Banks' Expanded Non-Financial Activities Regulations

Summary#

The federal government has published proposed Non‑Financial Activities (Banks and Bank Holding Companies) Regulations to put into practice earlier changes to the Bank Act that let federally regulated banks do and invest in more non‑financial work (mainly technology and related commercial activities). This is a proposal — not law yet — and public comments are invited for 30 days from the Canada Gazette posting on October 17, 2026.

What it does#

• Implements the 2018 legislative changes (the “NFA Amendments”) so banks can more easily run or invest in non‑financial activities such as information technology, software design, and fintech‑type services.
• Sets a test for when an outside company counts as mainly a financial business: “majority” is fixed at 60% (by revenue, operating expenses, or assets, measured over the last four quarters or most recent annual statement).
• Puts two overall limits on how much non‑financial business a bank (or its holding company) can have:
  • A cap measured as a share of annual revenue: 10% for very large institutions, 15% for small and medium institutions.
  • A cap measured as a share of regulatory capital: 10% for all banks.
• Defines size categories by equity: small (under $4 billion), medium ($4 billion–$12 billion), large (over $12 billion).
• Adds reporting rules for large institutions (equity $12 billion or more):
  • Transaction reports within 30 days after an investment or acquisition.
  • Annual reports no later than six months after the end of the financial year.
• Gives a temporary relief period: certain existing cross‑border technology activities won’t have to meet the new limits immediately for two years while banks adapt.
• Keeps current leasing restrictions: banks still cannot run general consumer leasing businesses (for example, lending customers temporary possession of cars for non‑financing purposes).
• Applies a numerical backstop for foreign banks operating in Canada: the lower of percentage limits or Can$1.5 billion in exposure will apply.
• Repeals several older regulations that previously governed information‑technology activities and replaces them with these terms and conditions.

Who's affected#

• Banks and bank holding companies that are federally regulated are the direct targets of these proposed regulations.
• The changes are part of a broader package that also proposes similar rules for insurers, trust and loan companies, and foreign banks; in total the government says it covers over 400 FRFIs (federally regulated financial institutions).
• Large banks (equity over $12 billion) will feel the biggest effect because they must file the new reports and are subject to the stricter revenue cap.
• Small and medium institutions (equity under $12 billion, with a special category under $4 billion) get higher revenue room (15%) and are exempted from the new reporting rules to reduce burden.
• Fintech companies and other tech businesses may be affected because banks can now invest in or buy firms whose primary business is financial services even if they also do other commercial activities — provided the numerical tests are met.
• Consumers and businesses are indirectly affected as banks may change what products they offer, and regulators (for example, Office of the Superintendent of Financial Institutions (OSFI) and Financial Consumer Agency of Canada (FCAC)) will monitor risks and consumer protections.

Why it matters#

• It makes it easier for banks to adopt and invest in modern technology and fintechs. That could speed up innovations in banking apps, back‑office technology, AI use, and new products for customers.
• It aims to balance innovation with safety by limiting how much non‑financial activity banks can run or own. Those limits are intended to keep banks focused on core financial services and to reduce new types of risk or unfair competition in other economic sectors.
• Large banks will face more administrative work and some reporting costs; the government estimates annualized compliance costs of $267,518 and a 10‑year present value of $1,878,936 across the four parallel sets of proposed rules. These are the government’s estimates for monitoring and reporting only.
• The rules are not final. This is a consultation document; the proposed regulations would only take effect after further steps (including the government choosing a start date) and after the comment period (comments due within 30 days of October 17, 2026).