Canadian Payments Association By-law No. 6 — Compliance (SOR/2003-347)

Interpretation

Marginal note:Definitions

• 1 (1) The following definitions apply in this By-law.

  By-law No. 3

  By-law No. 3 means Canadian Payments Association By-law No. 3 — Payment Items and Automated Clearing Settlement System. (Règlement administratif n° 3)

  clearing member

  clearing member means a member that, on behalf of a non-member, exchanges payment items and effects clearing or makes entries into the Automated Clearing Settlement System within the meaning of By-law No. 3. (membre de compensation)

  committee

  committee means a committee established by the Board or a subcommittee of that committee. (comité)

  document

  document includes data stored by electronic means. (document)

  item in dispute

  item in dispute means an item in dispute as defined in Canadian Payments Association Rule A6. (effet contesté)

  non-member

  non-member means a local referred to in subparagraph 6(1)(a)(ii) of Bylaw No. 3. (non-membre)

  party

  party means a party to an investigation under section 10. (partie)

  secretary

  secretary means the secretary of the Association appointed by the Board. (secrétaire)

• Marginal note:Contravention by member

  (2) For the purposes of this By-law, a member commits a contravention when the member fails to comply with a provision of the by-laws or rules that imposes a duty on the member.

• Marginal note:Contravention by non-member

  (3) For the purposes of this By-law, a non-member commits a contravention when the non-member fails to comply with a provision of the by-laws or rules in respect of which a clearing member is responsible for ensuring compliance by the non-member under By-law No. 3.

Investigation Initiated by President

Marginal note:Initiated by President

• 2 (1) The President may, at any time, if the President reasonably believes that a member or a non-member has committed a contravention, refer the matter to a committee that has relevant expertise for the purposes of an investigation.

• Marginal note:Requirements

  (2) The President shall provide the following when referring the matter to a committee:

  • (a) the name of the member or non-member involved;

  • (b) a description of the alleged contravention and the relevant facts;

  • (c) any documentary evidence supporting the allegation; and

  • (d) any other relevant information or arguments.

• Marginal note:Notice

  (3) Immediately after the President refers a matter to a committee, the President shall give written notice to the parties that the President has referred the matter to a committee for the purposes of an investigation. The notice shall contain a description of the alleged contravention.

Investigation Initiated by Complaint

Marginal note:Complaint

• 3 (1) A member may file with the President a complaint alleging that another member or non-member has committed a contravention.

• Marginal note:Requirements

  (2) A complaint shall be in writing and signed by an authorized representative of the complainant. The complaint shall contain the following:

  • (a) the name of the member or non-member involved;

  • (b) a description of the alleged contravention and the relevant facts;

  • (c) any documentary evidence supporting the complaint;

  • (d) if appropriate, the relief sought; and

  • (e) any other relevant information or arguments.

Marginal note:Item in dispute

• 4 (1) Before filing a complaint that involves an item in dispute, the member shall give written notice to the member alleged to be in contravention or, in the case of a non-member alleged to be in contravention, to the non-member and its clearing member

  • (a) of the reason for the dispute, within 60 days after receipt of the returned item by the branch that originally received the item on negotiation or deposit; and

  • (b) of the member’s intention to file a complaint, at least 30 days before the day on which the complaint is filed.

• Marginal note:Time limit

  (2) No complaint involving an item in dispute may be filed more than 180 days after the notice referred to in paragraph (1)(b) has been given.

Marginal note:Acknowledgement of receipt

5 The President shall acknowledge, in writing, receipt of the complaint within 10 days after the day on which it is filed.

Marginal note:Powers of President

• 6 (1) The President shall, if the President believes that the complaint is not frivolous, vexatious or made in bad faith,

  • (a) investigate the complaint and appoint one or more persons as necessary to assist in the investigation; or

  • (b) refer the complaint to a committee that has relevant expertise for the purposes of an investigation.

