Privacy office orders release of FSRA enforcement notice

Ontario’s Information and Privacy Commissioner (IPC) has ruled that provincial regulator the Financial Services Regulatory Authority of Ontario (FSRA) must release an enforcement notice setting out allegations and proposed penalties even though the case in question was settled.

FSRA denied access to an enforcement notice prepared in a case brought by its predecessor, the Financial Services Commission of Ontario, in 2018.

The case involved a series of orders imposing licence revocations and monetary penalties against four companies and individuals in the mortgage brokerage sector.

According to the IPC’s decision, the regulator denied access to the notice, claiming that the notice qualified for a discretionary legal privilege exemption, as it was created to be potentially used in litigation.

The notice was used in settlement discussions. Once a settlement was reached, the notice was withdrawn, and an enforcement proceeding wasn’t held.

“FSRA argues that by keeping the notice of proposal confidential, the parties to the settlement agreement were able to resolve and avoid ‘lengthy and complex litigation before the Financial Services Tribunal,’” the IPC said.

The regulator’s decision to deny access to the notice was appealed to the IPC.

The appellants in the case argued that the notice represents a “pleading” that’s required to bring enforcement action, that the notice is used to notify respondents of disciplinary allegations against them, and that it doesn’t qualify for a legal privilege exemption.

The IPC sided with the appellants in the case, upholding their argument that the notice is a “statutory requirement” rather than a legal tool to facilitate a settlement.

“While the notice was issued around the time settlement discussions took place, this is not enough, in my view, to find that the notice was issued ‘for use in’ or even ‘in contemplation of’ the settlement of litigation,” the IPC said. It added that the notice “was issued in contemplation of enforcement action should the negotiations fail.”

“[P]ublic policy dictates that if settlement could not be achieved, there was a reasonable expectation that FSRA would preserve its statutory ability to pursue the sanctions set out in the notice of proposal on behalf of the public,” the IPC said. “It would be absurd to conclude that FSRA would not be able to rely on the notice of proposal to pursue sanctions against those alleged to have committed infractions … if mutual settlement discussions broke off.”

As a result, the IPC concluded that the notice of proposal is not protected by statutory legal privilege, and it ordered FSRA to disclose it by June 29.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.