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This Act has "Not in Force" sections. See the Table of Legislative Changes.

Financial Institutions Act

[RSBC 1996] CHAPTER 141

Part 8 — Sanctions

Division 1 — General Sanctions

Commission's order to cease or remedy

244  (1) In this section, "committing an act or pursuing a course of conduct" includes failing or neglecting to perform an act or failing or neglecting to pursue a course of conduct.

(2) If, in the opinion of the commission, a person is committing an act or pursuing a course of conduct that

(a) does not comply with this Act or the regulations,

(a.1) [Repealed 2011-29-105(a).]

(a.01) does not comply with the Credit Union Incorporation Act,

(a.02) does not comply with the Business Corporations Act as that Act applies to trust companies, insurance companies or extraprovincial corporations,

(a.2) does not comply with regulations under section 72 (d), (f) or (g) or 73 of the Insurance (Vehicle) Act,

(b) does not comply with a condition of

(i)   a business authorization, consent or order under this Act,

(ii)   a licence issued under Division 2 of Part 6, or

(iii)   a permit issued under section 187,

(c) might reasonably be expected to result in a state of affairs not in compliance with

(i)   this Act or the regulations,

(ii)   the Credit Union Incorporation Act, or

(iii)   the Business Corporations Act as that Act applies to trust companies, insurance companies or extraprovincial corporations,

(d) does not comply with a written undertaking given under this Act, or

(e) might reasonably be expected to harm

(i)   in the case of a trust company or credit union, the interests of depositors or persons for whom the trust company or credit union acts in a fiduciary capacity, or

(ii)   in the case of an insurance company, the interests of insureds,

then, the commission may

(f) order the person to

(i)   cease doing the act,

(ii)   cease pursuing the course of conduct, or

(iii)   do anything that the commission considers to be necessary to remedy the situation, or

(g) if the person is a financial institution and the commission considers it appropriate to do so, give the financial institution an opportunity to make a written voluntary compliance agreement with the commission, by which the financial institution undertakes to rectify the act or course of conduct.

(3) Despite a voluntary compliance agreement, the commission may make an order under subsection (2) (f) in respect of the financial institution or another person that is the subject of an order under subsection (2)

(a) on matters not covered by the agreement,

(b) if the agreement is not complied with, on matters covered in the agreement,

(c) if in the opinion of the commission there has been a deterioration in the financial condition of the financial institution, or

(d) on matters provided for in the agreement if all the facts related to the matter provided for in the agreement were not known by the commission at the time of the agreement.

(4) On the application of a financial institution that has made a voluntary compliance agreement with the commission, the commission may approve the alteration of the agreement.

(5) If a person has been

(a) convicted of an offence in Canada or another jurisdiction arising from a transaction, business or course of conduct related to financial services, or

(b) found by a regulator or a court in Canada or another jurisdiction to have contravened the laws of that jurisdiction respecting financial services,

the commission may order the person to

(c) cease doing any act or pursuing any course of conduct that is the same or similar to the act or course of conduct that resulted in the conviction or finding described in paragraph (a) or (b), or

(d) carry out specified actions that the commission considers necessary to remedy the situation.

Order to freeze property

245  (1) When

(a) the superintendent under section 215 has ordered, orders or is about to order an investigation of a person,

(b) after a special inspection, examination and audit under section 214 or an investigation under section 215, the commission or superintendent believes on reasonable grounds that a person has contravened this Act or the regulations in a way which materially damages or is likely to materially damage the interests of the financial institution or its customers,

(c) the commission has ordered, orders or is about to order the revocation of a business authorization under section 249,

(d) criminal proceedings that in the commission's opinion involve the conduct of the affairs of a financial institution have been instituted, are being instituted or are about to be instituted, or

(e) the commission receives a request in respect of an extraprovincial corporation, based on grounds similar to those in paragraphs (a) to (d), from an official in another jurisdiction,

the commission may make orders requiring

(f) a person having in British Columbia on deposit or under control or for safe keeping any assets of a person named in the order to hold the assets in trust,

(g) a person named in the order not to withdraw any of the person's assets from the possession of another person named in the order having them on deposit, under control or for safe keeping,

