TORONTO, Jan. 29, 2021 /CNW/ - FSRA is launching new principles-based guidance for credit unions on residential mortgage lending that sets out principles and describes FSRA's supervisory approach for sound risk management practices. The new guidance takes effect on February 1, 2021.
This guidance outlines FSRA's interpretation of what a credit union, its Board, management and employees need to do to meet the requirements of the Credit Unions and Caisses Populaires Act, 1994 (CUCPA).
It also confirms FSRA's approach to ensuring credit unions have reasonable and prudent procedures in place to manage residential mortgage lending.
FSRA continues to make the protection of credit union members' deposits and the stability of the credit union sector a priority. Residential mortgage lending is the most significant activity of Ontario credit unions representing approximately 63% of credit unions' total loans and 52% of total assets. It is also a major financial relationship between the credit union, its members, depositors and mortgage members. It requires a careful balancing between members' ability to purchase a residence, earn a return for other members and ensure that members, depositors, mortgage members as well as credit unions are not put at unnecessary risk due to this credit granting.
The health of this portfolio is instrumental to the financial well-being of credit unions and the credit union sector, as well as the ongoing ability of credit unions to serve their members.
FSRA's supervision of residential mortgage lending will allow credit unions to compete effectively and take reasonable risks.
FSRA consulted with the CU sector on the proposed guidance with the consultation closing on November 12, 2020. FSRA received positive feedback from the sector and adjustments were made to the guidance to improve accuracy and clarity of certain elements resulting in the final guidance that we are now releasing. The new guidance outlines principles and describes our supervisory approach for credit union residential mortgage lending, and ensures that these principles are transparent and efficient.
- FSRA's Residential Mortgage Lending Interpretation and Approach Guidance
- Residential Mortgage Consultation Summary Report
The Financial Services Regulatory Authority of Ontario (FSRA) is continuing to work with those we regulate to ensure financial safety, fairness and choice for consumers and members. Learn more at www.fsrao.ca
SOURCE Financial Services Regulatory Authority of Ontario
For further information: For media inquiries: Malon Edwards, Senior Communications Officer, Financial Services Regulatory Authority, C: 647-296-5479, Email: [email protected]