Over the past several weeks, the Department of Finance has proposed and introduced regulations impacting financial institutions under the Bank Act, Trust and Loan Companies Act, and Insurance Companies Act.
- Three Diversity Information Disclosure Regulations, which would require distributing federally-regulated financial institutions (FRFIs) to disclose information on the diversity of board directors and senior management.
- Regulations amending the Financial Consumer Protection Framework Regulations, which will require banks and foreign banks to cap non-sufficient funds (NSF) fees beginning in March 2026.
Governance Diversity Disclosure
On February 15, 2025, the Department of Finance proposed Diversity Information Disclosure Regulations for distributing FRFIs under the Bank Act (see Banks and Bank Holding Companies regulation), Trust and Loan Companies Act (see Trust and Loan Companies regulation) and Insurance Companies Act (see Insurance Companies and Insurance Holding Companies regulation).
The proposed regulations follow an announcement in Budget 2021 and a detailed consultation in 2022, which looked to enhance the representation of women, Indigenous peoples, persons with disabilities and visible minorities in leadership roles within FRFIs.
Overall, the measures would adapt and apply the “comply or explain” diversity disclosure requirements introduced in January 2020 for distributing corporations in the Canada Business Corporations Act. Distributing FRFIs may be required to disclose the following:
- director term limits, or other mechanisms supporting board renewal;
- the number and percentages of individuals from each of the designated groups on the board and in senior management;
- whether the representation of designated groups is considered when nominating directors and appointing senior management, or the reasons why not;
- any targets for representation on the board and among senior management for each designated group, the annual and cumulative progress in achieving that target, or the reasons for not adopting a target; and
- whether there is a written policy for identifying and nominating candidates from designated groups, and if so, details about the policy's objectives, key provisions, implementation measures and effectiveness.
Designated groups have the same meaning as in the Employment Equity Act: namely women, Indigenous peoples, persons with disabilities and members of visible minorities. However, First Nations, the Inuit and the Métis are each considered to be a group referred to in the definition of designated groups, and the information for each group must be reported separately.
Disclosure of targets for representation and the number and proportion of designated groups in director and senior management roles must also be made for each major subsidiary of a distributing FRFI, being a subsidiary that accounts for 30% or more of the parent entity’s consolidated assets or revenue.
Diversity disclosure will be required at the same time as the notice of the annual meeting is sent to FRFI shareholders. A standardized form is set out in the proposed Diversity Regulations to ensure consistency and support comparisons across different FRFIs.
NSF Fee Regulations
On March 12, 2025, regulations amending the Financial Consumer Protection Framework Regulations were made that will introduce caps on NSF fees for banks and foreign bank branches.
The regulations would cap NSF fees at $10 per charge for personal deposit accounts. In addition, banks would be restricted from imposing an NSF fee on the same account more than once within two business days and for any personal deposit account that is in unauthorized overdraft by less than $10.
The Department of Finance had previously proposed a much wider scope for these regulations, as detailed in our bulletin “Holiday Savings for Financial Consumers? Proposed Regulations to Limit NSF Fees”. The final regulations do not require the initially proposed electronic alerts, grace period, or public reporting by financial institutions.
Looking Forward
The Diversity Information Disclosure Regulations were open for comment until March 17, 2025. If approved, the new regulations would come into force at a date to be determined.
The NSF fee changes to the Financial Consumer Protection Framework Regulations will come into force on March 12, 2026.
