Alberta Record

· Order in Council / Proclamation of Financial Statutes Amendment Act, 2024 (No. 2) · enacted

Oic proclamation financial statutes amendment act 2024 no 2

This Order in Council proclaims specific sections of the Financial Statutes Amendment Act, 2024 (No. 2) into force on January 31, 2025, and February 13, 2025.

Moderate impactInstitutional independenceCentralization of powerThe public, directlyIndependent watchdogsLegislature

What changed

  • Proclaims sections 4 (except subsection 4), 5, and 9 of the Financial Statutes Amendment Act, 2024 (No. 2) into force on January 31, 2025.
  • Proclaims section 6 of the Financial Statutes Amendment Act, 2024 (No. 2) into force on February 13, 2025.
  • Section 9 of the ATB Financial Regulation (AR 187/97) is repealed and replaced with new provisions.
  • The new Section 9 defines 'alternative finance mortgage lender' as a subsidiary of ATB.
  • It establishes conditions under which ATB or an alternative finance mortgage lender may purchase mortgages or make loans secured by mortgages.
  • Alternative finance mortgage lenders are restricted to purchasing or lending on residential mortgages only.
  • A maximum loan-to-value ratio of 80% is set for residential mortgages, unless the excess is guaranteed or insured by specified government entities or an authorized insurance corporation.
  • A new Section 31.1 is added, stipulating that the regulation expires on January 31, 2030.
  • Defines "alternative finance mortgage loan" to include principal, expenses, and a return or profit amount other than interest, expanding the scope of mortgage products.
  • Introduces "lending subsidiaries" as entities entitled to make or acquire alternative finance mortgage loans, subject to specific conditions, including a "quality mortgage loan" requirement.
  • Amends various sections to include "lending subsidiary" in provisions related to loan provision and information gathering.
  • Repeals Schedule 2 of the Regulation and replaces references to it with "the capital requirements standard established under section 145.1 of the Act."
  • Repeals Section 41.3 of the Regulation.
  • Amends Section 22(k) to include employees of subsidiaries in the scope of certain employee-related provisions.

Why it matters

  • This Order brings into effect specific provisions of the Financial Statutes Amendment Act, 2024 (No. 2).
  • The full implications of these changes depend on the content of the proclaimed sections, which relate to financial statutes.
  • Centralizes oversight by explicitly defining and regulating the mortgage lending activities of ATB's subsidiaries.
  • Introduces specific risk management parameters for residential mortgage lending, potentially influencing ATB's market participation and risk exposure.
  • The expiry clause mandates a future review, indicating a potentially temporary or experimental approach to these new financial regulations.
  • Clarifies the operational scope and limitations for ATB and its subsidiaries in a core business area.
  • Expands the range of financial products available through credit unions and their subsidiaries, potentially increasing access to financing for specific borrower segments.
  • Establishes "lending subsidiaries" as new actors within the credit union regulatory framework, potentially allowing for specialized operations and risk management.
  • Shifts the basis for credit union capital requirements from a fixed schedule to a standard established under the Credit Union Act, centralizing regulatory oversight.
  • The introduction of conditions for alternative finance mortgage loans by subsidiaries aims to manage potential risks associated with these new offerings.
  • The change in capital requirements may alter the financial stability framework and operational flexibility for credit unions.

Other governance concerns

  • Specific impacts on governance structures and financial oversight are determined by the content of the proclaimed sections of the Act.
  • Impact on ATB's operational autonomy in mortgage markets
  • Introduction of a sunset clause for a financial regulation
  • Specific definition and regulation of 'alternative finance mortgage lenders'
  • Changes to regulatory oversight of credit union capital requirements.
  • Introduction of new financial products and entities into the regulated financial sector.
  • Clarity on the accountability and risk management frameworks for 'lending subsidiaries'.

Primary sources (4)

Secondary sources (2)