solvency Assessment and Guideline A-4: Regulatory Capital and Internal Capital Targets, and repealed Guideline A-2: Capital Regime for Regulated Insurance Holding Companies and Non-Operating Life Companies, effective January 1, 2016. The revised MCCSR Guideline incorporates a number of past OSFI capital advisories.

On the international scene, the International Association of Insurance Supervisors (IAIS) continued its efforts to develop a risk-based global insurance capital standard (ICS) for internationally active insurance groups (IAIGs), as part of IAIS's proposed Common Framework for the Supervision of IAIGs. In October and November 2015, IAIS published responses to industry comments on selected questions relating to the proposed ICS. Assistant Superintendent Neville Henderson indicated on December 1, 2015, that OSFI's current work on the Canadian life insurance framework already includes many of the changes stemming from this international standard and that OSFI does not expect "ICS 1.0 to be as sophisticated as our current MCCSR capital test." Therefore, OSFI does not foresee a need to implement any significant changes in Canada in relation to ICS before IAIS finalizes ICS 2.0, which is expected in 2020.

With respect to the development by IAIS of a new Capital Requirement measure in December 2014 and a new Higher Loss Absorbency measure in November 2015 for global systemically important insurers (G-SII), Superintendent Jeremy Rudin in 2014 that OSFI did not expect these requirements to directly apply to Canadian life insurers, as no Canadian company has so far been identified as a G-SII.

Revisions to OSFI Capital Framework for P&C Insurers

On July 8, 2015, OSFI published an updated version of ORSA Key Metrics Report to take into account the material revisions, introduced in 2014, to OSFI's capital guideline for P&C Insurers: Guideline A: Minimum Capital Test for Federally Regulated Property and Casualty Insurance Companies (MCT Guideline). The industry impact of these revisions was also discussed in a letter published by OSFI on July 13, 2015.

On November 30, 2015, OSFI published a further revised version of the MCT Guideline, which came into effect on January 1, 2016. The key revisions to the MCT Guideline include the following:

  • Two transitional measures were introduced concerning equity derivatives, common shares held short, and eligible equity hedges
  • Branches of foreign insurance companies are now allowed to include insurance receivables from federally regulated insurers and approved reinsurers in net assets available in the Branch Adequacy of Assets Test, subject to certain conditions

Expected Changes to Capital Requirements for Residential Mortgages

On December 11, 2015, OSFI published a letter advising banks, federal trust and loan companies and private mortgage insurers that OSFI is working on changes to capital requirements for loans secured by residential real property. The changes are intended to ensure that capital requirements keep pace with developments in the housing market and reflect the underlying risks. Specifically, for banks using internal models for mortgage default risk, OSFI plans to introduce a risk-sensitive floor for one of the model inputs (losses in the event of default) that will be tied to increases in local property prices and/or to house prices that are high relative to borrower incomes. For federally regulated private mortgage insurers, OSFI intends to introduce a new standardized approach that updates the capital requirements for mortgage guarantee insurance risk and will require more capital when house prices are high relative to borrower incomes. OSFI indicated that it will conduct consultations with affected federally regulated financial institutions and other stakeholders in 2016 before introducing any changes. The final rules are expected to be in place no later than 2017.

Concurrently with OSFI's notice, the federal Minister of Finance announced that, effective February 15, 2016, the minimum down payment requirement for new insured residential mortgages will increase from five per cent to 10 per cent for the portion of the house price above C$500,000. These new measures will require amendments to the regulations under the National Housing Act (NHA) and the Protection of Residential Mortgage or Hypothecary Insurance Act.

On the same day, the Canada Mortgage and Housing Corporation (CMHC) announced an increase to the guarantee fees it charges issuers for NHA Mortgage-Backed Securities and Canada Mortgage Bonds.

OSFI is also developing new capital rules for mortgage insurers, as announced by OSFI in a 2014 letter to the industry. These more risk-based capital requirements are expected to be implemented in 2017, according to OSFI's 2014-2015 Annual Report (see our January 2016 Blakes Bulletin: New Federal Rules for the Residential Mortgage Market).