• Marginal note:Notice

  (2) If the President decides to investigate a complaint or to refer a complaint to a committee, the President shall, within 30 days after the day on which the complaint is filed, give written notice to the parties of the President’s decision. The notice shall contain the details of the complaint.

• Marginal note:Referral

  (3) If the President refers a complaint to a committee, the referral shall be made within 40 days after the day on which the complaint is filed.

Marginal note:Frivolous complaints

• 7 (1) If the President decides that the complaint is frivolous, vexatious or made in bad faith, the President shall give written notice of that decision with reasons to the complainant within 30 days after the day on which the complaint is filed.

• Marginal note:Appeal

  (2) A complainant may appeal the President’s decision to the Board within 30 days after the day on which the notice of the decision is given to the complainant.

• Marginal note:Requirements

  (3) The appeal shall be made in writing, signed by an authorized representative of the appellant and given to the secretary.

• Marginal note:Acknowledgement of receipt

  (4) The secretary shall acknowledge, in writing, receipt of the appeal within 10 days after the day on which it is received.

• Marginal note:Distribution and scheduling

  (5) The secretary shall distribute the appeal to the members of the Board, and the hearing of the appeal shall be placed on the agenda for the next regular meeting of the Board.

• Marginal note:Notice of the hearing

  (6) The secretary shall give written notice of the hearing of the appeal to the complainant and the President at least 14 days before the day of the hearing.

• Marginal note:Conflict of interest

  (7) If a director has, or appears to have, a conflict of interest, that director shall withdraw from the appeal.

• Marginal note:Submissions

  (8) The complainant and the President shall be given the opportunity to make oral and written submissions to the Board without introducing new evidence.

• Marginal note:Decision of Board

  (9) The Board shall either confirm the President’s decision, if the Board believes the complaint is frivolous, vexatious or made in bad faith, or order that an investigation be conducted.

• Marginal note:Requirements for decisions

  (10) The decision of the Board shall be in writing with reasons and the Board shall give the decision to the complainant and the President within 30 days after the day of the hearing.

• Marginal note:Notice

  (11) If the Board orders that an investigation be held, the President shall, within 10 days after the day on which the order is received,

  • (a) refer the investigation to a committee that has relevant expertise; and

  • (b) give to the parties a written notice setting out the details of the complaint and that the complaint has been referred to a committee for the purposes of an investigation.

Compliance Panel

Marginal note:Duties

• 8 (1) If a complaint has been referred to a committee, the committee shall, at its next regular meeting,

  • (a) establish a compliance panel of at least three representatives of members other than the complainant and the member alleged to be in contravention or, in the case of a non-member alleged to be in contravention, the non-member’s clearing member; and

  • (b) appoint the chair of the compliance panel.

• Marginal note:Decision

  (2) A decision of the compliance panel is by majority vote.

Conduct of Investigations

Marginal note:Fairness and impartiality

• 9 (1) An investigation shall be conducted in a fair and impartial manner.

• Marginal note:Conflict of interest

  (2) If the President or a member of a compliance panel has, or appears to have, a conflict of interest, the President or the panel member, as the case may be, shall withdraw from the investigation and be replaced by a person designated by the Board.

Marginal note:Parties to investigation

• 10 (1) A member alleged to be in contravention and, in the case of a non-member alleged to be in contravention, the non-member and its clearing member are parties to an investigation of the contravention.

• Marginal note:Association

  (2) Subject to subsection (3), the Association is a party to every investigation.

• Marginal note:Complainant

  (3) In the case of an investigation involving an item in dispute that has been initiated by the complaint of a member involved in the dispute, the complainant, rather than the Association, is a party to the investigation.

Marginal note:Representation by lawyer

11 The parties to an investigation are entitled to be represented by a lawyer during the investigation.

Marginal note:Evidence

• 12 (1) The President or compliance panel, as the case may be, shall assemble information and documents that are relevant to the investigation.

• Marginal note:Written summary

  (2) The President or compliance panel, as the case may be, shall ensure that a written summary is prepared of any information that is assembled.

• Marginal note:Record

  (3) The written summaries and documents are part of the record of the investigation.

