Appearance before the Standing Committee on Finance (July 7, 2020): Enforcement process

Issue

FCAC has a robust enforcement toolbox that complements the supervisory work we do with regulated entities. FCAC’s Enforcement Division determines whether regulated entities are complying with legislative obligations, codes of conduct and public commitments that are overseen by FCAC – referred to as market conduct obligations (MCO).

Background

• FCAC conducts investigations to determine whether there are reasonable grounds to believe that a breach of an MCO has occurred. Once complete, FCAC responds with the appropriate enforcement tool to ensure compliance and deter future breaches. 
• Several factors may be considered in determining an enforcement outcome, such as harm, duration of breach, strength of controls, negligence, and compliance record.
• Enforcement responses include issuance of Notices of Breach, Notices of Violation/Non-Compliance, Commissioner’s Decisions, Action Plans and Compliance Agreements. A Notice of Violation may propose an Administrative Monetary Penalty (AMP).
• A Commissioner’s Decision will conclude on whether there is a violation and the quantum of the AMP, if any. Commissioner’s Decisions are made public and posted on FCAC’s website (redacted if required). A Commissioner’s Decision may name a regulated entity.

Data/Quick facts

• 140 Notices of Breach were issued by the Enforcement Division between April 1, 2019 and March 31, 2020. 
• FCAC requires regulated entities to action all concerns noted in the Notices of Breach.
• From April 1, 2019 to March 31, 2020, FCAC’s former Commissioner decided that financial institutions had committed a total of 4 violations and imposed a total of $275,000 in administrative monetary penalties.

Key messages

• Compliance is best achieved with the use of supervisory interventions and enforcement tools.
• If FCAC’s investigation reveals that a regulated entity has contravened a consumer provision, the Agency will respond using the appropriate enforcement tool.
• FCAC’s new powers are an indication of how seriously the government takes consumer protection.
• FCAC’s new powers have yet to be tried and tested, so we have no comment on the effectiveness of the increased AMPs at this point.