(h) a financial institution named in the order or a subsidiary of one named in the order not to trade in or otherwise part with assets left with it by customers or other persons,

(i) a lessor, named in the order, of safety deposit boxes, safes or compartments in safes, not to permit the opening or removal of a safety deposit box, safe or compartment in a safe leased to a person named in the order, or

(j) a person named in the order to hold the assets affected by the order in that person's possession, safekeeping or control in trust for

(i)   a receiver or receiver manager who has been appointed or whose appointment has been applied for under section 251, or

(ii)   an interim receiver, custodian, trustee, receiver manager, receiver or liquidator who has been appointed or whose appointment has been applied for under the Business Corporations Act, the Company Act, the Credit Union Incorporation Act, the Law and Equity Act, the Personal Property Security Act, the Supreme Court Act, the Bankruptcy and Insolvency Act (Canada) or the Winding-up and Restructuring Act (Canada).

(2) Particular assets affected by an order made under subsection (1) continue to be affected by the order and remain frozen under it until

(a) all of the assets are released because of a revocation under subsection (5) (a) of the order, or

(b) an order is made under subsection (5) (b) releasing the particular assets.

(3) An order under subsection (1) does not apply to assets in a stock exchange clearing house or to securities in process of transfer by a transfer agent unless the order expressly so states.

(4) If a bank, trust company or credit union is the holder of assets described in subsection (1) (f) or (g) or is the lessor described in subsection (1) (i), an order under that subsection applies only to offices, branches or agencies specified in the order.

(5) On the commission's own motion, or on the written application of a person named in or directly affected by an order under subsection (1), the superintendent may

(a) revoke an order made under subsection (1), or

(b) order the release of particular assets among the assets affected by an order made under subsection (1).

(6) The commission may apply to the court without notice to any person for an order under subsection (8).

(7) If

(a) a person to whom an order under subsection (1) is directed is uncertain respecting the application of the order to property, or

(b) a claim is made to the property,

the person may, on giving notice to the commission, apply to the Supreme Court for an order under subsection (8).

(8) On an application under subsection (6) or (7), the Supreme Court may direct the disposition of the property as it considers just.

Order for compliance

246  If the commission considers that a person has failed to comply with an order made under this Act, the commission may apply to the Supreme Court for either or both of the following:

(a) an order directing the person to comply with the order or restraining the person from violating the order;

(b) an order directing the directors and officers of the person to cause the person to comply with or to cease violating the order,

and the Supreme Court may make an order it considers appropriate.

Valuation of assets and insurance contracts

247  (1) If the commission considers that the fair market value of an investment or loan made by a financial institution or its subsidiary, including land held by the financial institution or subsidiary other than improved land occupied by it and used primarily for the purposes of conducting its business, is less than the value shown in the books of the financial institution or subsidiary, the commission by an order identifying the investment or loan may direct the financial institution to obtain one or more appraisals of it by one or more appraisers approved by the commission.

(2) If the commission considers on the basis of an appraisal under subsection (1) that the fair market value of the investment or loan is less than the value shown in the books of the financial institution or its subsidiary, the commission may order the financial institution or subsidiary to include in the financial statements of the financial institution or subsidiary for the year in which the order is made a statement that discloses the amount that the commission considers to be the fair market value of the asset.

(3) The commission may order an insurance company to obtain a valuation of its contracts or claims liabilities.

(4) If the commission considers on the basis of a valuation under subsection (3) that the actual value of the contracts of insurance or claims liabilities is materially different than the value shown in the books of the insurance company, the commission may order the insurance company to include in its financial statements for the year in which the order is made a statement that discloses the amount that the commission considers to be the actual value of the contracts or claims liabilities.

Supervision of central credit union

248  (1) If

(a) the commission has made an order under section 244 in respect of a central credit union, and

(b) the central credit union does not immediately comply with the order,

the commission

(c) must order the central credit union, on proper notice to its members and the commission, to hold a special general meeting of its members as soon as possible for the purpose of receiving the commission's report under paragraph (d), and

(d) at the meeting when it is held must report to the members about the order under section 244.