• Marginal note:Information and documents

  (4) The President or compliance panel, as the case may be, may request any member to provide information or documents that are relevant to the investigation and may make copies of them.

• Marginal note:Duty

  (5) A member shall provide, or arrange to provide, the information or documents requested, unless the member satisfies the President or compliance panel, as the case may be, that there is a good reason as to why it should not provide or arrange to provide them.

• Marginal note:Restriction on use

  (6) The President or compliance panel, as the case may be, shall use the information or documents that are assembled for the sole purpose of the investigation and for making a decision in respect of the alleged contravention.

Marginal note:Examination by the parties

13 The parties may, for the sole purpose of the investigation, examine the record of the investigation and make copies of it.

Marginal note:Experts

• 14 (1) The President or compliance panel, as the case may be, may engage legal and other experts. Their reasonable fees and disbursements shall be included in the expenses of the investigation.

• Marginal note:Record

  (2) Any information or documents provided to the President or compliance panel, as the case may be, by their experts, other than a legal expert, forms part of the record of the investigation.

Marginal note:Hearing

• 15 (1) The President or compliance panel, as the case may be, shall convene a hearing unless the parties agree that a hearing is not necessary.

• Marginal note:Date of hearing

  (2) The President or compliance panel, as the case may be, shall select a date for a hearing in consultation with the parties.

• Marginal note:Notice

  (3) The President or compliance panel, as the case may be, shall give to the parties written notice of the day of a hearing at least 20 days before that day.

• Marginal note:Rights of parties

  (4) In a hearing, the parties have the right to be heard, to produce and cross-examine witnesses, to receive copies of any documentary evidence produced against them, to produce evidence and to make oral and written submissions.

Sanctions and Expenses

Marginal note:Sanctions

• 16 (1) If, after an investigation, the President or compliance panel, as the case may be, decides that a member is in contravention or, in the case of a non-member alleged to be in contravention, that the non-member is in contravention and that its clearing member failed to ensure compliance by the non-member, the President or compliance panel, as the case may be, may take one or more of the following actions:

  • (a) reprimand the member;

  • (b) order the member to do anything that a member is required to do, or to stop doing anything that a member is not allowed to do, under the by-laws or rules;

  • (c) order the member to make restitution to any member that has suffered a loss as a result of the contravention;

  • (d) suspend one or more of the rights of the member, specifying the day on which the rights are automatically reinstated or the conditions that must be met before the rights can be reinstated on application under section 25;

  • (e) order the member to comply with certain conditions when the member exercises one or more of its rights;

  • (f) order the member to pay a penalty not to exceed $250,000 for each contravention.

• Marginal note:Recommendation to remove

  (2) In addition to the sanctions referred to in subsection (1), the President or compliance panel, as the case may be, may notify the Board or any committee on which an officer or employee of the member serves that the member has committed a contravention and recommend that the officer or employee be removed from the Board or committee.

Marginal note:Expenses

17 The President or compliance panel, as the case may be, may determine the amount of the expenses of the investigation and order one or both of the following persons to pay all or a part of those expenses:

• (a) the member who is the subject of the investigation;

• (b) a complainant who is a party to the investigation under subsection 10(3).

Marginal note:Compliance

18 Every member who is subject to an order under subsection 16(1) or section 17 shall comply with the order.

Compliance Report

Marginal note:Investigation by President

• 19 (1) When an investigation is conducted by the President, the President shall prepare a compliance report.

• Marginal note:Investigation by compliance panel

  (2) When an investigation is conducted by a compliance panel, the panel shall prepare a compliance report.

Marginal note:Contents

20 A compliance report shall contain the following information:

• (a) the facts and analysis with respect to the investigation;

• (b) the conclusions of the investigation, including a determination of whether a contravention has occurred;

• (c) any sanctions that are being imposed; and

• (d) who is required to pay all or a part of the expenses, if any, of the investigation.

Marginal note:Time limit

21 The President or compliance panel, as the case may be, shall give the compliance report to the parties within 30 days after the day on which the investigation has concluded.

