Canada: Ontario Minister Of Finance Accepts Recommendations To Amend Credit Union Legislation

Ontario's Minister of Finance recently announced that the Ontario government will accept the 15 recommendations set out in a legislative review report (Report) to amend Ontario's credit union legislation, The Credit Unions and Caisses Populaires Act, 1994 (Credit Unions Act). In its 2016 Ontario Budget, the Ontario government confirmed its intention to implement the Report's recommendations, which aim to align Ontario's credit union legislation with international best practices, allow credit union ownership of a wider spectrum of subsidiary businesses, and enhance consumer protection. The Report means to address recent changes in the credit union industry, including consolidation of credit unions, an increase in their asset size, and the development of new and innovative business lines that generate non-interest income. 

Ontario's Ministry of Finance announced the legislative review in October 2014 and the Parliamentary Assistant to the Minister of Finance issued the Report in November 2015. If adopted, the recommendations will usher in significant changes to Ontario's credit union legislation since the last legislative review of the credit union sector in 2009.

No proposed amendments to the Credit Unions Act or related regulations have yet been published. 


The Report contains 15 recommendations in nine different areas. We discuss in detail the recommendations that are likely to have the biggest impact on the business of Ontario credit unions.

Capital Adequacy

The Report recommends adopting capital adequacy requirements for Ontario's credit unions consistent with the Basel III international capital standards developed by the Bank for International Settlements. The Report proposes a five-year transition period for Ontario credit unions to reach the Basel III 10.5 per cent minimum risk-weighted capital ratio. Under the proposed new capital framework, investment shares issued by credit unions would qualify as Tier 1 regulatory capital, if certain eligibility criteria are satisfied. This would include a mandatory regulatory approval for investment share redemptions and an unconditional right by the credit union to refuse redemptions. The Report proposes a five-year transition period during which outstanding investment shares would qualify as Tier 1 capital, but newly issued investment shares would need to satisfy the proposed eligibility criteria to count as Tier 1 capital. As a result, Ontario credit unions would need to ensure that new offerings of investment shares conform to the eligibility requirements set out in the Report, once the recommendations in the Report are formally adopted. Canada's federal bank regulator, the Office of the Superintendent of Financial Institutions (OSFI), has adopted the Basel III capital framework for Canadian banks, including for federal credit unions (of which there are currently none), but OSFI is yet to announce how the Basel III requirements would apply to the unique legal and capital structure of cooperative financial institutions, such as federal credit unions and cooperative credit associations.

The Report is also proposing that the current four per cent leverage ratio would remain in place as a supplement to the risk-based capital requirement, although off-balance sheet assets would be included in the calculation. The minimum leverage requirement adopted by OSFI for Canadian banks is three per cent. 

The Report does not contemplate the introduction of a non-viability contingency capital conversion requirement for any capital instruments issued by Ontario credit unions, unlike the federal capital framework. 

The Report recommends repealing the group capital provisions of the Credit Unions Act, under which two or more credit unions may enter into an agreement with a league for the purposes of meeting the capital adequacy requirements, with the approval from Deposit Insurance Corporation of Ontario (DICO).

Lending and Investment 

In terms of lending and investment rules, the Report recommends permitting Ontario credit unions to enter into loan syndication agreements with credit unions in other provinces. Under the current rules, Ontario credit unions are only permitted to enter into a syndication agreement with other Ontario credit unions or with certain listed entities, such as a league. 

The Report also recommends that the investment powers of credit unions be broadened by allowing them to wholly own a wider spectrum of subsidiary businesses, such as insurance brokerages. Although the Report does not provide many specifics on this proposal, the objective is to put credit unions on equal footing with the investment powers of banks. 

Consumer Protection

The Report recommends aligning Ontario's credit union consumer protection framework with that in place federally for banks. Specifically, the Report recommends disclosures to members similar to those required federally for banks, which could include: disclosures on account fees, deposit-type products (e.g., index-linked Guaranteed Investment Certificates), and mortgage default insurance. In addition, the Report suggests regulatory prohibitions related to: coercive tied selling, negative option billing, maximum cheque holding periods, or minimum account balances as conditions for loans.

The Report also suggests some voluntary commitments from credit unions, including publishing annual accountability statements, providing notice of branch closures, and submitting complaints data to the regulator, similar to the federal requirements for banks. These changes are in response to the absence of a third-party dispute resolution framework, such as an ombudsman, for resolving credit union member complaints.

Lastly, the Report suggests working with credit unions to explore the role credit unions can play in protecting and educating consumers of payday loans by providing lower-cost alternatives and education initiatives to improve consumer financial literacy. This recommendation comes at the same time as the Minister of Government and Consumer Services introduced Bill 156, which will amend, among other legislation, the Payday Loans Act, 2008. See our December 2015 Blakes Bulletin: Regulating 'Alternative Financial Services' in Ontario for more details.

Deposit Insurance

The Report recommends increasing Ontario's provincial deposit insurance coverage limit to C$250,000 for basic deposits and limiting the deposit insurance coverage for each category of registered accounts (registered retirement savings plans, registered retirement income funds and tax-free savings accounts) at C$250,000. Currently, the deposit limit in Ontario for basic deposits is C$100,000, while cash deposits held in registered accounts are subject to unlimited deposit insurance. 

Other Recommendations

The Report also recommends:

  • That the Ministry of Finance lead an initiative to address provisions in regulations under various statutes that do not include credit unions as permissible financial institutions. This recommendation aims to put credit unions on equal footing with banks under Ontario regulations.
  • That the Ontario government work with the Ministry of Municipal Affairs and Housing to consider changes to the investment rules for municipalities in order to remove barriers to municipalities from doing business with credit unions.
  • That differentiated rules for small credit unions be removed from the Credit Unions Act. Currently, the Credit Unions Act applies more restrictive rules to credit unions with assets of less than C$50-million if they do not engage in commercial lending.
  • In terms of corporate governance, no enhancements to corporate governance standards were recommended, although the Report recommends requiring credit unions to report to members on gender composition of boards.
  • That Ontario maintain the ability to enter into reciprocal agreements on credit unions with other governments.
  • That the Ontario government consider recommendations of the "FSCO-FST-DICO Mandate Review Panel" with a view to clarifying the roles of the Financial Services Commission of Ontario and DICO with respect to the credit union system in Ontario.


Neither the Report nor the Minister's announcement specify the next steps for the recommendations' implementation. We would expect that since Ontario credit unions were consulted in connection with the Report, the next step would be draft legislation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
27 Oct 2016, Seminar, Toronto, Canada

Please join members of the Blakes Commercial Real Estate group as they discuss five key provisions of a commercial real estate purchase agreement that are often the subject of much negotiation but are sometimes misunderstood.

1 Nov 2016, Seminar, Toronto, Canada

What is the emotional culture of your organization?

Every organization and workplace has an emotional culture that can have an impact on everything from employee performance to customer or client satisfaction.

3 Nov 2016, Seminar, Toronto, Canada

Join leading lawyers from the Blakes Pensions, Benefits & Executive Compensation group as they discuss recent updates and legal developments in pension and employee benefits law as well as strategies to identify and minimize common risks.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

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.