Expanding the Bank Resolution Framework

On April 21, 2015, the federal government made public the 2015 Federal Budget, which reiterated the government's intention to introduce a new bank recapitalization (or "bail-in") regime for Canada's six largest banks designated by OSFI as domestic systemically important banks or D-SIBs. Originally announced in an August 2014 consultation paper, the proposed bail-in regime contemplates the introduction of a new statutory conversion power that would authorize the federal government to convert a D-SIB's long-term unsecured liabilities into common shares in the event of its non-viability, consistent with international guidance issued by the Financial Stability Board (FSB) in 2014 under its revised Key Attributes of Effective Resolution Regimes for Financial Institutions. The 2015 Federal Budget also indicated that a minimum loss-absorbency requirement would be introduced for D-SIBs, which would be a new capital measure that D-SIBs must meet through the sum of their regulatory capital and bail-in eligible senior unsecured debt. International guidance for this new capital measure was finalized by the FSB on November 9, 2015, under the new Loss-Absorbing Capacity Standard for Global Systemically Important Banks.

The 2015 Federal Budget also indicated that amendments would be introduced to the provisions of the Canada Deposit Insurance Corporation Act governing the restructuring and resolution of banks in Canada. In this respect, the Canada Deposit Insurance Corporation (CDIC) stated in its 2015 Annual Report, published on March 31, 2015, that CDIC is working on the development of credible resolution strategies aligned with the enhanced resolution powers expected to accompany the bail-in framework.

The foregoing proposals were not included in the former Conservative federal government's last budget implementation bill of June 23, 2015. It remains to be seen how the new Liberal government will approach these policy initiatives in 2016.

As part of the 2015 Federal Budget, the federal government also announced that it would ask Canada's D-SIBs to be responsible for preparing resolution plans that would set out how each bank could be resolved in the unlikely event that recovery actions fail. This initiative did not require legislative amendments. As CDIC notes in its 2015 Annual Report, going forward, CDIC will:

  • Provide guidance to each D-SIB to ensure that their resolution plans reflect structural and operational changes specific to their institution
  • Examine bank structural and operational gaps to resolution, identify appropriate mitigants, and share these results with the banks
  • Work with each D-SIB to consider how CDIC could leverage the banks' existing crisis management infrastructure (including communications, treasury operations, governance and resources) to undertake key resolution activities in a timely manner to support continuity of operations and minimize market impacts

CDIC also noted that it will update its D-SIB resolution "playbook" and will test, at least annually, its readiness through a simulation or tabletop exercise.

On December 3, 2015, CDIC announced that it has signed a memorandum of understanding with the United Kingdom's Prudential Regulation Authority that formalizes cross-border cooperation and information sharing in the event of the failure of a large, complex financial institution operating in both countries. CDIC has entered into similar memoranda of understanding with the U.S. Federal Deposit Insurance Corporation, as well as CDIC's counterparts in Japan, Taiwan and Mexico. CDIC hopes that these information-sharing and resolution coordination agreements will ultimately lead to bank-specific coordination agreements with foreign regulators, according to the remarks of CDIC President Michèle Bourque delivered to the 2015 Financial Services International Forum on May 6, 2015.

Early Adoption of IFRS 9

On January 9, 2015, OSFI issued a new Advisory on Early Adoption of IFRS 9 Financial Instruments for Domestic Systemically Important Banks (Advisory). IFRS 9 – Financial Instruments is an international accounting standard developed by the International Accounting Standards Board in July 2014 to account for financial instruments. When adopted, IFRS 9 will replace the current International Accounting Standard 39 – Financial Instruments: Recognition and Measurement. IFRS 9 contains a new impairment model that will result in earlier recognition of impairment losses. The Advisory states that OSFI expects Canadian D-SIBs to adopt IFRS 9 for their annual period beginning on November 1, 2017. The major global bank peers of Canadian banks using IFRS accounting rules are expected to adopt IFRS 9 somewhat later — for financial years beginning January 1, 2018. In remarks delivered to the Accounting Standards Oversight Council on October 23, 2015, Deputy Superintendent Mark Zelmer indicated that OSFI was monitoring the endorsement processes for IFRS 9 in other jurisdictions, including the European Union, "to minimize the risk of Canada being the 'crash test dummy' when other jurisdictions delay adoption of new IFRS standards."

