While it is true that money runs the world, there is still a larger force that rules over it: a country’s financial regulations. Financial institutions and consumers alike are bound by these laws, and non-compliance may bring negative consequences.
So, what are these financial laws in Canada and how do they apply to a typical person?
What is financial regulation?
Financial regulation is based on the principle that financial institutions are impressed with public interest. These institutions or entities have a fiduciary responsibility over their clients and customers.
Because of this, the government ensures that financial institutions exercise truthfulness and good faith in their dealings with their customers. The government also ensures that the rights of consumers are protected for any transaction arising out of their relationship with these institutions.
To make all these things possible, financial regulations are enacted and enforced. They aim to uplift the confidence of the public over these institutions, prevent any crime from happening, and protect the public from erring institutions.
What are Canada’s laws on financial regulation?
Canada’s financial regulation is a shared responsibility among the provincial, territorial, and federal governments.
Since most financial institutions operate nationally and across borders, the federal government has a large chunk of responsibility over them.
Here are some of the prevailing federal laws on financial regulation:
- Bank Act: regulates banks and the business of banking, such as the incorporation of federal domestic banks, their governance and management structure, limitations on foreign ownership, and financial regulation governing foreign banks and its branches in Canada
- Personal Information Protection and Electronic Documents Act (PIPEDA): compels organizations (including banks) to acquire the consent of consumers for the collection, use, and disclosure of their personal information for any commercial activity
- Canada’s Anti-Spam Legislation (CASL): prohibits the sending of spam and other marketing tactics that may qualify as spam without the consent of the receiver
- Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA): governs the financial regulation in preventing and prosecuting money laundering and terrorist financing activities
- Retail Payment Activities Act (RPAA): introduces a new regime for ‘retail payment activities’ under the Bank of Canada
There are many regulations enacted to enforce the provisions of these laws. There are also other province-specific financial regulation and governing bodies.
For example, Quebec’s main financial regulator is the Autorité des marchés financiers (AMF). Watch this video on how AMF educates and protects investors, along with their investments:
If you’re a financial institution or consumer in Quebec, reach out to any of the Lexpert-Ranked best banking lawyers in Quebec for other province-specific financial regulations.
What are financial regulators in Canada?
Canada’s financial regulation and other laws are overseen by the different federal agencies, whose roles may be distinct or may overlap with one another:
Office of the Superintendent of Financial Institutions (OSFI)
The OSFI is an independent federal agency responsible for the prudential regulation and stability of financial institutions.
The OSFI’s mandates related to financial regulation include:
- verifying whether institutions meet their minimum funding requirements
- ensuring that institutions have policies and procedures against threats to security and integrity
- checking material deficiencies and compelling institutions to address them
The agency covers several federally regulated financial institutions, such as:
- domestic banks
- foreign bank representative offices
- trust and loan companies
- fraternal benefit societies
- insurance companies
- private pension plans
Financial Consumer Agency of Canada (FCAC)
The FCAC is mainly concerned with the protection of the rights of consumers in all their dealings with banks and financial entities. When there are reports about an institution’s financial products and services, FCAC is empowered to investigate these complaints.
The FCAC does not resolve any individual disputes nor provide redress or compensation. This may only be done by the financial institution itself, its external complaints bodies, or by the court.
Among the institutions that FCAC regulates are:
- banks
- insurance companies
- trust and loan companies
- retail associations
- external complaints bodies
Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
Also called Canada’s financial intelligence unit and anti-money laundering and anti-terrorist financing supervisor, FINTRAC is one of the many federal agencies that implement the PCMLTFA.
The FINTRAC ensures that businesses and financial institutions comply with the financial regulation prohibiting money laundering and terrorist financing.
The Centre also provides financial intelligence for police, law enforcement, and national security agencies regarding the activities of the institutions it monitors.
Canada Deposit Insurance Corporation (CDIC)
The CDIC is a federal Crown corporation that contributes to the financial stability of its member institutions by insuring eligible deposits. In addition, the CDIC acts as a resolution authority in case a bank financially fails.
Canadian Securities Administrators (CSA)
In lieu of a single federal body regulating securities, the CSA is an umbrella organization of the different securities regulatory bodies of the different provinces and territories.
As part of financial regulation authority in Canada, the CSA aims to harmonize regulations among the 13 different securities commissions or regulators.
Provincial or territorial securities regulator
Each province or territory has its own laws on securities and capital markets in its jurisdiction. These laws may cover:
- distribution of securities
- reporting obligations of issuers
- licensing of dealers and advisers
- anti-fraud and misrepresentations
All of these are the securities regulator's responsibility and may include the prosecuting or initiating court proceedings against violators.
Office of the Privacy Commissioner of Canada (OPC)
The OPC’s primary concern, as far as financial regulation is concerned, is the implementation of the PIPEDA that covers financial institutions.
This Office may also receive complaints from consumers whenever their right to privacy has been breached under the PIPEDA.
Other financial regulators
Here are other entities in addition to the above institutions that are involved in Canada’s financial regulation:
- Bank of Canada
- Canadian Bankers Association (CBA)
- Canadian Payments Association (CPA)
- Ombudsman for Banking Services and Investments (OBSI)
- Payments Canada (PC)
Interested to know more about Canada’s laws on financial regulations? Consult with the best banking lawyers in Canada as ranked by Lexpert.