Regulators push deadlines for reform implementation in response to COVID-19

As the COVID-19 pandemic saga continues to unfold, financial regulators continue to demonstrate flexibility for market participants and their staff who are charged with administering day-to-day regulatory activity. Part of this includes prioritizing initiatives to allow regulators to address the most immediate matters and deferring longer-term project timelines.

During recent weeks several Canadian and international regulators made announcements about new timing relating to various reforms and regulatory initiatives. The following lists some of the implementation delays and consultation suspensions for some key regulatory policy initiatives.

Client-focused reforms

CSA update

The Canadian Securities Administrators (“CSA”) published two relief orders to extend the deadline for registered dealers and advisers to implement the conflicts of interest and relationship disclosure provisions of the Client Focused Reforms (“CFRs”) amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. The CFRs are an investor protection initiative based on the concept that the interests of the client come first in the client-registrant relationship. To learn more about the CFRs, visit our previous blog post.

Given CSA’s recognition “that as a result of the pandemic registered firms are facing enormous and unprecedented operational pressures that impair their capacity to pursue the scheduled implementation of the Client Focused Reforms,” it made two relief orders. The first relief order provides registrants an additional six months to comply with the conflict interest provisions. Registrants will now have until June 30, 2021 to implement changes. Additionally, according to the second relief order the relationship disclosure provisions will now take effect on December 31, 2021. The CSA has not extended the deadline for compliance with the new know-your-product requirements or the enhanced know-your-client and suitability requirements, which will take effect on December 31, 2021.

IIROC update

The Investment Industry Regulatory Organization of Canada (“IIROC”) provided an update on timing relating to its Plain Language Rulebook (“IIROC Rules”) and plans regarding CFRs.

IIROC plans to harmonize its implementation of its CFR amendments with the CSA. As detailed above, the conflict of interest CFR amendments are postponed to June 30, 2021 and associated relationship disclosure information requirements to December 31, 2021.

Additionally the IIROC Rules implementation will be delayed until December 31, 2021. This decision was made in view of the pandemic and with the intention of reducing the burden on dealers as they navigate the situation. The IIROC Rules were formerly expected to become effective June 1, 2020 as per previous announcements.

OSFI and Basel Committee update

The Office of the Superintendent of Financial Institutions (“OSFI”) has announced the suspension of its public consultations and policy development on new or revised guidance and delayed the implementation deadlines for a number of planned regulatory changes until economic conditions stabilize. These measures are intended to reduce operational burdens on Canadian financial institutions so that they can focus their efforts on addressing the challenges posed by COVID-19 and current market conditions.

Included in the list of delayed regulatory changes are:

  • the implementation of the new Guideline B-20 benchmark rate for uninsured mortgages;
  • public consultations on draft revisions to federal insurers’ reinsurance practices (Guideline B-3);
  • insurance capital frameworks;
  • the role of foreign branch principal officers and chief agents (Guidelines E4A and E4B); and
  • the implementation of the recently announced capital and liquidity proportionality initiative (Guideline B-12) for small and medium-sized banks to 2023. 

The Basel Committee announced the delay of remaining Basel III reforms until  January 2023. Consistent with that announcement, OSFI has also announced the delay of the domestic implementation of the remaining Basel III reforms until January 2023. The deferred reforms include revisions to the standardized approaches for credit and operational risk, the market risk framework and Pillar 3 disclosure requirements.  Implementation of the Fundamental Review of the Trading Book framework and the Credit Valuation Adjustment have also been postponed to 2024.

Additionally, the introduction of new regulations under the federal financial institution statues to implement the proposed new financial consumer code (introduced in October 2018) and the proposed new technology-related framework (introduced in March 2018) are expected to continue to be delayed.

Syndicated mortgage investments regime

CSA update

The CSA provided an update on the syndicated mortgage regime. The CSA is adjusting the timeline to implement regulatory changes set to harmonize the regulation of syndicated mortgages across Canada. The changes relating to syndicated mortgages include amendments to each of the following:

  • National Instrument 45-106 (Prospectus Exemptions)
  • National Instrument 31-103 (Registration Requirements, Exemptions and Ongoing Registrant Obligations)
  • Companion Policy 45-106CP (Prospectus Exemptions)
  • Companion Policy 31-103CP (Registration Requirements, Exemptions and Ongoing Registrant Obligations)
  • proposed associated local amendments.

According to the release, these amendments are now anticipated to take effect January 1, 2021 subject to requisite approvals (as opposed to July 2020 according to the prior update provided in December 2019). This update has been circulated by provincial regulators including the OSC, Autorité des Marchés Financiers , the Alberta Securities Commission  and the British Columbia Securities Commission.   

FRSA and OSC update

The Financial Services Regulatory Authority of Ontario (“FRSA”) and the OSC notified market participants of new timing for the transfer of regulatory oversight of certain syndicated mortgage investments to the OSC. The new regulatory regime is now expected to be effective January 1, 2021, subject to requisite approvals. The change had been expected to take place in 2020. These dates are consistent with the update provided by the CSA as outlined above.


The timetable revisions demonstrate how regulators recognize the significant impact of the COVID-19 pandemic on the financial and investment industry, consumers and investors and the Canadian economy – and their willingness to be flexible as a result. Regulatory reforms have been put on hold while regulators review their current supervisory and regulatory priorities to align with current conditions. It will be interesting to see if and how regulators reprioritize both the substance and focus of their previous reforms and regulatory changes post-COVID-19.

This approach aligns with financial relief measures that are concurrently being implemented. For example, the CSA temporarily increased short-term borrowing limits for mutual funds investing in fixed income, as announced last week. Our previous blog posts and regulatory updates include further information on the response of financial and capital markets regulators.

Please note that as the response to COVID-19 is evolving rapidly, we have centralized relevant content on our “Coronavirus: Navigating legal implications and business impacts” page and interested persons can subscribe to our Osler COVID-19 Daily Digest. Our daily updates will be conveniently emailed to you at the end of each business day.

One of the authors, Larry Ritchie, is on the FSRA Board; the content of this post reflects the views of the authors only and not any regulator.