The Deputy Superintendent also noted that OSFI has taken the lead in the Basel Committee on Banking Supervision (Basel Committee) in developing a new expected credit loss accounting framework, which would ensure a consistent implementation and interpretation of IFRS 9 requirements across jurisdictions. The final version of that framework was published by the Basel Committee on December 18, 2015, as Guidance on Credit Risk and Accounting for Expected Credit Losses.

OSFI Guidance on Derivatives Practices

On January 30, 2015, OSFI released the final version of its new Guideline B-7: Derivatives Sound Practices (Guideline B-7), which sets out OSFI's expectations for federally regulated financial institutions (including Canadian branch operations of foreign banks and insurers) with respect to derivatives activities. Guideline B-7 incorporates the over-the-counter (OTC) derivatives market reforms initiated by G-20. It communicates OSFI's expectations for central clearing of standardized OTC derivatives and reporting of derivatives data to a trade repository. The new Guideline B-7 replaces OSFI's 1995 guideline on derivatives best practices.

On October 19, 2015, OSFI also released a draft Guideline E-22: Margin Requirements for Non-Centrally Cleared Derivatives (Guideline E-22), which will require the exchange of margin to secure performance on non-centrally cleared derivatives transactions between covered entities. The draft Guideline E-22 is based on a policy framework on Margin Requirements for Non-Centrally Cleared Derivatives, developed by the Basel Committee and International Organization of Securities Commissions to mitigate the systemic risk posed by non-centrally cleared derivatives. The draft Guideline E-22 will apply to all federally regulated financial institutions where they meet the definition of a covered entity set out in the draft Guideline E-22. The comment period for the draft Guideline E-22 ended on November 27, 2015, and the margin requirements are expected to take effect starting September 1, 2016.

Revisions to OSFI Financial Assessment Criteria

On October 1, 2015, OSFI updated its Financial Assessment Criteria, which guide OSFI's supervisory assessment of a federally regulated financial institution's financial function, as part of the institution's composite risk rating. The updated criteria are available here.

Updated OSFI Advisories and Transaction Instructions

On June 29 and 30, 2015, OSFI published the following revised advisories, transaction instructions and incorporation guide:

  • Advisory 2015-01: Substantial Investments, which provides an overview of how OSFI administers the substantial investment regime in the federal financial institutions legislation. It replaces OSFI's earlier advisories on substantial investments.
  • Advisory 2006-01-R1: Legislative Framework for Foreign Banks, which provides an overview of how OSFI administers Part XII of the Bank Act. The advisory was first published in 2006 and has now been updated to conform it to the current legislative scheme.
  • Transaction Instructions DA 22: Related-Party Asset Transactions as Part of a Restructuring and DA 23: Related-Party Asset Transactions with a Financial Institution, which set out OSFI's updated application requirements for related-party asset transactions permitted under the federal financial institutions statutes.
  • Guide for Incorporating Banks and Federally Regulated Trust and Loan Companies, which has been updated to reflect OSFI's current information requirements and practices on the incorporation of new banks and federal trust and loan companies. The Guide was last updated in May 2013.


Annual Statement to Shareholders

On February 6, 2015, the federal government passed amendments to the Annual Statement (Banks and Bank Holding Companies) Regulations (Regulations) made under the Bank Act. These Regulations specify the contents of the annual financial statement that banks are required to place before their shareholders at every annual meeting. The amendments provide that a statement of comprehensive income must be included in the annual financial statement, in addition to the balance sheet, statement of income, statement of cash flows, and statement of changes in shareholders' equity, as required by IFRS. The amendments came into force upon publication.

Supervisory Information Privilege

On June 23, 2015, the Economic Action Plan 2015 Act, No. 1 amended the provisions of the Bank Act, the Insurance Companies Act, the Trust and Loan Companies Act, and the Cooperative Credit Associations Act governing supervisory information confidentiality. The amendments introduce an express prohibition against the use of supervisory information as evidence in civil proceedings and deem such information to be privileged for that purpose. The amendments also provide that no person may be required in any civil proceedings to testify to, or to produce any document relating to, supervisory information and that the disclosure of supervisory information does not constitute a waiver of the statutory privilege. Certain narrow exceptions apply. The amendments address a Québec Court of Appeal decision, released in December 2014, in which the court took a narrower interpretation of the scope of the legislative prohibition against disclosing supervisory information in the context of civil proceedings.

