The Financial Services Regulatory Authority is giving late-filing pension plans a “one-time” opportunity to avoid administrative monetary penalties.
The “safe harbour,” which applies to any outstanding filings under the Pension Benefits Act, expires on Oct. 31. “Rather than have people concerned about flagging non-compliance with late filings, the FSRA has offered this amnesty of sorts,” says Kathryn Bush, a partner and pension lawyer at Blake, Cassels and Graydon LLP.
In an email to Benefits Canada, the FSRA noted Ontario has a “highly compliant pension industry” in which only a “small number” of plans have outstanding filings. “The provision of additional time to come into compliance was seen as an additional motivator,” the FSRA wrote, adding its intent is to work closely with non-compliant plans to facilitate filing by the deadline.
“FSRA has indicated that they’re going to go so far as to actually contact late filers,” says Bush. “There is no doubt they’re trying to be proactive and helpful.”
The safe harbour is part of a principles-based regulatory approach the FSRA is adopting to fulfil its mandate to transform the regulatory environment in pensions. “In developing an approach to address past filing deficiencies, we were careful to be both risk-based and outcome-focused, paying specific attention to regulatory filings of high value,” stated the FSRA. “We wanted to focus our attention on those filings, which we assessed as material to the regulation of pension plans.”
Jordan Fremont, a partner and pensions lawyer at Bennett Jones LLP, says the principles-based approach is particularly apt to late filings. “There are always people who fail to fulfill their obligations,” he says. “But many do so largely through inadvertence.”
While the FSRA is clear it will use administrative monetary policies to achieve compliance among plans with significantly late regulatory filings after Oct. 31, it will continue the principles-based approach to enforcement inherent in its administrative penalties guideline.
“That process includes FSRA’s reminder notices about when filings are due, the ability to request a filing extension if a delay in filing is anticipated, the opportunity for plan administrators to explain why summary AMPs should not be imposed and the ability for plan administrators to appeal to the Financial Services Tribunal,” wrote the FSRA in its email.
The regulator also emphasized that administrative monetary penalties will continue to be only part of the principles-based approach. “FSRA will also utilize other means to achieve the desired regulatory outcomes, namely ensuring that plans meet their filing requirements and demonstrate good administration and plan governance,” it noted.
With that being said, resort to AMPs should increase after Oct. 31. “Having given late filers an opportunity to avoid sanctions with the safe harbour, I see the FSRA stepping up enforcement and imposing more AMPs,” says Fremont.