Annual Report 2017-2018

​Table of contents

 

About the Financial Services Commission of Ontario

 

 

FSCO BY THE NUMBERS

 

  • 93,712 Regulated entities
  • 12 Statutes
  • 1,418 Sector complaints handled by FSCO
  • 53,479 Inquiries to the Contact Centre
  • 285 Enforcement actions against licensed entities
  • $1,402,481 In administrative monetary penalties imposed
  • 1,014,285 Unique visitors to FSCO's website

 

 

WHO WE ARE

The Financial Services Commission of Ontario (FSCO) is a regulatory agency accountable to the Minister of Finance, established by the Financial Services Commission of Ontario Act, 1997 (FSCO Act). FSCO oversees the insurance sector, pension plans, mortgage brokering, credit unions and caisses populaires, co-operative corporations, loan and trust companies in Ontario, and the business and billing practices of health service providers that electronically invoice auto insurers for statutory accident benefits claims.

 

As a provincial regulator, FSCO enforces legislation, protects the public interest and supports a strong financial services industry.

OUR MANDATE

To provide regulatory services that protect the public interest and enhance public confidence in the regulated sectors.

OUR VISION

To be an effective regulatory supervisor that protects the public interest in the financial services marketplace.

OUR STRUCTURE

  • The Commission: meets quarterly and provides oversight, including the review and approval of key FSCO planning, strategic and accountability documents.
  • The Superintendent of Financial Services: administers and enforces the FSCO Act and all other acts that confer powers or assign duties to the Superintendent.
  • The Financial Services Tribunal (FST): acts as an expert, independent adjudicative body. The Chair and Vice-Chairs of the FST are also the Chair and Vice-Chairs of the Commission.

OUR PRIORITIES

Each year, FSCO develops its strategic priorities. These priorities are available for consultation with the public and industry stakeholders, and are then published online as FSCO’s Statement of Priorities. In 2017-18, FSCO focused on the themes of enabling innovation, treating consumers fairly and supporting initiatives at the national level. FSCO had seven priority areas for the fiscal year: 

 

  1. Ensure financial services industry compliance with laws and regulations
  2. Disclose adequate information to enable informed decisions by consumers
  3. Create awareness of FSCO’s actions in the financial services marketplace
  4. Create common and integrated processes enabled by integrated technology solutions
  5. Enhance the collection, use and sharing of market intelligence
  6. Be an agile and adaptable organization
  7. Influence the development of provincial, national, and international regulatory policy

OUR COMMISSIONERS

FSCO is governed by a four-member Commission, consisting of the Superintendent of Financial Services, a part-time Chair and two part-time Vice-Chairs. Each member is appointed for a fixed term by the Lieutenant Governor in Council. Appointments to the commission are made in accordance with the guidelines established by Ontario’s Public Appointments Secretariat.

 

In 2017-18, the Commission saw the appointment of a new chair after the tenure of the former chair, Florence A. Holden, ended in September 2017.

 

Name Position Tenure in current role
Ian McSweeneyChairSeptember 13, 2017 to  September 12, 2019
Vice-ChairMarch 11, 2016 to September 12, 2017
Denis BoivinChair (Acting)September 6, 2017 to September 12, 2017
Vice Chair (Acting)October 18, 2017 to October 17, 2019
Florence HoldenChair (Acting)August 8, 2014 to September 5, 2017
Bethune WhistonVice ChairApril 11, 2018 to April 10, 2020
Brian MillsCEO and Superintendent of Financial ServicesOctober 18, 2014 to Present

 

OUR EXPENDITURES

FSCO recovers most of its costs from the sectors it regulates through a combination of assessments and fees. Under the FSCO Act, the Lieutenant Governor in Council may assess all businesses, individuals and pension plans that form part of a regulated sector with respect to expenditures incurred by the Ministry of Finance, the Commission and the FST. The Minister of Finance is authorized to establish fees related to the regulated services provided by FSCO. 

 

The government supports co-operative corporations by providing an allocation of $500,000 to help cover the costs of administering the sector.

 

As a government agency, FSCO receives an annual spending authority through the government planning process, based on needs and government priorities. FSCO files quarterly reports on its spending. The Office of the Auditor General of Ontario audits FSCO’s annual financial statements.