(2) If

(a) the central credit union, having been ordered under subsection (1) (c) to hold a special general meeting, fails to hold the meeting within 30 days after the date of the order, or

(b) the voting members at the special general meeting do not take action that the commission considers satisfactory to ensure compliance with the order under section 244,

the commission by order may appoint a person as an administrator of the central credit union that is the subject of the order under section 244, and may terminate the appointment.

(3) and (4) [Repealed 2004-48-110.]

(5) An administrator of a central credit union, appointed under subsection (2),

(a) has the powers described in section 278 of an administrator appointed under section 277 (e),

(b) must report regularly to the commission, and

(c) on being discharged must account to the commission for the administration of the central credit union.

(6) The central credit union must pay the administrator the remuneration established and the expenses allowed by the commission.

Revocation of business authorization

249  (1) If the commission has reasonable grounds to believe that

(a) a financial institution has failed to comply with an order of the commission, Commercial Appeals Commission or tribunal,

(b) a financial institution has failed to comply with an order of the Supreme Court made under section 246,

(c) a financial institution's licence, registration, permit or business authorization has been cancelled or suspended, or limitations, restrictions or conditions have been imposed on the financial institution's authority to carry on business under a law of Canada or a province,

(d) a financial institution has failed to comply with a condition of its business authorization,

(e) a financial institution is carrying on or soliciting business in another jurisdiction without first being authorized to do so under the laws of that jurisdiction,

(f) a financial institution has ceased to do business in British Columbia, or

(g) a credit union has fewer than 25 members,

the commission by order may

(h) impose conditions in respect of the financial institution's permit or business authorization,

(i) require the financial institution to cease carrying on business for a period of not more than 21 days specified in the order, or

(j) revoke the financial institution's permit or business authorization.

(1.1) The commission may make an order under subsection (1) (h), (i) or (j) if a financial institution has been

(a) convicted of an offence in Canada or another jurisdiction arising from a transaction, business or course of conduct related to financial services, or

(b) found by a regulator or a court in Canada or another jurisdiction to have contravened the laws of that jurisdiction respecting financial services.

(2) If the commission makes an order under subsection (1) (i), then, on or after the expiry of the specified period, the commission may make an order under subsection (1) (h) or (j).

(3) to (6) [Repealed 2004-48-111.]

(7) The commission may by order

(a) cancel a condition imposed under subsection (1) (h) in respect of a permit or business authorization, or

(b) reinstate a permit or business authorization that has been revoked under subsection (1) (j), either unconditionally or subject to conditions the commission considers appropriate.

(8) A financial institution must not transact or undertake any business after the revocation of its business authority, except so far as it is necessary for the winding up of its business, but any liability incurred by it whether before, on or after the revocation may be enforced against it as if the revocation had not taken place.

(9) If the commission has made an order under subsection (1) (i) and the financial institution first obtains the consent of the deposit insurer or of the insurer under the appropriate insurance compensation plan, if any, the financial institution may

(a) pay valid claims of depositors within the limits of and in accordance with the deposit insurance coverage, or

(b) pay valid claims of insured persons within the limits of and in accordance with the insurance compensation plan,

as the case may be, but must not make any other payments.

(10) If an order is made under subsection (1) (i), then, on liquidation of the financial institution that is the subject of the order, the deposit insurer or the insurer under the appropriate insurance compensation plan, as the case may be, must reimburse the financial institution for money paid by the financial institution in accordance with subsection (9), and the deposit insurer or the insurer under the insurance compensation plan, as the case may be, is subrogated for the amount paid to all the rights and interests of the depositor or insured person as against the financial institution in respect of the claims for which payment is made.

(11) While an order under subsection (1) (i) is in force, the commission may exclude the directors, officers, employees and the public from the premises of the financial institution.

Notice of revocation of business authorization

250  If the business authorization of a financial institution is revoked, the superintendent must publish notice of the revocation in the Gazette or in any other prescribed manner.

Appointment of receiver, etc

251  (1) If the business authorization of a trust company or insurance company is revoked under section 249, the commission may apply to the Supreme Court for the appointment of a receiver or receiver manager of all or any part of the assets of the trust company or insurance company.

