Annual Report 2015-2016

Table of Contents

Message from the Chair and the Chief Executive Officer 

We are pleased to present the 2015-2016 annual report of the Financial Services Commission of Ontario (FSCO), which reports on FSCO’s activities over the 12 months ending March 31, 2016.
People across Ontario depend on FSCO to effectively regulate the sectors we oversee. Families and businesses spend $45 billion a year on insurance to help manage risk. Pension plans hold over $574 billion in assets to provide for pension benefits payments for more than four million beneficiaries, including retirees. Millions of Ontarians receive savings, loans and other financial services through deposit-taking institutions; credit unions and caisses populaires alone hold assets totalling $47.6 billion. Across the province, Ontarians purchase properties with the support of licensed mortgage agents, brokers and brokerages. The more than 76,000 individuals and corporations FSCO licenses across these sectors form part of the engine of economic growth and financial stability in Ontario and nationally.

Assessing the Environment

The financial services sector is rapidly evolving in the face of significant disruptors, adding complexity and new risks. New and less traditional market entrants and products are altering market dynamics in response to changing financial technologies and consumer needs.
Since the 2008 financial crisis caused equity market values to fall, an extended period of low interest rates has reduced investment returns well below historic levels. This has had a significant impact on the value of pension assets and insurance company funds. Tightened rules for federal mortgage lending across Canada have also led more Ontarians to seek out non-traditional mortgage providers. In response, consumers and pension plan beneficiaries are expecting more from their financial services intermediaries and the regulators who protect their interests and ensure market  integrity.


FSCO’s strategic priorities are informed by the need for effective and integrated regulatory frameworks that foster a strong financial services sector while protecting the public interest; markets are more interconnected, with fewer distinctions between participants who operate across multi-product lines. This need is compounded by the increase in multi-jurisdictional entities, product innovation and the trend toward market consolidation.


We apply a risk-based approach to our work and remain committed to continually reviewing our systems and processes to ensure Ontario has a strong, flexible and integrated regulator that can keep pace with change, adapt to the environment, embrace modernization and identify and address emerging risks.

Reviewing FSCO’s Mandate

In fiscal 2015-16, the Ontario Minister of Finance appointed an Expert Advisory Panel to review the mandates of FSCO, the Financial Services Tribunal (FST) and the Deposit Insurance Corporation of Ontario (DICO), to modernize the regulation of financial services and pension plans while increasing accountability. The panel undertook consultations and reporting over the course of the fiscal year, and is in the process of completing its final report. FSCO continues to make priority-driven decisions to strengthen  our  regulatory  capabilities.

Implementing Reform

In the 2015 Ontario Budget, the government announced auto insurance reforms to strengthen consumer protection, improve affordability, and give Ontario consumers more choice when buying coverage to suit their needs. FSCO supported the Ministry of Finance with the development of reforms and worked with industry partners to revise 23 claims and policy forms. FSCO also communicated with consumers to aid in their understanding of the auto insurance product changes that will be implemented June 1, 2016.


As a part of these reforms, FSCO also prepared for the transition of the Automobile Insurance Dispute Resolution Services from FSCO to the Ministry of the Attorney General’s Licence Appeal Tribunal as of April 1, 2016. FSCO will continue to complete mediation, neutral evaluation and arbitration for applications received before March 31, 2016. More information on the transition appears later in this report.

Embracing Innovation

FSCO has partnered with industry to find regulatory approaches that support financial services product and service innovations while protecting consumer interests. FSCO has continued to work with insurers to monitor and improve conditionally approved usage-based auto insurance (UBI) programs while they gain statistically relevant data and experience. These programs give consumers a new tool to reduce their auto insurance cost, as driving patterns can directly influence their rates. As of March 2016, FSCO has approved usage-based auto insurance programs for 17 insurers representing 56% of the Ontario private passenger auto market.
As the sharing economy continues to grow in Ontario, ridesharing services have presented new challenges. The 2016 Ontario Budget noted, “there continues to be a significant insurance coverage gap for thousands of Ontarians driving and using ride-sharing services every day.”
FSCO is proactively working with the insurance industry and other groups to cover this gap in consumer and driver protection. One ridesharing insurance product has been approved on an interim basis, and work has begun to explore a flexible approach to approve others.

Regulating Service Providers

FSCO completed its first full fiscal year licensing health service providers that provide medical and rehabilitation services to injured auto accident benefit claimants. While licensing is voluntary, adoption rates have been high – FSCO has already issued more than 4,300 licences, and 99% of all billings for these expenses occur through licensed health service providers.
The first year of licensing was an opportunity for FSCO to engage and educate health service providers about their obligations under the law. FSCO completed over 600 examinations in the sector, and is building relationships with health services associations, enhancing awareness of emerging issues in the sector, and working to ensure service providers fully understand FSCO’s compliance expectations. Going forward, FSCO will shift its focus from activities aimed at building awareness of regulatory requirements  to  examination-based compliance activities.

