Regulatory reporting guide for trust and loan companies, insurance companies and retail associations

I. Introduction

The Financial Consumer Agency of Canada (FCAC) supervises federally regulated financial entities to determine whether they are complying with applicable consumer provisions and any codes of conduct and public commitments that FCAC oversees and with which the entities have agreed to abide (collectively, “market conduct obligations”).

This reporting guide applies to trust and loan companies, retail associations and insurance companies (collectively referred to as “regulated entities” or “REs”).

As noted in section 5.3 of FCAC’s Supervision Framework, REs must file specific information with FCAC within the timeframes and formats prescribed by its legislation and regulations. This information includes complaint-handling procedures, public accountability statements and notices of branch closures, all of which FCAC reviews to ensure compliance. FCAC may request REs to submit additional information not addressed in this guide.

Failure to meet statutory filing requirements may lead to enforcement action.

FCAC expects REs to designate a compliance liaison to interact with FCAC and ensure filing requirements are met. The compliance liaison is a senior official serving as the RE’s main point of contact for market conduct obligations.

II. Purpose

This regulatory reporting guide provides details about specific information that REs must file with FCAC. This guide complements FCAC’s Supervision Framework. However, it is not a substitute for the laws and regulations monitored by FCAC. When in doubt, please refer to the applicable legislation and regulations. Refer to the following resources to learn more about the:

• laws that govern your organization
• regulations that govern your organization
• codes of conduct that govern your organization
• public commitments that govern your organization

This guide covers the following topics :

• procedures for dealing with complaints
• aggregate complaint reports
• reportable compliance issues
• notices of branch closures
• public accountability statements
• codes of conduct and public commitments

III. FCAC’s use of regulatory reporting information

FCAC uses the information provided by REs to monitor their compliance with applicable market conduct obligations and determine appropriate promotion, supervision, and/or enforcement actions.

The data FCAC receives serves additional functions, including but not limited to:

• promoting REs to adopt policies and procedures in line with their market conduct obligations
• enhancing FCAC’s ability to supervise regulated entities, assess market conduct risk, and manage relationships
• prompting REs to gather key details that will aid them with their own internal investigations and analyses of the root causes of potential breaches
• improving REs’ control frameworks, which can lead to stronger compliance programs and reduce the likelihood of recurring breaches
• assisting FCAC in monitoring and evaluating trends and emerging issues that may have an impact on financial consumers
• identifying common industry issues that REs require further guidance about, in the form of guidelines, bulletins, and rulings^{Footnote 1}
• identifying opportunities for policy discussions and collaboration with other government agencies, regulators, and stakeholders to foster a better understanding of financial products, services, and related issues

IV. Complaint-handling procedures

All REs must have procedures in place to handle complaints from consumers about their products and services. These procedures must:

• designate an officer or employee in charge of implementing the complaint procedures
• designate at least one officer or employee to be in charge of receiving and dealing with those complaints
• be written in language that is clear, simple and not misleading

Trust and loan companies, and retail associations

As per relevant legislation^{Footnote 2}  and complaint regulations, trust and loan companies and retail associations must file a copy of their complaint-handling procedures with FCAC and make the procedures available as a brochure in their branches when products or services are offered in Canada. The procedures must include:

• information about how consumers can contact FCAC
• access to an independent organization responsible for dealing with customer complaints that have not been resolved to the customer’s satisfaction through the complaint handling procedures

Additionally, trust and loan companies and retail associations must also post the procedures on their websites offering products or services in Canada and provide them in writing to anyone who requests them.

Trust and loan companies and retail associations must also refile copies of their complaint-handling procedures when a significant change to their procedures has been made.

Insurance companies

According to sections 486, 486.1 and 487 of the Insurance Companies Act and related regulations,^{Footnote 3}  insurance companies must:

• file their complaint-handling procedures with FCAC’s Commissioner
• include information about how consumers can contact FCAC
• include access to an independent organization responsible for dealing with customer complaints that have not been resolved to the customer’s satisfaction through the complaint-handling procedures
• post the procedures on their websites offering products or services in Canada
• provide the procedures in writing to anyone who requests them

Insurance companies must also refile a copy of their complaint-handling procedures when a significant change to their procedures has been made.

