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In December 2021, the Ontario Government passed their omnibus Budget Bill which among many other things, amended the Financial Services Regulatory Authority of Ontario Act to include protections for whistleblowers.  The amendments are not yet in force, but let’s talk about what this will soon mean for pension plans in Ontario.

What’s a Whistleblower?

A whistleblower is defined as:

• a person or entity that discloses to the FSRA CEO, in good faith, an alleged or intended contravention of the Pension Benefits Act;
• that requests their identity be kept confidential; and,
• the CEO provides them with an assurance of confidentiality.

Ontario First

It appears that Ontario will be first among the Canadian provinces to bring in a whistleblower program for pensions; however, I note that Ontario already has a whistleblower program in the investment sector enforced by the Ontario Securities Commission, which notably offers ‘bounties’ for tips that lead to enforcement actions.  At least for now, the pension whistleblower program will not pay bounties for reporting legitimate tips.

Protections for Whistleblowers

While there are no financial rewards for pension whistleblowers in Ontario, there will be substantial protections for whistleblowers against reprisals such as termination, demotion, discipline, suspension, intimidation, etc.  Further, if a whistleblower accuses someone of taking reprisals, the burden of proof rests with the person or entity that is alleged of taking reprisals against the whistleblower to prove that they did not.  If guilty of taking reprisals, a director or officer of a company may face a fine of up to $100,000 and up to a year in jail, and the company may face a fine of up to $200,000.  Further, the whistleblower can be reinstated in their job, receive payment of up to two times their lost compensation, and receive compensation for any related damages including legal costs.

In addition, the whistleblower’s identity will be protected throughout the process; however, this protection ends if it’s discovered that the whistleblower themselves have broken the law.  So, you can’t whistleblow in the hopes of gaining immunity for something that you’ve personally done wrong.

It will also be illegal to impose confidentiality agreements on a person or entity which would prohibit whistleblowing.

More Work for FSRA

Presumably FSRA is already working on implementing these new rules, setting up tip lines and creating policies and procedures for dealing with these confidential complaints.  To be fair, FSRA is already well setup to deal with complaints and inquiries from pension plan members, they’ll just need to beef up the confidentiality protections and perhaps be prepared for an increased volume of calls.  Time will tell, but I wouldn’t be surprised if this new whistleblower regime results in more investigations by FSRA, and perhaps a higher level of administrative monetary penalties (AMPs) as a result of uncovering some misbehaviours.  However, even if this new regime doesn’t result in any new complaints, the focus on incrementally improving compliance isn’t a bad thing.

Do the Right Thing

Given that there are no financial rewards to whistleblowers for reporting potential issues first to FSRA, it will be in everyone’s best interest to report potential issues first to the pension plan sponsor/administrator for resolution.  I strongly recommend that plan sponsors and administrators review their governance structure to ensure that there are policies and procedures in place to address compliance issues as soon as possible.  It will also be important to foster a safe environment for people to come forward to report potential issues without fear, otherwise there will be a high risk of being whistleblown to FSRA.  At ASI we have a well-instilled culture of continuous improvement without assigning blame (supported by our ISO 9001 registered quality management system), and I couldn’t be prouder of our high-performing team’s focus on always doing the right thing.

Pension plans provide vital financial security to many individuals and all involved need to take their responsibilities seriously for the benefit of the plan members and beneficiaries.