New P&C Insurance Demutualization Framework

On July 1, 2015, the federal government passed regulations under the Insurance Companies Act to provide a framework for demutualizing mutual P&C insurers. Two sets of regulations were introduced, based on the P&C insurer's type of governance structure: Mutual Property and Casualty Insurance Company Having Only Mutual Policyholders Conversion Regulations and Mutual Property and Casualty Insurance Company with Non-Mutual Policyholders Conversion Regulations. Regarding the latter regulations, OSFI published a demutualization guide on December 29, 2015, as well as a ruling on November 27, 2015, which discussed the concept of "eligible policyholder". Demutualization regulations for life insurance companies were released in 1999. The new P&C demutualization framework is discussed in our February 2015 Blakes Bulletin: New P&C Insurance Demutualization Regulations: Unknown Unknowns.


Proposed New Federal Consumer Protection Framework

The 2015 Federal Budget repeated the federal government's intention to introduce a new federal financial consumer protection framework for banks, although no specific legislative amendments have been introduced to date. The proposal for a comprehensive financial consumer code was first announced in the 2013 Federal Budget and was reiterated in some different variations in subsequent years. The details of the 2015 proposal are discussed in greater detail in our April 2015 Blakes Bulletin: 2015 Federal Budget – Financial Services Highlights. It remains to be seen what the fate of this policy initiative will be under the new federal Liberal government.

Amendments to the Code of Conduct for the Credit and Debit Card Industry

On April 13, 2015, the Department of Finance released amendments to the Code of Conduct for the Credit and Debit Card Industry in Canada (Code). The Code was implemented in 2010 as a form of consumer protection for merchants. It aims to ensure that merchants are aware of the costs of accepting credit and debit cards and provides merchants with flexibility in determining what payment options to accept. The 2015 amendments provide merchants with even greater protection for acceptance of debit and credit cards, including in the mobile space. Payment card networks, issuers and acquirers had 30 days from the announcement to review and adopt the enhancements to the Code. For more information about the Code amendments, please see our April 2015 Blakes Bulletin: Amendments to Code of Conduct for Credit and Debit Card Industry.

FCAC Decisions

The Financial Consumer Agency of Canada (FCAC) issued two decisions in 2015. The Commissioner's Decision #123, released on April 20, 2015, related to an alleged failure to provide certain credit-card disclosures required under the Cost of Borrowing (Banks) Regulations. The Commissioner's Decision #124, released on June 4, 2015, involved a requirement by the FCAC for a bank to convene a meeting among the bank's representatives, FCAC's representatives, and interested parties to exchange views about the bank's intention to close a branch, in accordance with the Notice of Branch Closure (Banks) Regulations.

External Complaints Bodies Approved

On June 6, 2015, the federal Minister of Finance approved ADR Chambers Banking Ombuds Office and the Ombudsman for Banking Services and Investments as external complaints bodies under the authority of the Complaints (Banks, Authorized Foreign Banks and External Complaints Bodies) Regulations. For more information about the complaints regulations and the role of external complaints bodies, please see our April 2013 Blakes Update: Final Complaints Regulations Published Plus New FCAC Guidance.

Federal Privacy Legislation Amendments

On June 18, 2015, the Digital Privacy Act received royal assent and amends Canada's Personal Information Protection and Electronic Documents Act (PIPEDA); specifically:

  • The amendments clarify that an individual's consent is only valid if it is reasonable to expect that the individual would understand the nature, purpose and consequences of the collection, use or disclosure of the personal information to which the individual is consenting.
  • The amendments contain a "business transaction" exemption that will allow organizations to use and disclose personal information without consent in connection with mergers, acquisitions, financings, etc. (both during due diligence and post-closing), provided that certain conditions are met.
  • Business contact information is no longer excluded from the definition of personal information. However, PIPEDA's provisions dealing with personal information will not apply to the collection, use and disclosure of business contact information by an organization solely for the purpose of communicating or facilitating communication with an individual about his/her employment, business or profession.

