In an effort to streamline the licensing of new ventures, federal financial regulators are adopting a streamlined application process for certain innovative firms and credit unions.
Starting in June, the Office of the Superintendent of Financial Institutions (OSFI) will be launching a process to fast-track approvals for certain firms — including fintechs, crypto custodians and other firms with innovative banking models that are seeking federal banking licences, along with provincial credit unions that are pursuing federal licences.
Under the new process, OSFI will review and provide feedback on firms’ pre-application materials within four weeks. After undertaking a risk-based review of the full application — geared to the applicant’s business model, complexity and risk profile — it will provide a recommendation to the finance minister within 12 months. The regulator will also issue an order within three months after that enabling approved firms to begin operations.
In cases where regulators determine that “residual risks remain,” those orders may carry conditions, or restrictions on the firm’s licence, “with a defined plan for their removal.”
As part of the new process, the regulator said it’ll also provide firms with added guidance and greater transparency about the process, including a dashboard that will enable applicants to track their progress.
“As new business models and technologies emerge, we’re streamlining and making the path to a federal licence quicker, clearer and more predictable, all while maintaining strong prudential oversight and public confidence in the financial system,” the regulator said in announcing the new process.
While the regulator said the timeliness of approvals will still be dependent on the quality of the submissions from applicants, security clearances and the speed of applicants’ responding to regulators, “There will be greater predictability with established timelines between the phases” under the new framework.
Firms that aren’t eligible for the new approach will be subject to the existing review and approval process, although OSFI indicated that it’ll use insights from the initial process to inform a “broader rollout in the future.”
“The framework is intended to create efficiencies, not shift effort away from other applicants,” the regulator said.