 

In 2017-18, FSCO’s expenditures totaled $56.5 million, down $23.8 million or 29.6 per cent from the previous year. This is primarily due to the April 2016 transfer of its dispute resolution services activities to the Licence Appeal Tribunal of the Ministry of the Attorney General.

 

FSCO maintained responsibility for mediation, neutral evaluation and arbitration applications received before the transfer date, and continues to be responsible for all files remaining open as of March 31, 2016. FSCO continues to accept applications for appeal and variation/revocation of decisions arising out of arbitrations filed at FSCO, prior to the transfer date.

 

The number of open files has been decreasing steadily since the transfer date and all mediation files have been closed. As such, fewer arbitration services have been required. FSCO spent approximately $23 million on arbitration services contracts in 2016-17, compared with approximately $1 million in 2017-18. 

 

More information about FSCO’s expenditures can be found in the financial statements and notes later in this report.

OUR AGENCY MANDATE LETTER

Per the Agencies and Appointments Directive, ministers are not required to provide a mandate letter to an agency in a fiscal year during which the agency has a mandate review. While FSCO has not received a mandate letter, it is responsible for or directly supports a number of priorities outlined in the Minister of Finance’s mandate letter.

OUR PEOPLE

FSCO’s staff all report directly or indirectly to the Superintendent of Financial Services, who is also FSCO’s Chief Executive Officer. On March 31, 2018, FSCO had 382 full-time staff, including two staff at the FST and 25 staff at the Motor Vehicle Accident Claims Fund (MVACF). This total does not include legal services staff, who are employees of the Ministry of the Attorney General.

OUR LEADERSHIP

Brian Mills, Chief Executive Officer and Superintendent of Financial Services

 

Marco Ciavatta, Sr. Manager & Special Advisor (Acting), Office of the CEO and Superintendent of Financial Services

 

Richard Tillmann, Sr. Manager & Special Advisor (Acting), FSRA Transition, Office of the CEO and Superintendent of Financial Services

 

Michael Doi, Director, Legal Services Branch

 

Lester Wong, Deputy Superintendent (Acting), Pension Division

 

Anatol Monid, Executive Director, Licensing and Market Conduct Division

 

Tom Golfetto, Executive Director and Director of Arbitrations, Automobile Insurance Division

 

Peter Burston, Director, Regulatory Coordination Branch

 

Carolyn Hamilton, Director, Corporate Services Branch

 

Kathleen Graver, Director (Acting), Strategic Communications Branch

 

John Avgeris, Director (Acting), Enterprise Business Solutions Branch

 

 

OUR REGULATED SECTORS

 

As of March 31, 2018, FSCO regulated or registered:

 

  • 311 insurance companies
  • 81 credit unions and caisses populaires
  • 1,152 mortgage brokerages
  • 12,432 mortgage agents
  • 4,770 accident benefit service providers
  • 55,401 insurance agents
  • 1,762 insurance adjusters
  • 6,962 pension plans
  • 51 loan and trust corporations
  • 2,825 mortgage brokers
  • 202 mortgage administrators
  • 1,732 co-operative corporations
  • 6,031 corporate insurance agencies

 

 

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Sectors at a glance

ONTARIO'S PENSION PLAN LANDSCAPE

FSCO administers and enforces the Pension Benefits Act and its regulations to protect the rights of pension plan members and regulate pension plans in an effective, responsive manner. 

 

The chart below shows how the number of pension plans has been steadily decreasing over the last 10 years, although the number of total Ontario pension plan members has remained relatively steady. 

 

 

Ontario Pension Plans and Membership
from 2009-2018, as at March 31

Ontario Pension Plans and Membership from 2009-2018, as at March 31

Description of Ontario pension plans and membership image [New Window]

 

 

Since 2009, there has been a decrease in membership in single employer and multi- employer defined benefit (DB) pension plans and an increase in membership of jointly sponsored DB pension plans. In defined contribution (DC) pension plans, there has been a net increase in membership over the past 10 years.

