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Compliance Promotion Framework

1.0  Introduction

The Office of the Superintendent of Bankruptcy (OSB) contributes to an efficient marketplace by maintaining the integrity of the Canadian insolvency system, thereby strengthening confidence in the Canadian economy. The OSB is responsible for the administration of the Bankruptcy and Insolvency Act (BIA), as well as certain aspects of the Companies’ Creditors Arrangement Act (CCAA). It licenses and regulates the insolvency profession, ensures an efficient and effective regulatory framework, supervises stakeholder compliance with the insolvency process, and maintains public records and statistics.

In its oversight capacity, the OSB seeks to determine whether stakeholders (LITs, debtors, receivers, creditors, monitors) are fulfilling their obligations, as set out in the legislative and regulatory framework. To support this mandate, the OSB’s compliance program is comprised of the following three components: Compliance Promotion, Compliance Monitoring, Regulatory Investigation and Enforcement.

The purpose of this document is to articulate the OSB’s approach to enhancing its compliance promotion activities, while recognizing that individual LITs are responsible for their own compliance (pursuant to the BIA and its General Rules, including the Code of Ethics for Trustees) and corporate LITs share responsibility for compliance of all of their employees and stakeholders.

Compliance promotion includes any activity that increases awareness, informs, motivates or changes behaviour, and encourages voluntary compliance with regulatory requirements. As a key component of the OSB’s compliance program, compliance promotion provides a means for the OSB to increase stakeholder awareness and understanding of regulatory requirements and the consequences of non-compliance with the objective of increasing voluntary compliance and achieving more efficient compliance outcomes.

2.0  Objectives of Compliance Promotion

The objective of the OSB compliance program is to instill stakeholder confidence in the insolvency system by ensuring high levels of compliance and appropriate consequences for non-compliance. Regulated parties are ultimately responsible for being aware of and complying with regulatory requirements. Effective compliance promotion activities help regulated parties to fulfil their responsibilities. Barriers to compliance can range from lack of understanding to difficulty complying with requirements that are nuanced or complex. Compliance promotion activities are a critical part of a robust compliance program.

The objective of compliance promotion is to strengthen the OSB’s compliance program by encouraging voluntary compliance via a focus on:

  • Emphasizing the rights and responsibilities of stakeholders in the insolvency system.
  • Clarifying and communicating the OSB’s position and interpretation of the regulatory framework.
  • Reinforcing the consequences of non-compliance.

Compliance promotion includes helping all stakeholders understand the shared responsibilities within the insolvency system. Stakeholders who are aware of the OSB’s interpretation of the regulatory framework can self-correct and may also report possible non-compliance through the OSB’s complaints process. Effective enforcement and the publication of enforcement cases will support general deterrence.

3.0  Principles of Compliance Promotion

The OSB’s Compliance Promotion Framework is guided by the following principles:  

3.1    Transparency

The OSB will strive to communicate regulatory guidance and decisions, where appropriate, in a clear and concise manner that stakeholders can understand. The OSB will stand behind its guidance and decisions. This should allow stakeholders to arrange their affairs with the confidence that if they follow the guidance provided, they will be found to be in compliance with the regulatory framework.

3.2    Agility

The OSB will strive to communicate its views in a timely and responsive manner, wherever possible.  Communication from the OSB will adapt to the needs of stakeholders to support well-informed decisions and will seek to minimize the time that they are operating in an unclear regulatory environment.

3.3    Proportionality

The OSB will strive to apply a risk-based approach and seek consequences that are appropriate to the risk posed, dealing with risks of similar severity with similar consequences to provide stakeholders with a better sense of what to expect in cases of non-compliance.

4.0  Compliance Promotion and the OSB Compliance Program

There are three components to the OSB compliance program: compliance promotion, compliance monitoring and regulatory investigation, and enforcement. The proposed Compliance Promotion Framework seeks to enhance and support the two other components of the OSB’s compliance programs.

Compliance Promotion and the OSB Compliance Program

Image de la promotion de la conformité et le Programme de conformité du BSF
Text version

The graphic shows the three components to the OSB compliance program: compliance promotion, compliance monitoring and investigation, and enforcement.

