On March 19, 2019, the Federal Government (Government) released the 2019 budget plan (Budget), which includes proposed updates to Canada's financial services regulation. These proposed updates, found under Annex 4 of the Budget, aim to promote innovation and enhance the overall integrity of the Canadian financial system. This summary discusses several key highlights of Annex 4.
In 2018, the Government appointed an Advisory Committee on Open Banking, and announced that it would undertake a review of open banking in the Canadian context. In January 2019, the Government released a public consultation paper, followed by roundtable consultations, which are currently underway, to gauge the public's opinion regarding open banking. The Committee is aiming to deliver a report to the Minister of Finance once the consultations are complete, with the ultimate goal of promoting open banking that properly addresses consumer privacy, security and financial stability.
The Budget continues to expand on the Government's plan to develop a legislative framework in respect of retail payments oversight, with a view to encouraging innovation, reliability and safety. The proposed framework will support broader access to the payments system, and would require payment service providers to have in place adequate risk management practices to protect against loss of users' funds.
In addition to the development of a new legislative framework, the Budget introduces new technical updates to the Canadian Payments Act (Act), which result from the 2018 legislative review of the Act.
Financial Consumer Agency of Canada Governance Council
In 2018, the Government granted the Financial Consumer Agency of Canada (FCAC) new consumer protection powers. As an additional step forward, the Budget announced that the Minister of Finance would appoint a governance council to further support and guide the FCAC.
Updating federal financial sector statutes
The Budget proposes to make amendments to several statutes governing and regulating the federally regulated financial institutions. These statutes are the Bank Act; Insurance Companies Act and Trust and Loan Companies Act, as well as related statutes, including the Bank of Canada Act; Canada Deposit Insurance Corporation Act and Payment Clearing and Settlement Act. Further, the amendments were proposed to keep pace with the Canada Business Corporations Act, allowing for the modernization of financial institutions' corporate governance framework, including board governance matters, such as election of directors and board diversity. The Government anticipates these amendments will reduce the administrative and financial burdens associated with discharging corporate governance obligations. In addition, technical amendments are proposed to facilitate clarity with respect to stakeholder compensation, where financial authorities take actions to sell, wind-down or re-establish a deteriorating federal financial institution.
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