Bill 13: the law on financial innovation: an opportunity to play in the sandbox | Bennett Jones LLP

[co-author: Jesse Fontaine – Articling Student]

On March 30, 2022, Bill 13 passed its first reading in the Alberta Legislative Assembly. If Bill 13 receives Royal Assent, it will establish the Financial Innovation Act (FIA). The second reading of Bill 13 began on April 19, 2022.

The FIA ​​would create a regulatory sandbox for financial services and fintech companies, becoming a safe space for companies to test innovative products or services with reduced regulatory scrutiny, and enabling companies to assess the potential value of new products and services for consumers.

If Bill 13 receives Royal Assent, Alberta will become the first jurisdiction in Canada to establish such a regulatory sandbox. Similar initiatives to encourage innovation in the financial sector have emerged in other international jurisdictions. Examples of technologies that the sandbox could apply to include software tokens, biometric authentication, application programming interface (API) services, distributed ledger technologies, and mobile app enhancements. The Minister of Finance explained that the benefits of the regulatory sandbox for Albertans will be two-fold: first, by increasing the presence of innovative product offerings to Albertans; and second, to stimulate the growth of Alberta’s financial sector.

Proposed exemptions

The FIA would allow the minister to issue a certificate of acceptance to approved companies which provides for time-limited derogations from certain laws and regulations for a period of two years, which can be extended for an additional year. Companies participating in the sandbox may be exempt from some or all of the legal requirements set forth in the following laws:

  1. the Loan and Trust Companies Act;
  2. the Credit Unions Act;
  3. the ATB finance law;
  4. the Consumer Protection Act (subject to the approval of the Minister of Service Alberta);
  5. the Privacy Act (subject to the approval of the Office of the Information and Privacy Commissioner); and
  6. the Financial Consumer Law.

The specific exemptions would depend on the remedy sought by the plaintiff. Additionally, the proposed legislation would establish a regulatory authority that would allow the FIA ​​to apply to other laws not listed above.

Acceptance criteria

As written, the Regulatory Sandbox Acceptance Criteria include the following mandatory requirements.

  1. Physical presence: Applicants must maintain a physical presence in Alberta by operating an office in the province or employing senior executives who live in Alberta.
  2. Financial services: Applicants must offer financial products or services.
  3. Innovation: Applicants must describe how each eligible product or service is new and original, or how their product or service is a new adaptation or material improvement of another product or service. No exemptions will be granted for products or services already offered in Alberta by other companies.
  4. Business plan : Applicants must present a solid and viable business plan that includes details for testing the product or service and plans for getting out of the regulatory sandbox.

Ministerial discretion

The framework proposed by the FIA ​​confers a high degree of discretion on the Minister, including the discretion to impose terms, conditions or restrictions for:

  1. consult a qualified expert or auditor;
  2. limit the number of customers who can purchase the tested product or service;
  3. require an appropriate amount of capital to sustain the business;
  4. provide proof of appropriate insurance coverage;
  5. implement specific financial security or bonding requirements to mitigate risk and loss;
  6. implement risk management policies and procedures; and
  7. maintain a consumer complaint mechanism that allows consumers to resolve their concerns.


Beyond the borders of Alberta Business Corporations Act and similar acts, the FIA ​​provides various processes and legal authority for oversight, infractions and penalties for companies operating in the sandbox. The Minister will be empowered to appoint a person to review a sandbox participant or its corporate partners.

The Information and Privacy Commissioner is responsible for issuing exemptions under the Privacy Act. In such cases, the Office of the Information and Privacy Commissioner will have similar powers to appoint a reviewer. Nonetheless, increased privacy measures are in place to protect consumers, such as requiring customers to give express permission before disclosing privacy information to a company in the sandbox.

Offenses and Penalties for Sandbox Participants

Sanctions under the FIA reflect the provisions of other financial sector laws, including the Loan and Trust Companies Act, Securities Act, Insurance Act and Credit Unions Act.

In the event of non-compliance with the terms, conditions or restrictions of an acceptance certificate, the FIA or its settlements could amount to a fine of up to $100,000 for a first conviction and up to $200,000 for each subsequent conviction.

Public Information

Once a Certificate of Acceptance is issued to a Sandbox Participant or amended, the Government of Alberta will post the following information online:

  1. the name of each sandbox participant issued a certificate of acceptance;
  2. a description of the product or service offered by sandbox participants through the regulatory sandbox;
  3. a list of regulatory exemptions provided to each sandbox participant;
  4. any terms, conditions or restrictions imposed by the Minister on a Sandbox Participant;
  5. the expiry date (including any extension) of each participant’s Certificate of Acceptance; and
  6. any modification, revocation or cancellation of a certificate of acceptance.

Key points to remember

  • Financial services and fintech companies should closely monitor the development of this proposed legislation and, when the time comes, consider seeking a regulatory exemption for any innovative, new and original product or service. Sandbox apps are expected to open on or around July 1, 2022. Prior to this date, businesses should ensure they are aware of the app requirements, including Alberta’s physical presence requirement.
  • Since the reporting requirements under the FIA ​​mirror the requirements of Alberta law Business Corporations ActAlberta corporations should review the adequacy of their corporate records before applying for a regulatory sandbox exemption.
  • Persons considering exemptions should seek legal advice to understand how these exemptions may affect their business and how other statutory provisions remain applicable to their business.

We will continue to monitor Bill 13 closely.

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