Government of Ontario Issues Financial Services Report Following Red Tape Challenge: Implications for Fintechs
On August 9, 2017, the Government of Ontario released its report on financial services following the Red Tape Challenge. This report contains a number of recommendations and action items relating to Fintech:
- New flexible, innovative provincial financial services regulator – As previously announced, the Government of Ontario is proceeding with its plans to establish a new financial services regulator, the Financial Services Regulatory Authority of Ontario (“FSRA”), which is intended to be a “new, flexible and innovative financial services and pension regulator”, and which will replace existing provincial financial services regulators, including the Financial Services Commission of Ontario (“FSCO”). In the meantime, the report also states that FSCO has created a working group “to ensure that fintech-enabled start-ups and incumbents have a single point of contact for engaging with and accessing the regulator.”
- Regulatory sandbox – The report states that the Ontario Ministry of Finance will take into account the idea of a “regulatory sandbox” as it works to create the new FSRA and put forth this idea to the board of the FSRA for consideration. Many jurisdictions, including the UK and Singapore, have put in place regulatory sandboxes in the context of Fintech regulation, and the report refers specifically to “develop[ing] a pilot program to allow all fintech start-ups a regulatory grace period” as an action item to consider. The Ontario Securities Commission (“OSC”) has already put in place a similar approach by way of OSC LaunchPad.
- Harmonization of financial regulation – The report states that as part of the work establishing the new FSRA, it will keep in mind the feedback received requesting additional efforts in respect of the harmonization of provincial and federal financial services regulation, and also put forth this request to the board of the FSRA for consideration.
- Online resources for financial services regulation – The Ontario Ministry of Finance will work with the OSC and FSCO to review existing online resources with respect to financial services regulation to determine whether these can be improved.
- Simplification of financial services forms and regulations – FSCO has commenced a three year review process to determine whether it can simplify its forms, including mortgage and investor disclosure forms.
In addition, the report contains a number of other recommendations relating specifically to insurance, credit unions, mortgage brokerage and investment advisor requirements, which may impact particular Fintechs, depending on their business model.
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