 

 

Defined benefit (DB) plans – membership by plan type
2009-2018, as at March 31

Defined benefit (DB) plans – membership by plan type 2009-2018, as at March 31

Description of Ontario Defined Benefits Plans (DB) and membership by plan type image [New Window]

 

 

Defined contribution (DC) plans – membership by plan type
2009-2018, as at March 31

Defined contribution (DC) plans – membership by plan type 2009-2018, as at March 31

Description of Defined Contribution (DC) plans – membership by plan type image [New Window]

 

 

Pension plan administrators are required to file a number of statutory filings throughout the year. The filing deadline varies for each plan, depending on when each plan’s year ends.

 

Statutory filing Filing rate as at March 31, 2018
Annual Information Return (AIR) - Defined Benefit Pension Plans98.9%
Annual Information Return (AIR) - Defined Contribution Pension Plans97.8%
Pension Benefits Guarantee Fund (PBGF) Certificate - Defined Benefit Pension Plans96.0%
Financial Statements (FS) - Defined Benefit Pension Plans98.7%
Investment Information Summary (IIS) - Defined Benefit Pension Plans98.2%
Financial Statements (FS) - Defined Contribution Pension Plans95.4%
Actuarial Reports (AR) accompanied by an Actuarial Information Summary (AIS)- Defined Benefit Pension Plans92.9%
Statement of Investment Policies and Procedures (SIPP) accompanied by a SIPP Information Summary - Defined Benefit Pension Plans96.1%
Statement of Investment Policies and Procedures (SIPP) accompanied by a SIPP Information Summary - Defined Contribution Pension Plans95.5%

ONTARIO'S CREDIT UNIONS AND CAISSES POPULAIRES

Credit unions and caisses populaires provide deposit-taking and loan arrangement services for members in communities across Ontario. FSCO works with the Deposit Insurance Corporation of Ontario (DICO) to regulate the credit union and caisse populaire sector. FSCO’s role includes enforcing the market conduct provisions in the Credit Unions and Caisses Populaires Act, 1994 (CUCPA), incorporating credit unions and reviewing offering statements, amongst other things. The sector continues to see mergers and acquisitions, ultimately leading to fewer, larger and more complex organizations.

 

 

Ontario credit unions and caisses populaires and membership
2009-2018, as at March 31

Ontario credit unions and caisses populaires and membership 2009-2018, as at March 31

Description of Ontario credit unions and caisses populaires membership image [New Window]

 

 

Ontario credit unions and caisses populaires and total assets
2009-2018, as at March 31

Ontario credit unions and caisses populaires and total assets 2009-2018, as at March 31

Description of Ontario credit unions and caisses populaires and total assets image [New Window]

LOAN AND TRUST COMPANIES IN ONTARIO

FSCO is responsible for registering loan and trust companies operating in Ontario, and taking action against unlicensed deposit-takers. Loan and trust companies are either:

 

  • established to serve unique or niche markets
  • subsidiaries of banks supporting trust activities related to savings or accumulation accounts registered with the Canada Revenue Agency

As at March 31, 2018, there were 51 federally-incorporated loan and trust companies registered to operate in Ontario. This number has remained steady since 2015.

 

 

Loan and trust companies registered with FSCO
2013-2018, as at March 31

Loan and trust companies registered with FSCO 2013-2018, as at March 31

Description of Loan and trust companies registered with FSCO image [New Window]

ONTARIO'S MORTGAGE BROKERING SECTOR

In Ontario, mortgage agents, brokers, brokerages and administrators must be licensed with FSCO in order to conduct mortgage brokering business in the province. As at March 31, 2018, FSCO licensed:

 

  • 12,432 mortgage agents
  • 2,825 mortgage brokers
  • 1,152 mortgage brokerages
  • 202 mortgage administrators

 

Ontario’s mortgage brokering sector

Ontario’s mortgage brokering sector

Description of Ontario’s brokerages and administrators licensed with FSCO image [New Window]

SERVICE PROVIDERS IN ONTARIO

In December 2014, FSCO began licensing service providers who bill auto insurers directly for medical and rehabilitation services they provide to injured auto accident benefit claimants, and regulating the billing practices related to those services.

 

As at March 31, 2018, there were 4,770 licensed service providers in Ontario. The chart below shows the number of licensed service providers as at March 31 since FSCO began licensing service providers.