The amendments also introduced mandatory data-breach notification provisions, which will not come into force until implementing regulations have been enacted. For more information about the amendments, please see our June 2015 Blakes Bulletin: Digital Privacy Act Receives Royal Assent, but Breach Notification Provisions Lag Behind.


A number of legislative and regulatory initiatives impacting Canada's anti-money laundering (AML) and sanctions legislation were introduced in 2015.

Proposed New AML Regulations

On July 4, 2015, the federal government released key draft amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PC Act) regulations. The draft amendments, if adopted, will replace the current rules for customer identification with a new set of requirements, which are generally more flexible and allow reliance by financial institutions on a broader range of independent sources. The draft amendments to the regulations also introduce the operative provisions required for implementing the enhanced due diligence measures for politically exposed domestic persons and heads of international organizations, as contemplated by the 2014 amendments to the PC Act. A number of additional measures are included in the draft amendments, which are discussed in greater detail in our July 2015 Blakes Bulletin: Amendments to Canada's Anti-Money Laundering Legislation: What's New and What's Next. The comment period for the draft amendments ended in September 2015.

Risk Assessment Guidance

On May 30, 2015, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) published a new guidance on The Risk-Based Approach to Combatting Money Laundering and Terrorist Financing (FINTRAC Guidance). The FINTRAC Guidance was developed to help financial institutions and other reporting entities meet their risk-assessment and mitigation obligations under the PC Act. Financial institutions can expect that FINTRAC will evaluate their risk-based approach to combating money laundering and terrorist financing in accordance with the criteria set out in the FINTRAC Guidance. FINTRAC also indicated that it is developing sector-specific workbooks for the risk-based approach. The first such workbook was published on September 1, 2015, for money services businesses.

On July 31, 2015, the Department of Finance published an Assessment of Inherent Risks of Money Laundering and Terrorist Financing in Canada (Assessment), which is intended to "better identify, assess and understand inherent money laundering and terrorist financing risks in Canada on an ongoing basis." The Department of Finance notes that reporting entities are encouraged to use the findings in the Assessment to inform their efforts in assessing and mitigating money-laundering and terrorist-financing risks.

The above initiatives are discussed in greater detail in our August 2015 Blakes Bulletin: Risky Business – Assessment of Inherent Risks of Money Laundering and Terrorist Financing in Canada and Guidance on the Risk-based Approach.

Mass Marketing Fraud

On February 2, 2015, FINTRAC released a Typologies and Trends Report on Mass Marketing Fraud: Money Laundering Methods and Techniques (Report). The Report identifies techniques and methods used to launder the proceeds of mass marketing fraud, based on an analysis of voluntary information records and financial transaction reports included in FINTRAC disclosures to Canadian police services and foreign financial intelligence units.


On February 17 and June 29, 2015, the federal government introduced amendments to the Special Economic Measures (Russia) Regulations and the Special Economic Measures (Ukraine) Regulations, in coordination with Canada's G-7 partners. The amendments added to the Canadian-designated lists new Russian nationals and businesses, including a number of major Russian energy companies. The June 29 amendments also introduced a broad prohibition against dealings involving property in the Crimea region.

On June 19, 2015, the federal government introduced new Regulations Implementing the United Nations Resolution on South Sudan, which implement in Canada the United Nations Security Council's Resolution 2206 relating to South Sudan.


A number of key initiatives relating to the federal regulation of payment service providers and financial market infrastructures were introduced in 2015.

Prominent and Systemically Important Payment Systems

In December 2014, through amendments made to the Payment Clearing and Settlement Act, the Bank of Canada was given new legislative authority to designate and oversee clearing and settlement systems that pose a payments-system risk in Canada (referred to as "prominent payment systems"), in addition to its existing authority to designate systemically important clearing and settlement systems. On June 12, 2015, the Bank of Canada published a consultation document entitled Proposed Criteria and Risk-Management Standards for Prominent Payment Systems, which sets out its proposed criteria for identifying prominent payment systems and lists key risk-management standards that the Bank of Canada proposes to apply to the designated prominent payment systems. The consultation period for the proposal ended in August 2015, and the Canadian Payments Association (CPA), among others, submitted comments to the Bank of Canada. Earlier in 2014, the deputy governor of the Bank of Canada indicated that Canada's national retail payment system, the Automated Clearing Settlement System (ACSS) operated by the CPA, "exhibits characteristics of a prominent payment system and therefore could be subject to Bank of Canada oversight" under the amended legislation. There are presently no prominent payment systems designated by the Bank of Canada.

