One of the initiatives associated with FSRA’s priority 5.2 Financial Stability Structures is resolution
planning. FSRA has recently published the Resolution Planning Guidance effective May 2, 2022
for credit unions and caisse populaire (CU) (available on FSRA’s external website)
https://www.fsrao.ca/industry/credit-unions-and-caisses-populaires/regulatoryframework/
guidance-credit-unions-and-caisses-populaires/resolution-planning
It is critical that CU prepare for severely adverse scenarios as disorderly failures may have material
impact on the stability and reputation of the sector. Having robust and credible resolution plans in
place will enhance confidence in those CU and the sector.
The Resolution Planning Guidance sets out the principles of effective resolution planning and
FSRA’s expectation of what constitutes a sound and effective resolution strategy. Credit unions
must develop a plan that meets the goals of:
• contributing to and promoting sector stability
• ensuring business continuity
• protecting members and depositors
• minimizing exposure of the Deposit Insurance Reserve Fund (DIRF) to losses
These outcomes are consistent with several FSRA statutory objects, as set out in s. 3(1) and s.
3(4) of the Financial Services Regulatory Authority of Ontario Act, 2016 (the FSRA Act ) Resolution
planning enhances FSRA’s readiness in carrying out its mandate as the resolution authority in the
event of a failure of a large CU (with >$1 billion in assets).
A Resovlabiltiy Assessment Framework (RAF) is required to be developed by the proponent for
FSRA’s internal use to evaluate the resolution plans submitted from CUs as they start coming in
fiscal 2023 to 2024. This would be a co-led project by the Credit Union & Insurance Prudential
(CUIP) and Legal & Enforcement divisions within FSRA. The outcomes of the RAF will inform if
CUs are prepared in the event of resolution. The RAF should identify any impediemnts faced by
the CU to acheive an orderly resolution including continuity of business operations while the CU is
under restructuring.
Under the Credit Unions and Caisses Populaires Act, 2020 (the CUCPA 2020), FSRA can use its
Administration, Wind-up & Dissolution and Financial Assistance powers to resolve a CU. These
powers are stated in sections 228 (Financial Assistance), 234 (Administration), 238 (Voluntary
Winding Up), 240 (Winding Up By Court Order) of the CUCPA 2020. When the CU is under
Administration, FSRA has the power to undertake a merger, sell assets of the CU or wind-up the
CU. FSRA can also provide financial assistance to a CU that is under Administration. Resolution
planning also improves FSRA’s understanding of CUs’ systems, processes and resources to
ensure that insured deposits can be fully paid-out operationally (e.g. in a liquidation scenario).
