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Originally published: March 26, 2019
This article is part of the Investor Office series of discussions with key figures in Canada’s financial services industry whose work impacts investors. The views expressed in this article are entirely those of Mark White and are not intended to represent the views of the Investor Office or the Ontario Securities CommissionOntario Securities Commission An independent Crown corporation that is responsible for regulating the capital markets in Ontario. Its mandate is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair and efficient capital markets and confidence in capital markets, and to contribute to the stability of the financial system and the reduction of systemic…+ read full definition
I’m a lawyer by training, and one of the reasons why I studied law was because of my interest in public policy. In fact, my first public policy experience came early in my career, when I worked at the Ontario Energy Board. I also worked at various financial institutions and was Assistant Superintendent at the Office of the Superintendent of Financial Institutions (OSFI) during the financial crisis. I eventually returned to regulatory and risk work in the private sectorSector A part of the economy where businesses provide the same or related products or services. May also refer to a group.+ read full definition, but I realized I missed the opportunity to contribute from a public policy point of view. Public service, and what I did at OSFI, made me realize it was probably the most important thing I had done in my career up until that point. And so, when the opportunity to be Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (FSRA) came up, I thought it was another great way to serve the public.
On his role at FSRA…
As the Chief Executive Officer, I have responsibilities for the broad range of sectors that FSRA regulates. FSRA has a broad mandate including regulating credit unions, pensions, life insuranceLife Insurance Insurance that pays cash to your family or other beneficiary after your death. This can give them income and help pay your funeral and other final costs.+ read full definition, property and casualty insurance, auto rates, and mortgageMortgage A loan that you get to pay for a home or other property. Often the loan is for 20 years or more. You make a set number of payments for a set amount each year.+ read full definition brokers, and covers both prudential and conduct elements. My role includes making sure that we have the right people and that I’m creating the right processes and dynamics.
I will say, one of the cultural aspects that we want to build is that we want to have an organization that is dedicated to continuous improvement. It’s about creating checks and balances within the organization, recognizing that modern, successful organizations are not siloed: they’re flat, they’re flexible, they form teams, and they’re action-oriented towards problem solving. And, as I will talk about later, it’s also about making sure you have a dynamic regulator that can respond to changes and doing that from the leadership on down.
On building a new organization…
We’re building on the best of the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario (DICO) which are two existing regulatory agencies that FSRA will succeed. The goal is to take those agencies and keep what’s best and figure out how to make it better. And the best begins with the people who are actually doing the day-to-day regulation. The stakeholders – be it industry, consumers, public interest groups, or government – all agree that there’s a lot of strength in the people currently at FSCO and DICO. And, when we did our consultations with the individuals in the legacy organizations, it was obvious they had a tremendous dedication to public service and they see FSRA as an opportunity to better serve the public.
If someone asked me what the one thing that has to be different is, it is that regulation has to be dynamic. And that’s because business is dynamic. And never more so than now.
We need a regulator that understands the changes going on in business and how those changes impact the consumer and the public. I look at every aspect of what FSRA regulates, and the constant is change. FSRA has to be able to deal with it.
On FSRA’s responsibilities…
FSRA is both a prudential and a market conduct regulator, and it’s also multi-sectorial, meaning we regulate multiple industries. So, that actually puts us in a unique position, especially when you think about the boundaries between different financial services continuing to come down and blur. For example, there are insurance companies that offer products that are very similar to investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition products. There are some defined contributionContribution Money that you put into a savings or investment plan.+ read full definition pensionPension A steady income you get after you retire. Some pensions pay you a fixed amount for life. Others save up money for you while you are working. You use that money to create income after you retire.+ read full definition plans which are very similar – depending on how they operate – to either a private investment or RRSPRRSP See Registered Retirement Savings Plan.+ read full definition investment accountAccount An agreement you make with a financial institution to handle your money. You can set up an account for depositing and withdrawing, earning interest, borrowing, investing, etc.+ read full definition. There are credit unions engaged in insurance and investment advice. And so, this all starts to come together.
FSRA’s challenge will be to find commonality and efficiency. For example, when it comes to consumer interests, there are going to be principles underlining how we to want to see consumers treated in all the different sectors, but also recognize that each sector will have its own unique products and services, distributionDistribution A payment you get from a mutual fund or company stock. Funds must distribute any capital gains to shareholders at least once a year. This payment can take the form of cash or additional units. Some companies offer Dividend Reinvestment Plans (DRIPs).+ read full definition models and industry structures.
On FSRA’s priorities…
The consumer, the public interest, is at the core of everything we do. I use the termTerm The period of time that a contract covers. Also, the period of time that an investment pays a set rate of interest.+ read full definition “consumer” broadly because, when we look at our statutory objectives, it’s about pension members, pension beneficiaries, credit unionCredit union A non-profit financial institution whose members own and operate it. Members can borrow money at low interest rates and make deposits. Sometimes large organizations set them up for their members or employees. Offer services similar to a bank such as chequing and savings accounts.+ read full definition members, insurance purchasers, mortgagors, and so on.
We’re currently consulting with stakeholders. We’re aiming to be a very transparent organization and we put out our proposed priorities and budget for comment. Though we’re just going into our first real year of operations, we want to give all stakeholders an opportunity to understand what we propose to do and let us know their thoughts.
And, throughout those priorities, are numerous consumer-oriented objectives. We have also cross-sector objectives, and we also have sector-specific objectives. In the cross-sector priorities, there is a specific objective about protecting the public or consumer interest, and that’s making sure we focus our resources and build our organization in a way that the consumer lens will be present throughout it. A big part of that is going to make sure we have a consumer office and a chief consumer officer who will be one of the leaders of the organization. The person will be embedded in the policy function, and they will help to make sure that when we’re setting strategy or developing policy for the organization, that consumers will be part of our stakeholder engagement model and that we’re bringing in those consumer perspectives.
There are also two key priorities of burden reduction and regulatory effectiveness which will continue on beyond our launch.
On progress so far, milestones and launch…
We’re on a very good path towards our launch in late spring of 2019. We’re investing in our organization’s infrastructure and making sure that we have a platform that we can build on. These foundational elements like technology, human resources and payroll, disaster recovery, and data security, are important so we can then start to work on the front-end systems and processes.
We’re also working on the cultural transformation. We’ve done consultations with employees and other stakeholders. We also had an independent process review to look at what we’re doing with a fresh set of eyes. And, we’re well on our way to begin the cultural transformation and the empowerment of the organization, and the regulatory transformation which will continue on for several years to come.
On stakeholder reaction…
When I got here nine months ago, I made it a priority to get out and talk to as many stakeholders as I could. I called it my listening tour. I am pleased that many stakeholders have said that we’ve listened quite well, as reflected in our proposed priorities. And, though we have an exhaustive list of priorities, we’re also fairly measured in that we say this is what we’re going to get done in year one, and this is what we’re going to take to year two, and future years. So, I think we have the right priorities and the early feedback has been positive.
Any final thoughts?
As much as FSRA is going to be focused on its priorities, and on integrating the two existing regulatory agencies, and moving forward as a dynamic regulator, it’s also very important that we have regulatory continuity. Applications that are in process will continue without delays. We will inherit the guidance framework and the precedents that exists. And, while we’re building some additional expertise and capacities so that we can work on our new priorities, we’re continuing to make sure that its regulation as usual for those who rely on the regulator.
It’s important for the people in Ontario that there’s not a disruption of regulation, and that there’s an improvement in the current regulation, and that will take place over time.