(2) On an application under subsection (1), if the Supreme Court is satisfied that the appointment of a receiver or receiver manager of all or any part of the assets of the trust company or insurance company is in the best interests of

(a) the trust company's or insurance company's creditors or insureds,

(b) persons, any of whose property is in the possession or under the control of the trust company or insurance company, or

(c) the security instrument holders of or subscribers to the trust company or insurance company,

the Supreme Court by order may appoint a receiver or receiver manager of all or any part of the property of the trust company or insurance company.

(3) The commission may make an application under this section without notice to any person, and in that event the Supreme Court may make a temporary order under subsection (2) appointing a receiver or receiver manager for a period not exceeding 15 days.

(4) A receiver or receiver manager appointed under this section becomes the receiver or receiver manager of all or any part of the assets belonging to the trust company or insurance company or held by the trust company or insurance company on behalf of, or in trust for, any other person, and the receiver, if authorized by the Supreme Court, may wind up or manage the business and affairs of the trust company or insurance company and may exercise powers necessary or incidental to the winding up or management.

(5) On an application under this section, the court may admit as evidence

(a) any hearsay evidence that the court considers reliable, or

(b) any oral or written statement, record or report that the court considers relevant.

Division 2 — Offences and Penalties

Offences

252  (1) Section 5 of the Offence Act does not apply to this Act or to the regulations.

(2) A person commits an offence who

(a) contravenes section 50 (1) or (2), 52 (1) or (2), 66 (2), 70, 75, 81 (1), 91, 94, 104, 133, 138, 146, 148 (1), 149 (1) or (3), 162 or 164 (1),

(b) contravenes section 76 (2), 79 (1), 80 (1), 105, 108 (2), 109 (1), 167, 169 (1), 171 (2), 176, 178 (1), 179 (1), 180 (1), 196 or 274,

(b.1) contravenes a prescribed provision of the regulations,

(c) neglects or refuses to comply with

(i)   a business authorization,

(ii)   an order referred to in section 237 (2) (a),

(iii)   a condition imposed on a consent referred to in section 235 (2), or

(iv)   a written undertaking given under this Act,

(d) neglects or refuses to comply with

(i)   a permit issued under section 187 (1),

(ii)   a licence issued under Division 2 of Part 6,

(iii)   an order under this Act other than an order referred to in section 237 (2) (a), or

(iv)   a requirement under this Act that the person file or provide information or any record,

(e) being a member of the conduct review committee of a financial institution authorizes, permits or acquiesces in giving an approval under section 146 (1) that the conduct review committee, by section 146 (2), is prohibited from giving,

(f) makes a statement in a record filed or provided under this Act that, at the time and in the light of the circumstances under which the statement is made, is false or misleading with respect to a material fact or that omits to state a material fact, the omission of which makes the statement false or misleading,

(g) [Repealed 2011-29-109.]

(h) is an extraprovincial corporation and contravenes the Business Corporations Act, or

(i) uses any of the words "trust", "trustee", "deposit", "loan", "insurance", "assurance" or "insurer", or any other words in connection with the business of a person, in a way likely to

(i)   deceive or mislead the public about the ability of the person to undertake trust business, deposit business or insurance business, or

(ii)   give a false impression that the person is a trust company or an insurance company, as the case may be.

(3) A financial institution that

(a) enters into a voluntary compliance agreement approved under section 244 by the commission, and

(b) complies fully with the agreement

does not commit an offence under subsection (2) in respect of a contravention of this Act that the agreement is intended to rectify.

(4) A person does not commit an offence under subsection (2) (f) if at the time of the statement the person did not know that the statement was false or misleading and, in the exercise of reasonable diligence, could not have known that the statement was false or misleading.

(5) If a financial institution commits an offence under this Act, an employee, officer, director or agent of the financial institution who authorizes, permits or acquiesces in the offence commits the same offence whether or not the financial institution is convicted of the offence.