The Bank of Canada's designation criteria and risk-management standards for systemically important clearing and settlement systems are set out in a 2012 Guideline Related to Bank of Canada Oversight Activities under the Payment Clearing and Settlement Act. In respect of these systemically important clearing systems (of which five are currently designated), the Bank of Canada has adopted as Canadian requirements the Principles for Financial Market Infrastructures (Principles), developed by the Bank for International Settlements in 2012. The Bank of Canada has published supplementary Canadian policy guidance in respect of the Principles, including, most recently, a proposed supplementary Canadian guidance on the development of recovery plans by systemically important clearing systems on December 3, 2015. The comment period on the proposed new guidance ends on February 1, 2016.

Retail Payment Systems

On April 13, 2015, the Department of Finance issued a consultation paper entitled Balancing Oversight and Innovation in the Ways We Pay. The consultation paper considers whether Canada's retail payment systems should be subject to a federal regulatory framework. The consultation paper considers, and seeks comments on, the potential regulation of market conduct risk, financial loss risk, and operational risk posed by retail payment systems. Both the CPA and the Competition Bureau submitted comments on the consultation paper.

On September 17, 2015, the CPA and the Bank of Canada released a discussion paper entitled Public Policy Objectives and the Next Generation of CPA Systems: An Analytical Framework, outlining "a shared vision for the future of payments in Canada." The research aims to provide a tool for considering the ability of a payment system to balance the Canadian public policy objectives of safety and soundness, efficiency and end-user interests given the attributes of the system.

On December 18, 2015, the CPA also published Canadian Payment Methods and Trends: 2015, which aims to provide a complete picture of the most common consumer and business payments in 2014 and gain insights on emerging payments.

ISO 20022

On August 10, 2015, the CPA released a consultation paper entitled Creating Opportunities in Canadian Payments, seeking input on the introduction of the ISO 20022 standard, which, when implemented, is expected to enable efficiencies and facilitate innovation in the payments industry in Canada.


On December 3, 2015, the Bank of Canada published its updated Emergency Lending Assistance Policy Statement (ELA Policy Statement), following public consultations in 2015. Under the revised ELA Policy Statement, the Bank of Canada clarified the eligibility criteria for federal and provincial financial institutions and designated clearing and settlement systems to access the Bank of Canada's emergency lending assistance loans and advances in times of distress and liquidity shortfalls. Specifically, the ELA Policy Statement provides that a federally regulated financial institution will be eligible for emergency lending assistance if it is a member of the CPA and has implemented a credible recovery and resolution framework. The ELA Policy Statement notes that the Bank of Canada does not intend to develop any specific criteria or requirements for recovery and resolution frameworks beyond those that have been or will be developed by OSFI and CDIC. This new condition of a credible recovery and resolution framework replaces the Bank of Canada's earlier requirement that a financial institution be solvent before it could qualify for emergency lending assistance.

A provincially-regulated deposit-taking institution will qualify for emergency lending assistance under the updated ELA Policy Statement if:

  • The provincial institution is a member of the CPA
  • It has developed a credible recovery and resolution framework
  • The making of the liquidity loan is important to the stability of the Canadian financial system
  • A provincial government has formally agreed to indemnify the Bank of Canada in the event the provincial financial institution fails to repay the borrowed funds

The last requirement is also codified in a provision of the Bank of Canada Act, adopted in December 2014, which comes into force in January 2017.

Designated clearing and settlement systems operating within Canada are also eligible for emergency lending assistance under the Payments Clearing and Settlement Act. The ELA Policy Statement indicates that the financial institutions that would not qualify for emergency lending assistance are foreign bank branches, insurance companies, mutual funds, and investment dealers.

To access our past annual reviews of legislation and guidance for federal financial institutions, please visit:

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Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.