Enhancing Market Intelligence

FSCO collects market intelligence from entities in the sectors it regulates by working with industry partners through advisory committees, information returns, on-site examinations and inquiries to identify changes that may   be affecting consumers and pension plan beneficiaries and may require greater regulatory focus.
FSCO also continues to pursue information-sharing agreements with industry organizations and other regulators. In March 2016, FSCO signed an agreement with the Investment Industry Regulatory Organization of Canada (IIROC) through which the regulators will share   the decisions and sanctions of their respective disciplinary processes.

Strengthening Pension Regulation

In fiscal 2015-16, FSCO strengthened pension regulation capacity, shared information with pension plan administrators on regulatory changes and their impact,  and educated Ontarians on the importance of planning for retirement.
FSCO supported the Ministry of Finance in its development of new regulations under the Pension Benefits Act. FSCO also provided data on the pension sector to the Ontario Retirement Pension Plan Implementation Secretariat and informed pension plan administrators about key legislative and  regulatory  changes,  including  multi-jurisdictional pension plans, asset transfers and solvency funding relief. As well, FSCO launched a series of educational videos on its website to help Ontarians prepare for and make informed decisions about financing their retirement.

Recommendations of the Auditor General’s Report

FSCO made progress in 2015-16 on commitments to strengthen its regulatory oversight in response to recommendations in the 2014 Annual Report of the Office of the Auditor General of Ontario (OAGO).
In 2015, FSCO launched a mandatory Information Return  for co-operatives, designed to obtain and compile data on the sector in Ontario to support policy-making in this area. FSCO also upgraded its online licensing system to make it easier for agents to comply with errors and omissions (E&O) requirements in the Insurance Act.
In addition, FSCO strengthened procedures around delinquent pension filings, revised its pension examination processes, and increased the number and scope of examinations of defined contribution pension plans. FSCO’s quarterly estimates of the overall funded status of defined benefit pension plans also give plan members a benchmark against which they can measure the performance of their own pension plan.

Fostering National Regulatory Coordination

By working collaboratively with other regulatory bodies across the country, FSCO strives to play a leadership role in the development of national regulatory standards.
This year, FSCO and insurance regulators across Canada implemented a streamlined and updated entry-level qualification program for new life insurance agents and new accident and sickness insurance agents. The updated Life Licence Qualification Program (LLQP) aligns provincial educational standards with one harmonized standard.
The Canadian Insurance Services Regulatory Organization (CISRO) led the program development, supported by members of the Canadian Council of Insurance Regulators (CCIR), as part of a coordinated national approach to regulation. All new life insurance agents in Canada will now be measured against one common proficiency standard, which sets a minimum level of understanding for life agents in each area in which their licence allows them to operate, supporting FSCO’s efforts to protect the public interest.
FSCO also led research and analysis on regulatory requirements governing mortgage broker activities in other countries to better understand practices related to product suitability and identify potential consumer protection gaps. As well, FSCO supported the Mortgage Broker Regulators’ Council of Canada (MBRCC) to conduct a survey to identify brokerage practices in certain MBRCC member jurisdictions. MBRCC used the survey results to develop consumer education materials that describe what processes and practices they can expect from a mortgage brokerage.
Through the Canadian Association of Pension Supervisory Authorities (CAPSA), FSCO and pension regulators across Canada began work to develop a new inter-governmental agreement for the regulation of pension plans that operate in multiple Canadian jurisdictions. FSCO also actively contributed to delivering initiatives undertaken by other national organizations, including the General Insurance Statistical Agency  (GISA).

Serving the Best Interests of Ontarians

FSCO works to create opportunities to get input from Ontario consumers and pension plan beneficiaries as well as industry stakeholders on key issues affecting the sectors we regulate. This helps FSCO better understand changes affecting the marketplace, identify risks and deliver onits mandate to protect the public interest and enhance confidence in the sectors it regulates.its mandate to protect the public interest and enhance confidence in the sectors it regulates.
While this report reflects only a glimpse of the scope and depth of the work FSCO does to serve Ontarians, it highlights the strategic guidance of FSCO’s executive committee, the solid leadership of management, and the expertise and dedication of employees who deliver FSCO’s regulatory  services.


Florence A. Holden, Chair, Financial Services Commission of Ontario, Chair, Financial Services Tribunal

Florence A. Holden
Financial Services Commission of Ontario

Chair, Financial Services Tribunal

Brian Mills,Chief Executive Officer and Superintendent of Financial Services, Financial Services Commission of Ontario 

Brian Mills
Chief Executive Officer and
Superintendent of Financial Services

Financial Services Commission of Ontario


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