(6) If an extraprovincial corporation commits an offence under subsection (2) (h), a director or officer of the extraprovincial corporation who authorizes, permits or acquiesces in the offence commits the same offence whether or not the extraprovincial corporation is convicted of the offence.

Penalties

253  (1) A person who commits an offence under section 252 (2) (a), (c), (e) or (f) or a prescribed provision of the regulations is liable

(a) in the case of a corporation on a first conviction to a fine of not more than $100 000 and on each subsequent conviction to a fine of not more than $200 000, and

(b) in the case of an individual

(i)   on a first conviction, to a fine of not more than $100 000 or to imprisonment for not more than 2 years or to both, and

(ii)   on each subsequent conviction, to a fine of not more than $200 000 or to imprisonment for not more than 2 years or to both.

(2) A person who commits an offence under section 252 (2) (b), (d), (h) or (i) or a prescribed provision of the regulations is liable

(a) in the case of a corporation to a fine of not more than $5 000, and

(b) in the case of an individual to a fine of not more than $2 000.

Administrative penalties

253.1  (1) If, in the opinion of the commission, a person has contravened

(a) a prescribed provision of the Act,

(b) a prescribed provision of the regulations,

(c) a condition of a business authorization,

(d) an order under section 244 (2) (f), 245 (1) (f) to (j) or 247, or

(e) an undertaking given to the commission or the superintendent under section 208 or 244 (2) (g),

the commission may give written notice to the person requiring the person to pay an administrative penalty in the amount specified in the notice.

(2) A notice of administrative penalty under subsection (1) must specify all of the following:

(a) the contravention;

(b) the amount of the administrative penalty;

(c) the date by which the person must pay the administrative penalty;

(d) the right of the person, within 14 days after the notice is delivered, to dispute the administrative penalty, including disputing the amount of the administrative penalty, and the procedure for disputing the penalty.

(3) A person to whom an administrative penalty notice is given must, within 14 days after receiving the notice,

(a) pay the administrative penalty, or

(b) by delivering notice in writing to the commission, dispute the administrative penalty, including disputing the amount of the administrative penalty, in accordance with the regulations.

(4) A notice of dispute respecting a penalty described under subsection (5) (b) must indicate whether the person wishes to proceed by way of written submissions or oral hearing.

(5) A person may dispute an administrative penalty as follows:

(a) by written submissions only, if the administrative penalty specified in the notice is less than

(i)   $5 000, in the case of a corporation, or

(ii)   $2 000, in the case of an individual;

(b) by written submissions or oral hearing, if the administrative penalty specified in the notice is

(i)   $5 000 or more, in the case of a corporation, or

(ii)   $2 000 or more, in the case of an individual.

(6) If a person is proceeding by way of written submissions, the submissions must be delivered to the commission no later than 30 days after the person receives the administrative penalty notice.

(7) If a person requests an oral hearing, the commission must hold an oral hearing within a reasonable time after delivery of the notice referred to in subsection (3) (b).

(8) The commission must, within a reasonable time after receiving written submissions or holding an oral hearing, confirm whether the person committed the contravention, and if so, may, by order, confirm the penalty specified in the notice under subsection (1) or order a lesser penalty or no penalty.

(9) If a person requests an oral hearing respecting a penalty described under subsection (5) (b) and fails to appear at the time scheduled for the hearing, the commission may exercise its powers under subsection (8) in the person's absence.

(10) An administrative penalty for a contravention must not exceed the amount prescribed by regulation for that contravention, and in any event must not exceed

(a) $50 000, in the case of a corporation, and

(b) $25 000, in the case of an individual.

(11) An order made under subsection (8) must specify all of the following:

(a) the contravention;

(b) the amount of the administrative penalty;

(c) the date by which the person must pay the administrative penalty;

(d) the person's right to an appeal.

(12) The commission must deliver to the person a copy of any order made under subsection (8).

(13) A person on whom an administrative penalty is imposed by order under subsection (8) must, within 30 days after receiving the order,

(a) pay the administrative penalty, or

(b) file notice of appeal.

(14) An appeal of an order made under subsection (8) operates as a stay and suspends the order until disposition of the appeal.

