Vol. 149, No. 9 — May 6, 2015
SI/2015-30 May 6, 2015
ECONOMIC ACTION PLAN 2014 ACT, NO. 2
Order Fixing January 15, 2017 as the Day on which Certain Sections of the Act Come into Force
P.C. 2015-441 April 23, 2015
His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 303 of the Economic Action Plan 2014 Act, No. 2, chapter 39 of the Statutes of Canada, 2014, fixes January 15, 2017 as the day on which sections 269, 278 to 291 and 298 to 302 of that Act come into force.
(This note is not part of the Order.)
This Order in Council fixes January 15, 2017, as the date on which sections 269, 278 to 291 and 298 to 302 of the Economic Action Plan 2014 Act, No. 2 (the Act) come into force.
The objective of this Order is to implement a commitment made under Economic Action Plan 2014, that is to improve and clarify the federal regime for credit unions to further strengthen Canada’s financial system by ensuring that provincial governments appropriately supervise and support their own financial institutions.
This is in keeping with the international financial sector reform agenda, including the Basel Core Principles on effective banking supervision, which reinforce the importance of setting clear responsibilities and objectives for each prudential authority, and the G20 commitments to strengthen the stability and resilience of the global financial system.
Credit unions are an important part of the financial sector in Canada and offer a wide range of products in direct competition with other financial institutions. Many credit unions have shown strong growth in the recent past. In order to help encourage continued growth, the Government of Canada introduced a framework to allow credit unions to incorporate federally to foster growth of their business across provincial boundaries.
In addition to making the federal credit union framework more robust, the Act, which received royal assent on December 16, 2014, moves forward on the commitment to clarify the federal regulatory framework for provincial credit union centrals, thus ensuring a more coherent regulatory framework and strengthening the safety and stability of the credit union system.
As part of this commitment, the Office of the Superintendent of Financial Institutions (OSFI) will cease its supervision of provincial credit union centrals, which will also result in two consequential amendments to the Cooperative Credit Associations Act (i.e. clarifying the federal predominance of federal associations, and facilitating the transition of the Credit Union Central of Canada to a trade association).
It is the spirit and intent of the legislation to clarify that provincial governments are responsible for standing behind their financial institutions.
Accordingly, this Order sets the date for OSFI’s withdrawal and related consequential amendments as January 15, 2017, approximately two years from royal assent of the Act. This transition period allows provinces and industry to make adjustments to provincial frameworks, including to provincial legislation, as needed.
The federal government has repeatedly signalled the need for clarity on the federal role regarding supervision of the credit union system. The intent to make these changes was flagged to the provinces and credit unions in 2012 and announced more recently in the Economic Action Plan 2014.
The Department of Finance has since consulted key stakeholders in the credit union system, including provincial governments, regulators, provincial credit union centrals, the national central, financial sector associations and federal agencies. Going forward, further engagement is planned with key stakeholders to ensure an orderly transition.
Financial Institutions Division
Financial Sector Policy Branch
Department of Finance