The preliminary report by Panel reviewing the mandate of the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario (DICO) has been made public by the Ministry of Finance. Panel members are George Cooke, Lawrence Ritchie and James Daw.
The report is virtually silent on how auto insurance rates should be regulated in the province.
The report recommends the creation of a regulatory body - the Financial Services Regulatory Authority (FSRA). The FSRA would be self-funded and arm's-length from the government. There would be three distinct functions - pension regulation, prudential regulation and market conduct regulation. Under market conduct regulation, there would also be product regulation which might include auto insurance responsibility.
The FSRA would have a board of directors and reporting to the board would be a CEO. Each regulatory function would be headed by a Superintendent. The FSRA would have rule making authority.
FSRA would be given authority over any self-regulatory body operating within the financial services sector in Ontario not otherwise overseen by another statutory body. All relevant participants in the Ontario financial sector, such as payday lenders and loan brokers, consumer credit reporting agencies, debt and credit counsellors, and guarantee and warranty insurers would also fall under the FSRA. Regulatory oversight of the Cooperatives sector would be transferred to an agency or entity other than the FSRA. The administration and funding of the Motor Vehicle Accident Claims Fund should be transferred to the industry operated Facility Association.
The Financial Services Tribunal would operate separately from FSRA, with its own budget, subject to normal government process.
The Panel made no recommendation with respect to the prior approval of auto insurance rates. It appears a preference would be to move away from the rate setting approach currently used in Ontario. The Panel has reservations about continuing this approach within FSRA as it might unnecessarily dominate the agenda of FSRA to the detriment of other sectors.
At least three options were presented to the Panel during the consultations: continue rate approval within FSRA as practiced today; remove this function from FSRA and transfer it to a formal rate-setting board, or; give FSRA authority/responsibility for rate regulation, the approach to which to be determined through its rule-making authority.
Feedback on the preliminary report is being solicited by the government. The deadline is December 14, 2015. A final report will submitted to the government in the winter