The Financial Innovation Act: Regulations and Coming Into Force July 1, 2022

June 20, 2022

Written By Ceilidh Hemmati, Matthew Riskin, Amy Verhoeff and Jesse Fontaine

On June 7, 2022, the Government of Alberta published Order in Council 200/2022, under which the Lieutenant Governor in Council ordered that the Financial Innovation Act, SA 2022 c F-13 (FIA) be proclaimed into force on July 1, 2022. The same day, the Government of Alberta also published Order in Council 203/2022, establishing the Financial Innovation Regulation, Alta Reg 109/2022. The Regulations come into force simultaneously with the FIA. Further information on the FIA can be found in our prior posting: Bill 13: the Financial Innovation Act: An Opportunity to Play in the Sandbox.

As previously noted, the FIA will create a regulatory sandbox for financial services and fintech companies in Alberta, becoming a safe space for companies to test innovative products or services with decreased regulatory scrutiny and allowing companies to gauge the potential value of new products and services to consumers. The FIA will make Alberta the first jurisdiction in Canada to establish such a regulatory sandbox.

The Regulations

The Regulations are, for the time being, very brief and clarify two key aspects of the FIA, namely the physical presence requirement and the application fee required to apply to enter the sandbox.

In order to be eligible to apply to enter the sandbox, the Regulations require that entities pay an application fee of $5,000 and maintain a physical presence in Alberta either by operating an office physically located in Alberta or employing a senior officer who is a resident in Alberta for the purposes of the Alberta Personal Income Tax Act. Under the Regulations, a senior officer is the president, vice-president, secretary, comptroller, treasurer or general manager of the entity, or any other person who performs functions for the entity similar to those normally performed by persons holding the offices of president, vice-president, secretary, comptroller, treasurer or general manager.

The current Regulations do not yet address any of the other items which are contemplated as potentially being the subject of regulation under the FIA, including any additional criteria for the issuance of a certificate of acceptance into the sandbox, any additional legislation for which an exemption may be granted or provisions of the FIA from which an applicant may not be exempted. Bennett Jones will continue to monitor any expansion of or addition to regulations under the FIA as it comes into force and begins to be applied within the Province.

Next Steps

• Financial services and fintech companies should consider applying for a regulatory sandbox exemption for any innovative, new and original products or services once applications open on July 4, 2022. In advance of such date, companies should ensure that they are familiar with the application requirements, including the Alberta physical presence requirement.
• Because the reporting requirements under the FIA mirror the requirements of Alberta's Business Corporations Act, Alberta corporations should review the adequacy of their corporate records before applying for a regulatory sandbox exemption.
• Those considering exemptions should seek legal advice to understand how such exemptions may impact their business and how other legislative provisions remain applicable to their business.

Please contact any of the authors or a member of the Bennett Jones Fintech or Financial Services groups for more information about the developments discussed in this post or to seek assistance in preparing your business to capitalize on the opportunities presented by the FIA and its Regulations.

Authors