(15) The time limit for serving an administrative penalty notice under subsection (1) is 2 years after the date that the superintendent or the commission first had knowledge of the facts on which the notice of contravention is based, whichever is earlier.

(16) If a corporation commits a contravention referred to in subsection (1), the commission may, in accordance with this section, impose an administrative penalty on an officer, director or agent of the corporation who authorized, permitted or acquiesced in the contravention, even though the corporation is liable for or pays an administrative penalty.

(17) An administrative penalty must be paid into the consolidated revenue fund.

Limitation on proceedings

253.2  (1) A person on whom a penalty is imposed and who pays the penalty may not be charged and a prosecution does not lie against the person for an offence under this Act for the same contravention.

(2) The commission may not impose an administrative penalty under section 253.1 in respect of a contravention if the person has been charged with an offence under this Act for the same contravention.

Failure to pay administrative penalty

253.3  If a person fails to pay an administrative penalty within the time period specified in a notice under section 253.1 (1) or an order under section 253.1 (8), as applicable, or by the date specified in the order made on appeal, if any, the commission may file with the court a certified copy of the order imposing the administrative penalty and, on being filed, the order has the same force and effect and all proceedings may be taken on the order as if it were a judgment of the court.

Remedies preserved

254  Subject to section 253.2, a proceeding, conviction or penalty for an offence under this Act does not relieve a person from any other liability.

Limitation period

255  No proceeding for an offence under this Act may be commenced in any court more than 3 years after the facts on which the proceedings are based first come to the knowledge of the superintendent or commission, whichever comes first.

Court order to comply

256  If a person is convicted of an offence under

(a) this Act, or

(b) the Business Corporations Act as that Act applies to trust companies, insurance companies or extraprovincial corporations,

the court may, in addition to any punishment the court may impose, order the person to comply with the applicable enactment.

Restitution

257  If a person is convicted of an offence under this Act, then, in addition to any other penalty, the court may order the person convicted to pay compensation or make restitution.

Innocent third parties

258  (1) A provision of this Act or of the Business Corporations Act as that Act applies to trust companies, insurance companies or extraprovincial corporations, that makes a transaction by a person illegal, void or unenforceable, must not be construed as extinguishing rights of any other party to the transaction if that other party acted in good faith in the transaction.

(2) A provision of the Company Act as that Act applied for the purpose of this Act, that made a transaction by a person illegal, void or unenforceable, must not be construed as having extinguished rights of any other party to the transaction if that other party acted in good faith in the transaction.

Remedy of irregularities

259  (1) If an omission, defect, error or irregularity has occurred in the conduct of the business or affairs of a financial institution by which

(a) a breach of a provision of this Act or of the Company Act, as that Act applied for the purposes of this Act, has occurred,

(a.1) a breach of a provision of the Business Corporations Act has occurred,

(b) there has been default in compliance with the memorandum, notice of articles or articles of the trust company or insurance company, or the constitution or rules of the credit union, as the case may be, or

(c) proceedings at or in connection with

(i)   a general meeting, class meeting or series meeting of the financial institution,

(ii)   a meeting of the directors or of any committee of the financial institution, or

(iii)   an assembly purporting to be a meeting described in subparagraph (i) or (ii)

have been rendered ineffective,

then, despite any other provision of this Act or the Business Corporations Act, the Supreme Court

(d) either on its own motion, or on the application of an interested person, may make an order to rectify or cause to be rectified or to negative or modify or cause to be modified the consequences in law of the omission, defect, error or irregularity, or to validate any act, matter or thing rendered or alleged to have been rendered invalid by or as a result of the omission, defect, error or irregularity, and may give ancillary or consequential directions it considers necessary, but

(e) before making an order, must consider the effect of the order on the financial institution and on its directors, officers, members and creditors.

(2) An order made under subsection (1) does not prejudice the rights of a third party who has acquired those rights for valuable consideration without notice of the omission, defect, error or irregularity cured by the order.

Contents  |  Part 1  |  Part 2  |  Part 3  |  Part 4  |  Part 5  |  Part 6  |  Part 7  |  Part 8  |  Part 9  |  Part 10