 

 

Number of licensed service providers as at March 31

Number of licensed service providers as at March 31

Description of licensed service providers with FSCO image [New Window]

CO-OPS IN ONTARIO

Co-ops, or co-operative corporations, are run by their own members. They support the communities in which they operate and are funded by government or their members. As at March 31, 2018, co-ops must register with FSCO.

 

In 2017-18, FSCO registered 15 new co-ops.

 

 

Co-operatives registered in Ontario
2009-2018, as at March 31

Co-operatives registered in Ontario, 2009-2018, as at March 31

Description of Co-operatives registered in Ontario 2009-2018 image [New Window]

ONTARIO'S INSURANCE SECTOR

FSCO licenses and regulates insurance companies, insurance agents and agencies, and insurance adjusters in Ontario. FSCO’s main focus is overseeing the market conduct of companies and individuals who provide protection for Ontarians and their belongings through the life and health insurance sector and the property and casualty insurance sector.

 

More information about Ontario’s insurance sector can be found in the Superintendent’s Report on Insurance 2017 at the end of this report.

 

How we regulate

 

FSCO regulates using a risk-based approach to enforce legislation. Our regulatory framework describes what we do, how we do it and why. It outlines how FSCO fulfills its legislative mandate by achieving regulatory outcomes, our core regulatory activities and the principles we follow when conducting regulatory activities. It also summarizes what FSCO expects from the businesses and individuals it licenses and registers, and what they can expect from FSCO in the regulatory process.

 

Our role is to provide balanced and transparent regulation to help ensure consumers are treated fairly, pension plans are effectively managed on behalf of beneficiaries, and financial products and services satisfy the needs of the public.

 

 

FSCO’S RELEVANT STATUTES

 

  • Financial Services Commission of Ontario Act, 1997
  • Automobile Insurance Rate Stabilization Act, 2003
  • Insurance Act
  • Compulsory Automobile Insurance Act
  • Prepaid Hospital and Medical Services Act
  • Registered Insurance Brokers Act
  • Motor Vehicle Accident Claims Act
  • Co-operative Corporations Act
  • Credit Unions and Caisses Populaires Act, 1994
  • Loan and Trust Corporations Act
  • Mortgage Brokerages, Lenders and Administrators Act, 2006
  • Pension Benefits Act

 

 

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Performance standards and mitigation strategies

 

FSCO's performance standards are an established set of targets, developed in consultation with stakeholders. FSCO monitors its performance regularly against these standards and reports the results annually on its website. Where targets have not been met, FSCO reviews its processes to improve service delivery and develops mitigation strategies as appropriate. Mitigation strategies are developed for targets that have been missed by five per cent or more.

 

FSCO also has key service standards related to its regulatory and corporate functions to ensure it is providing high quality, cost-effective services.

 

FSCO’s performance standards can be categorized as regulatory or enabling functions:

 

  • Regulatory functions:
    • Applications and filings
    • Licensing and registration
    • Monitoring and compliance
  • Enabling functions:
    • General services
    • Communications

APPLICATIONS AND FILINGS: Automobile insurance performance results

Service Standard 2017‑18 Target (%) 2017-18 Results (%) 2016-17 Results (%)

​Applications for Private Passenger Automobile (PPA) Insurance Rate and Risk Classification Filings (Approved)​​​ ​


 

Simplified Filings (changes proposed are in accordance with Simplified Filing Guidelines and CLEAR Simplified Filing Guidelines) that are complete based on documentation requirements set out in FSCO Filing Guidelines, will be reviewed and approved within 30 days, excluding timeout periods. 90 87 100
 Simplified Filings (changes proposed are in accordance with Simplified Filing Guidelines and CLEAR Simplified Filing Guidelines) that are complete based on documentation requirements set out in FSCO Filing Guidelines, will be reviewed and approved within 30 days, excluding timeout periods. 90 74 59
 Comprehensive Filings (changes proposed include non-uniform base rate changes, changes to differentials and risk classification system changes using company existing modeling techniques) that are complete based on documentation requirements set out in the PPA Major Filing Guidelines, will be reviewed and approved within 60 days, excluding timeout periods. 90 81 100
 Complex Filings (changes proposed consists of introduction of predictive modeling) that are complete based on documentation requirements set out in the PPA Major Filing Guidelines, will be reviewed and approved within 90 days, excluding timeout periods. 90 88 100

