If the Ontario regulator wants to play a major and successful role in fintech and insurtech, it needs to get in early to talk with potential players and ensure regulations are clear to all sides, an innovation panel has been told.
Layial El-Hadi, executive director of Montreal-based Fintech Cadence, told a Financial Services Regulatory Authority (FSRA) innovation panel that in Quebec fintechs have met up with financial institutions and venture capitalists thanks to the Autorité des marchés financiers (AMF). The Quebec regulator was essential, she said, in filling in the regulatory blanks that faced fintechs and insurtechs.
“We’re very bullish that fintechs should be one of the top sectors in Canada,” said El-Hadi. “[But] we’re far behind in a lot of different components. So in order for us to start being competitive globally … the best lesson we can take away from Quebec, which is collaboration, implementing that and leveraging the strengths that Ontario has with a supportive regulatory landscape, will only help us be more competitive globally.”
FSRA introduced its innovation framework for public consultation in October, proposing that the regulator open dialogue with innovators. The framework sets out FSRA’s regulatory review process, including helping to introduce new products, services and business models.
But Simon Archer, a partner with Goldblatt Partners LLP, said not all innovation is necessarily good.
“Innovation can be a bad word as well as a good word and distinguishing bad innovation from good innovation is something that we really need the regulator’s guidance on,” said Archer. “Creative non-compliance is not good innovation… whether that’s in poorly communicated risks in some kinds of new benefit arrangements or hidden risks or conflicts in investment practices that aren’t well enough understood and other examples like that.”
Archer said innovation can be neutral in some ways, but it can present a number of issues.
FSRA has also introduced principles-based guidance for many sectors, including automobile insurance and credit unions.
Joanne de Laurentiis, chair of the FSRA board, said that in many ways principles-based guidance is “a game changer” that will push innovation forward and help modernize processes. Industries will be able to develop their own approaches to compliance that are best suited to their businesses, she said.
“This approach will not be easy. It will require heavy lifting on your part and on our part, but in the end it will be worth it.”