On October 17, 2026, the Department of Finance published the long-awaited proposed Non-Financial Activities Regulations (the “Regulations”) for (i) Banks and Bank Holding Companies, (ii) Foreign Banks, (iii) Insurance Companies, Societies and Insurance Holding Companies, and (iv) Trust and Loan Companies (“FRFIs”). The Regulations would operationalize the so-called “fintech amendments” to the Bank Act, the Insurance Companies Act and the Trust and Loan Companies Act (the “FRFI Statutes”) that were originally introduced as part of the Budget Implementation Act, 2018, No. 1.
The Regulations are substantially similar and are intended to provide FRFIs with flexibility to engage in a broad range of non-financial activities, either in-house or through subsidiaries, in support of innovation and productivity growth.
Methods to Engage in Non-Financial Activities
At a high level, the Regulations enable FRFIs to participate in non-financial activities without prior ministerial approval, in one of the following ways:
- Directly through business powers: FRFIs may conduct permitted non-financial activities such as information processing, information technology activities or activities that relate to the provision of financial services in-house.
- Investing in a majority financial services entity: FRFIs may invest in an entity that has a majority (defined as 60% or more) of its revenues, asset value or aggregate value of operating expenses attributable to financial activities. The entity satisfies this test if the 60% threshold is met under any of these three measures.
- Through a subsidiary engaging in a permitted non-financial activity: FRFIs may invest in other FRFIs or other permitted investment entities that engage in permitted non-financial activities.
Conditions and Reporting Requirements
The Regulations place conditions on revenue and capital with respect to non-financial activities, which differ based on the size of the FRFI.
- Revenue limit: FRFIs must ensure that aggregate annual revenues from non-financial activities do not exceed a prescribed proportion of total annual revenue. For FRFIs with CAD $12 billion or more in equity (“Large FRFIs”), this cap is set at 10%. For FRFIs with CAD less than $12 billion in equity (“SMEs”), this cap is set at 15%.
- Capital limit: FRFIs must ensure that the value of non-financial activity business ownership interests, loans and guarantees does not exceed a prescribed proportion of their total regulatory capital. This cap is set at 10% for both Large FRFIs and SMEs.
- For foreign banks, a limit of $1.5 billion is proposed in addition to the percentage-based aggregate limits to ensure that the lower of the proportional or numerical limit applies.
- If a FRFI exceeds the applicable revenue or capital limit, its investments in majority financial services entities and entities engaging in non-financial activities are deemed to be temporary investments. The FRFI would then have two years to satisfy the conditions of the Regulations or shift the investment into a permitted investment category (or divest). An investment is similarly treated as a temporary investment if a majority financial services entity ceases to satisfy the 60% threshold.
Large FRFIs must also:
- Report information to the Department of Finance on the following, within the prescribed timeframes: (i) the business of subsidiaries that undertake non-financial activity business; (ii) the nature of all non-financial activity business undertaken by the FRFI and its subsidiaries; and (iii) the FRFI’s aggregate revenues from, and its exposure to, non-financial activity business; and
- Submit transaction reports (within 30 days of the closing of a controlling or non-controlling investment by the FRFI in an entity engaging in non-financial activities or an entity engaging in majority financial services (“NFA Investment”)) and annual reports (no later than 6 months after any financial year in which the FRFI has engaged in non-financial activities or makes an NFA Investment).
SMEs are not subject to these reporting requirements.
Transitional Provisions
Activities undertaken within the scope of a previous Minister of Finance approval generally are not subject to the new calculations and reporting requirements, although activities outside the scope of the approval are subject to the new regime. Certain existing information-processing activities, including relating to payments and payroll, also remain excluded.
The Regulations also provide for transitional provisions that will last for two years beginning on the day on which the regulations come into force. These provide for the exemption of certain information technology and processing activities that do not presently require approval from the Minister of Finance. These activities are set to become non-financial activity business and therefore subject to the Regulations.
Upon the expiry of that two-year period, FRFIs will be required to meet the conditions of the Regulations to continue engaging or investing in those activities.
The expanded powers do not displace existing leasing restrictions applicable to FRFIs.
Looking Ahead
The Regulations are subject to a 30-day consultation period ending on November 16, 2026, during which interested stakeholders can provide feedback using the comment feature on the Canada Gazette website.
