The Evolution of Regulatory Oversight in the Public Interest

1. The Evolution of Regulatory Oversight in the Public Interest Jim Hall Superintendent of Financial Institutions, Insurance and Real Estate and Registrar of Credit Unions Saskatchewan Financial Services Commission Presentation to the Financial Management Institute Public Sector Management Workshop on June 2, 2009 in Regina, SK 1

2. The Evolution of Regulatory Oversight in the Public Interest Overview • Background • Serving the public interest • Some principles to consider • Government as Regulator of Financial Services • Evolution of Delivery • Commissions • Professions • Industry associations • Self regulatory organizations (SROs) • Alternative Model • Special Operating Authority (SOA) • Questions/Discussion 2

3. Background • Regulation is a key component of government policy • Regulatory approaches have adapted to the changing environment • Stakeholders have increasingly sought: • Greater transparency and more extensive consultation • More accountability and effectiveness • Principles instead of prescriptions • Reduction in regulatory burden • Harmonization • Lighter regulation • Deregulation 3

4. Serving the public interest • The primary objective of regulation of financial services is protection of consumers (or an effective marketplace) • This objective has been carried out by licensing of financial institutions and intermediaries, investigating consumer complaints and enforcing the rules against outliers (those in breach) • The requirements are usually rules based – prescriptive in nature 4

5. Some principles to consider Principles vary depending on role but generally include: • Appropriate whenever it is the most efficient means of realizing the public interest. • Regulatory institutions need independence. • Regulatory institutions need clear mandate, clear assignment of duties for general policy-making, implementation and adjudication, and judicial oversight. • Regulatory instruments should align incentives of service providers with the public interest. • Must be supported by effective enforcement tools, complaint and dispute resolution mechanisms. • Effectiveness of regulation needs periodic evaluation. • These principles were adapted from a consumer groups’ submission to a CRTC review regarding Bell Canada and Telus (date unknown). 5

6. Government as regulator of financial services • Usually in Justice or Finance Ministry • Sometimes a government controlled commission or board • Delegation to a council or commission with some government appointees • Grant of powers to an Self Regulatory Organization (SRO) • Recognition of an industry association standards 6

7. Government as regulator of financial services • Governments have outsourced some regulation of financial services: • to reduce expenditures • in response to stakeholder demands for more flexibility in regulation • pressures from globalization of markets 7

8. Government as regulator of financial services

9. Evolution of delivery of regulatory oversight • Consumer Protection Branch • Saskatchewan Securities Commission • Insurance Councils of Saskatchewan • Credit Union Deposit Guarantee Corporation • Saskatchewan Real Estate Commission • Investment Dealers Association • Mutual Fund Dealers Association • OBSI, CHLIO and GIO • AMF-FSCO complaint monitoring system • Saskatchewan Financial Services Commission 9

10. Special Operating Authority(SOA) • Saskatchewan Financial Services Commission – an alternative model July/09 • Formation • Mandate • Composition • Special Operating Authority – why now? • Budget • Staffing • Relationship with Justice Ministry 10

11. The Evolution of Regulatory Oversight in the Public Interest • Questions/discussion • Thank you for this opportunity to speak to you. 11