 

FSCO experienced a surge of PPA filings in the third and fourth quarters beyond its processing capacity. FSCO also received increasingly complex filings compared with previous years, including filings related to new innovative products and company mergers, that required more analytical and actuarial resources. As a result, the approvals of some filings were delayed. FSCO will work to anticipate and address potential resource issues in the future, and is taking steps to identify and leverage opportunities to reduce reviewing times.

APPLICATIONS AND FILINGS: Motor Vehicle Accident Claims Fund performance results

Service Standard 2017-18 Target (%) 2017-18 Results (%) 2016-17 Results (%)

Applications for Third Party Liability Claims 

 

Accurately completed Form 1 (Payment under Section 7) applications will be reviewed and processed within 20 days.85100100

 

This year, the Motor Vehicle Accident Claims Fund (MVACF) implemented an automated workflow to streamline Form 1 processing. Applications were reviewed and processed more efficiently due to this modernized process.

APPLICATIONS AND FILINGS: Pension plans performance results

Service Standard 2017‑18 Target
(%)
2017‑18 Results (%) 2016‑17 Results (%)

Applications for Defined Benefit Pension Plans​

 

Complete and compliant Surplus Applications will be reviewed and approved within 150 business days. 95 N/A N/A
 Complete and compliant Wind-up Applications will be reviewed and approved within 120 business days. 95 100 100
 ​Complete and compliant Transfer of Assets Applications will be reviewed and approved within 120 business days 95 N/A 100
 Complete and compliant Refund of Employer Overpayment Applications will be reviewed and approved within 90 business days. 95 N/A 100
 ​Complete and compliant Refund of Member Contribution Applications will be reviewed and approved within 60 business days. 95 N/A N/A
Applications for Defined Contribution Pension Plans ​ ​​ ​ ​ ​ ​Complete and compliant Refund of Employer Overpayment Applications will be reviewed and approved within 60 business days. 95 N/A N/A
 Complete and compliant Refund of Member Contribution Applications will be reviewed and approved within 30 business days. 95 N/A N/A
 Complete and compliant Transfer of Assets Applications will be reviewed and approved within 60 business days. 95 100 100
 Complete and compliant Wind-up (full and partial) Applications will be reviewed and approved within 60 business days. 95 100 100
 Complete and compliant Surplus Withdrawal (wind-up and ongoing) Applications will be reviewed and approved within 120 business days. 95 N/A N/A

APPLICATIONS AND FILINGS: Licensing and market conduct regulation performance results

Service Standard 2017‑18 Target
(%)
2017‑18 Results
(%)
2016‑17 Results
(%)
Application for Insurance Agent Licences ​Electronic applications for new and renewal Insurance Agent licences that are complete and meet all requirements will be reviewed and approved within 5 business days.1007786
Insurance Companies IVIC Submission

Approval of an Independent Variable Insurance Contract (IVIC) submission within 30 days of receipt.


 

10097100

 

FSCO’s improved risk identification practices for insurance agent applications has led to an increase in files being selected for in-depth screening. FSCO is taking steps to review business systems and practices so that insurance agent licensing timelines are not impacted by the detailed assessment of these applications.

MONITORING AND COMPLIANCE: Licensing and market conduct regulation performance results

Service Standard 2017‑18 Target
(%)
2017‑18 Results
(%)
2016‑17 Results
(%)

Examinations

 

 

Final examination reports will be issued within 30 business days of the completion of routine onsite examinations.

