Cross-border crosswalk: An overview of Canadian and US banking and consumer financial services regulators

Canada and the United States are neighbours, each with its own ‘alphabet soup’ of banking and consumer financial services regulators. Many institutions in each country are under the purview of both federal and state/provincial regulators, and some institutions may be supervised by multiple financial regulators. For businesses engaged in financial services on either side of the border, it is important to understand which agencies regulate the products and services they offer and how agencies policies change over time. Understanding how local regulatory environments differ should inform business decisions. For example: There may be costs associated with expanding to a new jurisdiction as there are likely different compliance requirements. A product that is viable in one area may be untenable in another due to differing regulations (eg varying usury limits). Litigation risk may differ between jurisdictions: various US regulators can file lawsuits in federal court whereas Canadian regulators often have supervisory and regulatory powers that do not include prosecution. US companies are also often able to insulate themselves from class action liability through the operation of arbitration clauses and class action waivers. Companies seeking to do business in both the United States and Canada should consider engaging legal and expert teams during product development to harmonise where possible. Additionally, when facing regulatory scrutiny or litigation, similar harmonisation may be beneficial as well. Navigating the oversight of each agency is nuanced within each country, and one’s knowledge, experience and jargon are often specific to their area of expertise. Regulated entities’ incentives may differ due to differences in regulation or licensing requirements. Engaging with and retaining expertise (eg staff, counsel or external experts) in one country who have the tools and language to work with people in another can be valuable. To help with that, this paper provides an overview of the legal framework, financial services landscape and key regulators in Canada and the United States.