Financial Innovation Act, SA 2022 cF-13.2
Amended
- Loan and Trust Corporations Act, RSA 2000, cL-20
- Credit Union Act, RSA 2000, cC-32
- ATB Financial Act, RSA 2000, cA-45.2
- Consumer Protection Act, RSA 2000, cC-26.3
- Personal Information Protection Act, SA 2003, cP-6.5
- Financial Consumers Act, RSA 2000, cF-13
Summary
The Financial Innovation Act created a regulatory Sandbox which is the framework that allows a Sandbox participant to develop or test the viability of an innovative financial product or service.
The Act authorizes the Minister to issue a certificate of acceptance to approved companies upon application. The Minister must decide whether to issue a certificate of acceptance within 90 days of receipt of a completed application and either issue a certificate or notify an applicant of the decision not to issue a certificate. The Minister may also extend the deadline in a written notice to an applicant.
Companies that participate in the Sandbox may be exempt from some or all of the legal requirements set out in each of the Loan and Trust Corporations Act, the Credit Union Act, the ATB Financial Act, the Consumer Protection Act, the Personal Information Protection Act, and the Financial Consumers Act.
Exemptions to the Personal Information Protection Act must be approved by the Information and Privacy Commissioner. Exemptions would also require that terms and conditions be agreed on by the Minister and the Information and Privacy Commissioner.
To participate in the Sandbox, companies must meet the following criteria:
- Maintain a physical presence in Alberta;
- Be in the business of providing a financial product or service;
- Intend to offer an innovative financial product or service; and
- Provide a proposed business plan that includes a description of an applicant’s plans for testing a financial product or service in the Sandbox and for exiting the Sandbox.
In addition to the foregoing criteria, the President of Treasury Board and Minister of Finance must issue certificates of acceptance to applicants who in the Minister’s opinion:
- Offer a financial product or service that provides a net benefit to the public;
- Has directors and officers or, if applicable, has directors and officers of its corporate partners, that are fit as to character and as to competence;
- Demonstrates reasonable consumer protection arrangements;
- Will operate in a safe and sound manner; and
- Meets any additional criteria prescribed by the regulation.
A certificate of acceptance must outline any legislative exemptions granted to the approved Sandbox participant, terms, conditions and restrictions imposed on the participant as well as the issue date and expiry date of the certificate of acceptance.
The Minister may impose or amend terms, conditions or restrictions on a company’s certificate of acceptance. Such terms, conditions and restrictions may include requirements:
- To engage qualified and expert third party consultants or auditors;
- Regarding transaction limits, such as number of customers;
- Regarding capital;
- Regarding insurance;
- Regarding security or surety;
- Regarding risk management policies and procedures;
- Regarding a consumer complaints mechanism; or
- Other consumer protection, including any required disclosure.
Sandbox participants will be required to submit an annual return to the government for every year they participate in the Sandbox, and for the year following their time in the Sandbox. The annual return must be submitted not later than three months following each annual anniversary date of the Sandbox participant’s certificate of acceptance.
Sandbox participants will also be required to maintain a number of corporate and financial records in relation to the period commencing with the Sandbox participant’s application and ending one year from the expiry, revocation or cancellation of the Sandbox participant’s certificate of acceptance. The corporate and financial records must be maintained for five years from the expiry, revocation or cancellation of the Sandbox participant’s certificate of acceptance.
The Minister may appoint someone to conduct an examination of a Sandbox participant, its corporate partners, directors or officers.
A person is guilty of an offence if they contravene any provision of the Act or regulations under the Act, or an order or direction made according to the Act. This includes failing to comply with the terms, conditions or restrictions on a company’s certificate of acceptance. Fines for offences under the Act may be up to $100,000 for the first conviction and $200,000 for each subsequent conviction.
The Minister must publish the following information on a government website or by any other means the Minister considers appropriate:
- The name of each Sandbox participant;
- A description of the product or service which each Sandbox participant is offering through the Sandbox;
- A list of regulatory exemptions provided to each Sandbox participant;
- Any terms, conditions or restrictions imposed by the Minister on a Sandbox participant;
- The expiry date (including any extension) of each participant’s certificate of acceptance; and
- Any amendment, revocation or cancellation of a certificate of acceptance.
The foregoing information must remain available to the public until one year after the Sandbox participant’s time in the Sandbox has ended.
In Force: On Proclamation