Consultation lasts for 90 days and includes technical briefing via live webinar
The Financial Services Regulatory Authority of Ontario has announced on June 14 a consultation on three proposed rules, which will be under the new Credit Unions and Caisses Populaires Act, 2020, once it has been proclaimed into force.
The consultation period, which ends on Sept. 14, will include a technical briefing via a live webinar on June 24, said a news release. The proposed rules seek to improve the transparency and effectiveness of Ontario’s credit unions, caisses populaires and the financial sector in general and to better line up with international standards.
The Proposed Rule – Sound Business and Financial Practices, which will replace the Deposit Insurance Corporation of Ontario (DICO) By-Law No. 5, aims to introduce a principles-based approach to business and financial practices through setting outcomes for member governance, board of directors governance, senior management, operational management, enterprise risk management, subsidiary governance and internal audit, compliance and finance functions.
The Proposed Rule – Capital Adequacy for Credit Unions and Caisses Populaires seeks to provide new requirements for credit, operational and market risk; for the internal capital adequacy assessment process; and for calculating capital ratios and supervisory minimums relating to tier 1 and tier 2 capital, risk weighted assets, capital conservation buffer, total capital ratio and leverage ratio. The contemplated changes are intended to promote risk sensitivity, resiliency and a stronger credit union sector by assessing and maintaining sufficient and proper forms of internal capital.
The Proposed Rule – Liquidity Adequacy for Credit Unions and Caisses Populaires, which will replace certain elements of guidance that interpret liquidity requirements under the Credit Unions and Caisses Populaires Act, 1994, aims to strengthen the credit union sector through assessing and maintaining adequate and appropriate forms of liquidity. The proposal provides new requirements for the diversification of funding; for the internal liquidity adequacy assessment process; and for calculating and reporting liquidity ratios, including liquidity coverage ratio, net stable funding ratio and net cumulative cash flow.