959192

 

 

Service Standard 2017‑18 Target
(%)
2017‑18 Results
(%)
2016‑17 Results
(%)
Sectoral complaints Complaints regarding one of the sectors that FSCO regulates will be acknowledged within 5 business days.10092100
 ​​Complaints regarding one of the sectors that FSCO regulates will be concluded within 150 days.90N/A88
 ​​Complaints regarding one of the sectors that FSCO regulates will be concluded within 365 days.98N/A98
TelephoneAll calls will be answered by the third ring during core business hours or directed to voicemail.10098100
 ​All calls will be returned by the next business day.1006771
Correspondence Correspondence will be answered within 15 business days of receipt.100100100
 If a conclusive response is not possible within the standard time, an interim acknowledgement will be provided within 5 business days of receipt.10099100
Quality Service Complaints Complaints received in writing or through our website where a reply is requested and contact information has been provided will be acknowledged within 5 business days.100100100
 Complaints received in person or by telephone where a reply is requested and contact information has been provided will be acknowledged within 2 business days.100100N/A
 Complaints will be concluded within 15 business days of receipt.100100100

 

FSCO continues to be committed to delivering high quality customer service. Going forward, FSCO will make efforts to review the tools and supports required to achieve its performance standards. Sectoral complaints data will be available in the second quarter of 2019-20.

COMMUNICATIONS PERFORMANCE RESULTS

Service Standard 2017‑18 Target
(%)
2017‑18 Results
(%)
2016‑17 Results
(%)

Accessible formats1

FSCO will respond within 5 business days to a requestor of web content in accessible format. Following discussions with the requestor, FSCO will provide agreed-upon web content (excluding online applications) in an accessible format within 5 business days.100N/AN/A
 ​​FSCO will respond within 5 business days to a requestor of print publication in an accessible format. Following discussions with the requestor, FSCO will provide agreed-upon publication material in an accessible format within 5 business days.100N/AN/A
Website Response​​

All inquiries directed to the Web Manager e-mail account will be concluded and/or responded to within 5 business days.​

10010088

1 Data listed as unavailable are because no inquiries requesting accessible web content or print publications were received in the specified timeframe.

 

Update on FSCO projects

 

Each year, FSCO’s Agency Business Plan outlines the organization’s strategic direction and provides details about major initiatives planned or underway to help achieve FSCO’s goals.

 

The following table lists the status of the projects or initiatives in FSCO’s 2017-2020 Agency Business Plan as at March 31, 2018 that remain under FSCO’s jurisdiction or, for multi-jurisdictional initiatives, where FSCO’s leadership or participation is significant. For 2017-18, a number of projects were on hold pending implementation decisions related to the establishment of the Financial Services Regulatory Authority. 

 

FSCO may begin new projects and initiatives throughout the year that may not be reflected in its Agency Business Plan. These projects are usually in response to emerging issues or government direction. 

 

Project name Status as at March 31, 2018 Projected fiscal year of completion
Ridesharing/Sharing Economy – Long-Term StrategyOn holdn/a
Common Traffic Injuries (previously listed as Minor Injury Treatment Protocol Project Implementation)In progress2018-19
Report on the Three Year Review of Automobile Insurance, 2017Complete 
Work with Stakeholders to Reduce Auto Insurance Fraud: Auto Insurance Anti-Fraud Task ForceComplete 
Implement Value-for-Money Audit Recommendations: Pension DivisionIn progress2018-19
Enterprise Business Architecture Complete  
Enterprise Development ProgramOn holdn/a
Information Management Project Phase IIComplete 
Risk-Based Regulation: Pension DivisionIn progress 2018-19
Strategic Professional Development ProgramCompleted 
CAPSA Multi-Lateral Agreement ImplementationIn progress2018-19
CAPSA Longevity Risk InitiativeComplete 
CCIR Market Conduct Co-operative Supervisory Framework InitiativeComplete 
CCIR Property Insurance Review InitiativeComplete 
CCIR Segregated Funds Review InitiativeComplete 
CCIR Travel Insurance Review InitiativeComplete 
MBRCC Release of Licensing Course Design, Delivery and Accreditation Standards Complete 
MBRCC Anti-Fraud Messaging for Consumers and Industry  In progress2018-19
MBRCC Continuing/re-licensing education modelsIn progress2019-20
MBRCC Implementation of disciplinary information database for licensed mortgage brokersComplete 
Minister’s Advisor on Auto Insurance and Pensions (Marshall Report)Complete 
Life Insurer Accountability ProjectComplete 
Self-Assessment against the International Association of insurance Supervisors’ Insurance Core Principles (ICPs)In progress2018-19

 

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