V. Aggregate complaints report

A reportable complaint is a complaint involving a market conduct obligation (i.e. a legislative provision, a code of conduct or a public commitment), that has been received by, or forwarded to the reportable level, or higher, designated by the RE’s complaint-handling procedure. The "reportable level" is one level higher than the one that routinely handles and makes operational decisions about the subject matter. The reportable level may vary, based on a RE’s operational profile.

FCAC reviews aggregate complaints from RE’s. That being said, each RE must record the findings of its investigation of every consumer complaint related to a market conduct obligation using the template in Annex A: Reportable complaints summary report for consumer provisions. Relevant legislation^{Footnote 4}  does permit FCAC to request detailed information on individual complaints.

Required use of aggregate complaints report template

Regulated entities must report complaints received by or forwarded to their “reportable level” and do so using the template in Annex B: Reportable complaints aggregate report, which is subject to the market conduct obligation tied to the complaint.

The complaint aggregate report contains a section for “nil” reporting, to be used as applicable.

A reportable complaint must be forwarded to FCAC if the:

• consumer has also contacted FCAC
• consumer is satisfied with the outcome of the complaint
• complaint was received internally at the reportable level or higher but then sent to a lower level of the complaint-handling procedures for a response or resolution
• complaint was received at the reportable level of the complaint-handling procedures and resolved directly
• RE concluded it complied with its obligations to consumers

For more information on the issues that must be reported to FCAC, please refer to the following:

• Annex C: Reportable complaints aggregate report guide for consumer provisions
• Annex D: Reportable complaints aggregate report guide for codes of conduct and public commitments

Exception

Tier 2 REs are not required to file “nil” reports. These are addressed in the annual examination by FCAC.

Deadlines to report complaints

Below are the deadlines for filing the aggregate complaints reports that REs must be submit to FCAC quarterly in an aggregated format (i.e., the number of reportable complaints received, classified in relation to each relevant market conduct obligation):

• For the period from April 1 to June 30, the deadline is August 31
• For the period from July 1 to September 30, the deadline is November 30
• For the period from October 1 to December 31, the deadline is March 2
• For the period from January 1 to March 31, the deadline is May 31

VI. Reportable compliance issues

According to section 5.3 of FCAC’s Supervision Framework, REs must submit reportable compliance issues to FCAC.

Definition

REs must report compliance issues that meet the following three criteria:

1. The issue must be a breach of a market conduct obligation.
2. The issue would normally be reported to the RE’s compliance division.
3. The issue meets, at a minimum, one of the following:
   • once detected by the RE, it took longer or will take longer than 120 calendar days to fix^{Footnote 5}  and remediate^{Footnote 6}  the issue; or
   • the issue affected or affects more than 250 consumers^{Footnote 7}  or
   • the issue was or is ongoing for more than 1 year before the RE detected it

The compliance issue may have been identified through various means, such as including, but not limited to:

• internal audits
• compliance or control reviews
• process or product design review
• a system change/enhancement
• a consumer complaint

For greater certainty, a reportable compliance issue must be reported to FCAC even though:

• consumers were not affected financially
• the issue was caused by an individual employee

If a compliance issue has already been reported to FCAC through the normal reporting of a reportable complaint, it should still be reported as a reportable compliance issue and linked to the initial report.

Required use of reportable compliance issues template

Each compliance issue must be reported to FCAC using Annex E: Reportable compliance issues template.

Deadline to file reportable compliance issues

RE’s must submit any reportable compliance issue within 60 days of the compliance issue being reported to their compliance division.

VII. Notice of branch closure

According to relevant legislation and regulations,^{Footnote 8}  before closing a branch, ceasing to open retail deposit accounts, or disbursing cash to customers at a branch, trust and loan companies, and retail associations must notify FCAC, their customers and the public.

