Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.
Issue link: http://digital.canadawide.com/i/842412
bankaccountable CmB magazine cmba-achc.ca spring 2017 | 41 FCAC will continue to use third-party intelligence to initiate investigations based on information obtained through complaints, media coverage or other regulators, as well as gather information from multiple regulated entities and stakeholders on matters relating to the financial services sector and market conduct. Enforcing Market Conduct Obligations e Supervision Framework sets out an enforcement regime that begins with the process of investigating any potential breach of a market conduct obligation. Such investigations may lead to the issuance of either a compliance report (previously included in the FCAC Compliance Framework) or notice of breach (a new tool under the Supervision Framework). Notice of Breach Notices of breach are a new enforcement tool introduced in the Supervision Framework, which allow FCAC to categorize a notice of breach within one of three levels depending on the severity of the breach: n A level 1 notice of breach may be issued if the breach is isolated or minor, when a systemic breach has been promptly identified, corrected and remediated, or when harm or impact was minimal and the regulated entity has shown there is a low risk of recurrence. n A level 2 notice of breach may be issued when the severity of the breach is elevated. n A level 3 notice of breach may be issued when the severity of the breach is further elevated or when there is a specific need to escalate concerns within the regulated entity. is would include if an entity has demonstrated a low level of cooperation with FCAC on voluntary compliance, there is a heightened sense of urgency to complete corrective actions, or the breach is a symptom of a broader compliance deficiency or concern that needs to be addressed. In connection with notices of breach, FCAC may require the regulated entity to enter into an action plan or compliance agreement. Both action plans and compliance agreements detail the corrective measures required to address a breach of a market conduct obligation or prevent recurrence of the breach, and the timeframes for action. For legislative or regulatory obligations, breaching a compliance agreement may result in a notice of violation, while a breach of non-legislative obligations may result in a notice of non-compliance. ere are no similar consequences in the Supervision Framework for breach of an action plan. e notice of breach provides FCAC with a new tool to address less severe breaches. However, the Supervision Framework does not provide a clear explanation as to when a notice of breach will be issued as opposed to a notice of violation. Additionally, the Supervision Framework does not set out when FCAC will require a regulated entity to enter into an action plan rather than a compliance agreement. Parties will be looking for FCAC guidance on how such decisions will be made under the Supervision Framework. Compliance Report Under the Supervision Framework, FCAC will continue to use compliance reports to address breaches of market conduct obligations. Once FCAC's Deputy Commissioner reviews a compliance report and any comments FCAC has received from the regulated entity, a notice of violation or notice of non-compliance may be issued. Notices of violation specify the name of the regulated entity, the nature of the violation and any proposed administrative monetary penalty (AMP). e maximum AMP is C$50,000 per violation for a natural person and C$500,000 for all other persons. e regulated entity may make representations to FCAC's Commissioner within 30 calendar days following the issuance of a notice of violation, pay the AMP or do nothing (the latter two options will result in the entity being deemed to have committed the violation). Where a violation has been committed, a notice of decision will be issued. e Commissioner has the discretion to make public the nature of the violation, the name of the regulated entity and the amount of any AMP by way of an FCAC decision, which will be published according to FCAC Publishing Principles. Notices of non-compliance may be issued when an investigation reveals that a regulated entity is in breach of its obligations under a voluntary code of conduct or public commitment. e process for a notice of non-compliance is similar to a notice of violation, although no AMP can be imposed. FCAC Publishing Principles e FCAC Publishing Principles were introduced alongside the dra Supervision Framework in the fall of 2016 for public comment. e proposed new Publishing Principles aim to clarify how FCAC will publish information about notices of violation, notices of decision and notices of non-compliance. Although the Supervision Framework does not include the final Publishing Principles, it is expected that FCAC will release a final version of the Publishing Principles in the near future. FCAC expects regulated entities to proactively identify, address and monitor risks, and keep FCAC updated on their particular risks and controls.