(September 11 – 12:00 ET) – The Ontario Finance ministry has released a discussion paper proposing the merger of the Ontario Securities Commission and the Financial Services Commission of Ontario to create the Ontario Financial Services Commission.

The OFSC would be a self-funding Crown corporation, with rule making authority in Ontario. Its goal would be to eliminate both duplication and gaps in industry regulation.

As proposed, the new agency’s objectives include:

  • improving consumer and investor protection;
  • enhancing enforcement capabilities;
  • streamling regulation into a “one-window” approach;
  • ensuring common standards between OSC and FSCO;
  • providing similar rules for managers of investment funds, including mutual funds, seg funds or pension funds;
  • enhancing disclosure;
  • providing a more cost effective use of resources; and
  • providing a regulatory framework that is flexible enough to quickly accommodate new products and business models.

The discussion paper proposes a merger executed in a single bill that would be proclaimed in two phases. In phase one, the OFSC would be established to develop a framework for the transition. In phase two, the two regulators would actually merge. The government says it intends to introduce merger legislation in the upcoming fall session.

The new commission would be independent, but would answer to Finance minister. The discussion paper proposes 18 members for the commission appointed by the lieutenant-governor to five-year terms. The commission would be headed by a full-time chairman and CEO with three vice chairmen. There would also be a superintendent in charge of the insurance regulation.

The current rule-making and adjudicative powers of the OSC would be continued and extended into areas currently supervised by FSCO. The government is also proposing a separate pension tribunal with three members that would only have adjudicative powers. The Insurance Act would be modified to allow greater investigative powers at the new agency.

The OFSC would operate on a cost-recovery basis, with the goal of balancing fees so that no sector subsidizes another. The Finance ministry also intends to merge similar departments of the OSC and FSCO. For example, registration and compliance play similar roles at both organizations and may be merged to improve efficiency.

In releasing the discussion paper, the Finance ministry is seeking comment on whether this vision is vision appropriate. It would like to hear which sectors should be included under the new agency. It currently contemplates including securities, insurance, pensions, mortgage brokers, loans and trust, co-operatives, credit unions, and commodity futures.

The paper asks for comment on whether it should grant rule-making power in all of FSCO’s areas of responsibility, and whether the proposed governance structure and proposed new name are appropriate?

The ministry is also seeking comment on how consumer complaints should be handled and whether the role of insurance ombudsman should be extended to other sectors, such as securities. Finally, the discussion paper asks whether Ontario should pursue the creation of a national financial services ombudsman.

David Young, parliamentary assistant to minister Ernie Eves, is leading the discussion into the merger. Comments are due by October 2.
-IE Staff