This applies to all branches where:

• retail deposit accounts are opened through a natural person
• cash is disbursed to customers through a natural person

Deadline for providing a notice of branch closure

The timeframe to provide this notice varies according to:

• the location (urban or rural) of the branch in question. According to the branch closure regulations:^{Footnote 9} 
  • an urban area is a population centre^{Footnote 10}  in Canada with a minimum population of 10,000 persons
  • a rural area is a location in Canada outside of an urban area
• the distance to the closest deposit-taking branch in rural areas

The Commissioner must receive notices of branch closures at least:

• four months before the proposed closing date, if the branch is located in either
  • an urban area
  • a rural area where another retail deposit branch is located within 10 km of the branch to be closed
• six months before the proposed closing date, if the branch to be closed is in a rural area and there is no other retail deposit branch located within 10 km of the branch to be closed-

Content of the notice to the Commissioner

The notice sent to FCAC must include the following information:

• the location of the branch
• the date proposed for the closure of the branch or cessation of the activity
• alternative sites where, after the closure date, customers of the branch may obtain similar services to the financial services that were provided at the branch, or a telephone number customers may call to be informed of those sites
• the measures, if any, the trust and loan company or retail association is taking to maintain any financial services available in the area served by the branch to the extent that particular information is available
• how the trust and loan company or retail association may be contacted in respect of the proposed closure of the branch or cessation of the activity
• how the trust and loan company or retail association has consulted the community, as per FCAC’s Guideline 14

Exceptions

Under certain circumstances, the notice of branch closure is not required. Please refer to the relevant legislation and related regulations.^{Footnote 11}

VIII. Public accountability statements

According to relevant legislation and regulations,^{Footnote 12}  all trust and loan companies and insurance companies (collectively referred to as “companies”) with equity of $1 billion or more must publish an annual statement describing their respective contributions and prescribed affiliates to the Canadian economy and society.

Prescribed affiliates are either:

• an entity that engages in a business that includes:
  • issuing payment, credit or charge cards and, in cooperation with others including financial institutions, operating a payment, credit or charge card plan, or
  • making or refinancing loans or entering into any other similar arrangements for advancing funds or credit
• financial institutions with equity of less than $1 billion, other than foreign institutions that carry on business exclusively outside of Canada

Content of public accountability statements

The public accountability statements of trust and loan companies, and insurance companies must include specific details about the period covered by the statement. For more information on public accountability statements, please refer to the Public Accountability Statements (Insurance Companies and Trust and Loan Companies) Regulations.

Exceptions

According to the Public Accountability Statement (Insurance Companies and Trust and Loan Companies) Regulations, insurance companies may not be required to provide all of the prescribed information if they did not participate in certain activities.

A company may refuse to report the information required under paragraph 3(1)(e) for amounts of $1 million and greater if, by providing that information, the firm could be identified.

If reporting provincial data required under paragraph 3(1)(e) could identify a company’s client, the company may combine the information with that reported for another province, provided the company indicates that fact in the report and identifies the provinces concerned.

Disclosure of public accountability statements

Companies must disclose their public accountability statement by:

• informing their customers and the public within 135 days after the end of each period, by advertising, making public announcements, posting notices, mailing information, etc., about the means by which the statement is available to them
• providing the statement free of charge to any person who requests it
• posting the statement on their websites that offer products or services in Canada

Deadline for filing public accountability statements with the Commissioner

Companies must file this statement within 135 days after the end of their financial year.

IX. Codes of conduct and public commitments

FCAC is responsible for promoting the adoption of policies and procedures designed to implement legislation, regulations, codes of conduct, and public commitments by regulated entities for monitoring regulated entities’ compliance with their obligations.

List of codes of conduct and public commitments

As per relevant legislation,^{Footnote 13}  FCAC expects REs to report the list of codes of conduct and public commitments to which the RE adheres to FCAC by April 1 each year.

X. Contact FCAC

If you have questions related to your regulated entity, please contact FCAC at compliance@fcac.gc.ca or the lead FCAC supervisor assigned to your regulated entity. All required reports should be sent to this email address in accordance with the deadlines stated above.

XI. Annexes

Annex A: Reportable complaints summary report for consumer provisions (PDF, 827 KB)

Annex B: Reportable complaints aggregate report (PDF, 244 KB)

Annex C: Reportable complaints aggregate report guide for consumer provisions

Annex D: Reportable complaints aggregate report guide for codes of conduct and public commitments

Annex E: Reportable compliance issues template (PDF, 827 KB)