Enforcement and Collection

Marginal note:Time limit

• 22 (1) Any amount to be paid by a member under subsection 16(1) or section 17 is due and payable within 30 days after the day on which the compliance report is given to the member.

• Marginal note:Interest

  (2) If a member does not pay the amount within the 30-day period, the member shall pay interest calculated in accordance with subsection (3).

• Marginal note:Calculations

  (3) The interest is equal to an amount calculated in accordance with the formula

  A × B × C

  where

  A

  is the amount to be paid under subsection (1);

  B

  is the weighted average of the minimum interest rate that the Bank of Canada is prepared to charge in respect of an advance, as made public in accordance with the Bank of Canada Act, converted to a daily rate that is based on 365 days, for the period beginning on the day on which the compliance report is given to the member and ending on the day on which the amount referred to in the description of A is paid (in this subsection referred to as the interest period); and

  C

  is the number of days in the interest period.

• Marginal note:Amount owing added to membership dues

  (4) Any amount to be paid by the member that is not paid within the 30-day period, together with the interest calculated under subsection (3), shall be added to the following year’s annual dues of that member.

Marginal note:General revenue

23 The amount of any penalty or interest paid or expenses recovered under this By-law accrues to the general revenue of the Association.

Marginal note:Register

• 24 (1) Every compliance report and every decision or order of the Board referred to in subsection 7(9) shall be filed with the Association and recorded in a register maintained by the secretary.

• Marginal note:Consultation

  (2) The register may be consulted by any member or non-member on request to the secretary.

Reinstatement of Rights

Marginal note:Reinstatement

25 The President or compliance panel, as the case may be, shall reinstate the rights of a member that have been suspended under subparagraph 16(1)(d) if the member applies for reinstatement and the conditions for reinstatement referred to in that paragraph have been met.

Notices and Documents

Marginal note:Method of giving notices

• 26 (1) Any notice to be given under this by-law is sufficiently given if it is given by personal delivery, transmitted by facsimile or electronic mail, or sent by registered mail (except during periods of actual or threatened interruption of normal postal service because of labour disturbance) addressed to the intended recipient at the recipient’s address as recorded on the membership list or in the records of the Association.

• Marginal note:Delivered notice

  (2) A notice given by personal delivery is considered to have been given on the day it is delivered.

• Marginal note:Mailed notice

  (3) A notice sent by registered mail is considered to have been given on the fifth day after it was mailed.

• Marginal note:Notices sent by other means

  (4) A notice transmitted by facsimile or electronic mail is considered to have been given on the day it is transmitted.

• Marginal note:Change of address

  (5) The secretary may change or cause to be changed in the records of the Association the address of any member, director, officer, auditor or member of a committee of the Board in accordance with any reliable information.

• Marginal note:Notice of change of address

  (6) Members shall inform the secretary of any change in their address.

Marginal note:Association

27 Any document given to the Association because the Association is a party to an investigation shall be delivered or given to the secretary.

Exclusion of Liability

Marginal note:Exclusion of liability

28 Neither the Association, nor a director, the President or a member of a compliance panel is liable for any loss or damage suffered by a member for anything done or omitted to be done honestly and in good faith in the administration or discharge of any powers or duties that under this By-law are intended or authorized to be executed or performed.

Marginal note:Indemnity

29 The Association shall indemnify a member of a compliance panel or former member of a compliance panel and his or her heirs and legal representatives, against all costs, charges and expenses — including an amount paid to settle an action or to satisfy a judgment — reasonably incurred by him or her in respect of any civil, criminal or administrative action or proceeding to which he or she was made a party by reason of being or having been a member of a compliance panel, if

• (a) the member or former member acted honestly and in good faith; and

• (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the member or former member had reasonable grounds for believing that his or her conduct was lawful.

Consequential Amendment

30 [Amendment]

Repeal

31 [Repeal]

Coming into Force

Marginal note:Coming into force

32 This By-law comes into force on the day on which it is registered.