Ontario’s proposed new provincial regulator, the Financial Services Regulatory Authority (FSRA), is revising its plans for collecting fees from the industries it will regulate.
The FSRA, which is expected to launch this spring — replacing both the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario — first published its proposed fee model back in October 2018. Following an industry consultation, the new regulator is making some changes to the initial model that it says will ease the transition to the new agency for certain sectors.
The initial fee model is designed to enable the FSRA to be self-funded, and to operate on a cost-recovery basis. It was developed in consultation with seven industry working groups that provided input on the model. The first round of public consultations, which ended on Jan. 4, attracted another 91 submissions.
As a result of these consultations, the FSRA is now proposing a number of changes to its initial model. In its notice outlining the proposed changes, the FSRA says that the revisions “will facilitate a better transition to the fee rule and will help ensure that the administration of such fee rule is less burdensome.”
Among other changes, firms will have more time to pay their invoices (30 days instead of 14). And credit unions’ assessments won’t factor in their risk-weighted asset exposures during the first year for the new model; instead, it will continue to levy deposit-based assessments for its first year of operation. Also, the definition of certain pension beneficiaries will be enhanced.
Additionally, the FSRA has decided to eliminate a planned fee exemption for certain health service providers, noting that the regulatory framework for these firms needs to be reviewed. In the meantime, the FSRA is planning to maintain FSCO’s existing approach to levying fees in this sector.
The agency says that the fees charged to the mortgage brokerage sector will likely not cover the costs of regulating that industry in the first year, but that it expects that future levies will make up for the initial shortfall. Instead of increasing fees to cover the expected shortfall, the FSRA says, it plans to borrow the funds required, and to repay that loan with future fees charged to the sector.
The revised model is now out for a second, shorter comment period ending Feb. 25.