There is a table with three columns that lists the components to the OSB’s compliance program. The first column is compliance promotion. There is an image of a lighthouse to represent compliance promotion. Under this symbol are examples of compliance promotion. From top to bottom:

  1. Regulatory guidance
  2. Engagement with stakeholders
  3. Non-compliance decisions

The second column is compliance monitoring and regulatory investigation. There is an image of binoculars to represent compliance monitoring and regulatory investigation. Under this image are examples of compliance monitoring and regulatory investigation. From top to bottom:

  1. Licenced Insolvency Trustee office visits
  2. Debtor examinations
  3. Banking reviews
  4. Review of aged estates

The third column is enforcement. There is an image of a gavel to represent enforcement. Under this image are examples of enforcement. From top to bottom:

  1. Civil interventions
  2. Professional conduct investigations
  3. Conservatory measures
  4. Criminal investigations

There are arrows extending across the three columns to show the interconnectedness among all three components.  

Compliance promotion enhances compliance monitoring and regulatory investigation by informing stakeholders of the OSB’s interpretation of the regulatory framework, providing insights on the OSB’s areas of concerns, and clarifying the standards the OSB is using to determine non-compliance.

Compliance monitoring and regulatory investigation is focused on the targeted oversight of risk areas.

Enforcement is focused on addressing instances of non-compliance and seeking appropriate consequences. Publishing non-compliance decisions, as appropriate, can provide stakeholders with information on the nature and consequences of non-compliance.

5.0  Compliance Promotion Tools

The OSB’s compliance promotion tools can be divided in the following categories:

  • Proactive publication of guidance and decisions
  • Engagement with stakeholders
  • Publicizing enforcement decisions

5.1  Regulatory Guidance

To communicate its expectations and interpretations of the regulatory framework, the OSB issues guidance and decisions to stakeholders. This may include:

5.1.1  Directives

The BIA provides the Superintendent the authority to issue Directives to detail the administrative requirements of the Act. The OSB will continue to review, analyze and propose amendments to Directives to ensure they remain relevant and effective, provide clear and timely information and balance the interests of stakeholders in a way that helps protect the integrity of the insolvency system.

5.1.2  Guidance

The OSB issues guidance to inform stakeholders of its interpretation of the regulatory framework. The OSB strives to ensure guidance is timely, relevant and easily searchable.

5.1.3  Decisions

The OSB also highlights relevant administrative or court decisions which can further assist stakeholders in understanding the regulatory requirements and how the OSB is applying them.   

5.2  Engagement with Stakeholders

Engagement with stakeholders encompasses a two-way sharing of information. Presentations, meetings and discussions serve to support compliance by providing the OSB with timely information on issues which need to be addressed and clarified and by providing regulated parties with information on the elements necessary to comply. Engagement will include:

5.2.1  Participation in Presentations and Conferences

The OSB will continue to participate in presentations to industry associations, speaking engagements with stakeholder groups, and to provide an opportunity for stakeholders to participate in OSB led presentations and conferences.

5.2.2  Engagement with Professional Associations

The OSB is committed to continuing its engagement with relevant professional associations on issues of mutual interest.

5.2.3  Engagement with LITs

The OSB will continue to engage directly with LITs through public consultations and other direct communications between OSB analysts and LITs.

5.2.4  Engagement with debtors and creditors

The OSB will continue to seek opportunities to engage with and provide information to debtors and creditors.

5.3  Non-compliance Decisions

The OSB will publish non-compliance decisions, as appropriate, in an effort to inform insolvency stakeholders about the consequences of contraventions which will encourage them to comply and provide them with information on what constitutes non-compliance.

Publication of non-compliance decisions will also support public confidence in the integrity of the insolvency system in that there is a vigilant regulator which pursues serious cases.

The information also contributes to the protection of consumers and the public by promoting awareness pertaining to the conduct of stakeholders and the expected standards of conduct. At the same time, the information allows stakeholders to assess whether their own respective conduct meets expectations and to take necessary steps to ensure compliance.

Non-compliance decisions includes:

5.3.1  Conservatory Measures and Professional Conduct Investigations

The OSB publishes the issuance of conservatory measures and the outcomes of professional conduct investigations on its website.

5.3.2  OSB Interventions

The OSB will publish summaries of significant cases where the OSB intervened in an insolvency matter and the topic of the intervention may be of value to the insolvency profession in understanding what is expected to achieve compliance.

5.3.3  Criminal Cases

The OSB will publish summaries of criminal cases following a guilty plea or sentencing to help stakeholders achieve a greater understanding of criminal non-compliance and to deter future behaviour of a similar nature.

Conclusion

The OSB’s approach to compliance promotion activities has been developed using best practices of other government departments and international regulatory organizations.

Compliance promotion will play an important part in realizing the OSB compliance objectives.

The OSB welcomes feedback from stakeholders on the Compliance Promotion Framework at: osbregulatoryaffairs-affairesreglementairesbsf@ised-isde.gc.ca.

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