Review of the Trustee Licensing Regulatory Framework
Consultation Paper - Part Three

Issue

The Office of the Superintendent of Bankruptcy (OSB) is considering whether annual licensing fees for trustees should be tiered or subject to a scale of fees where the trustee's performance has resulted in higher supervision costs by the OSB. Some of the possible options being considered are:

1. Require that trustees with sustained compliance concerns pay a higher licensing fee to better defray the added costs of the supervision they require.
2. Establish performance criteria that could be used by the OSB to determine if a trustee should be subject to a higher licensing fee.
3. Establish a period of time over which a trustee's performance would be judged unacceptable to warrant a higher licensing fee.
4. Establish a time frame (for example, six months) during which a trustee has notice to put his/her practice into compliance to avoid imposition of increased premiums.
5. Set an amount for the licensing fee of a trustee whose performance remains unacceptable.

Issue

The Office of the Superintendent of Bankruptcy is considering the following options regarding succession agreements:

1. Make it a condition to practice that trustees have "succession agreements" in place with successor trustees in the event of their deaths, incapacity or other factors that may prevent them from performing engagements.
2. Monitor/ensure, on an annual basis, that succession agreements remain valid and meaningful.
3. Take appropriate steps where there is no succession agreement in place.
4. Establish exceptions to the requirement to have succession agreements for certain corporate trustees.

Issue

The OSB is considering whether it would be appropriate to require that trustees file an annual licensing report with the OSB that would include information such as financial statements, self-identification of non-compliance matters, self-reporting of complaints received and resolutions, details of professional liability insurance coverage and confirmation that a succession agreement is in place. In particular, the OSB is considering the following options.

Annual Report

1. Require trustees to submit an annual report to the OSB containing information such as financial statements, self-identification of non-compliance matters, self-reporting of complaints received and resolutions, details of professional liability insurance coverage and confirmation that a succession agreement is in place.
2. Whether there are any options aside from submitting an annual report that would allow the OSB to receive financial statements, details of professional liability insurance coverage and confirmation that a succession agreement is in place on an annual basis.
3. What action should be taken by the OSB if trustees fail to comply with a requirement to submit an annual report.

Financial Statements

1. Require both individual and corporate trustees to submit to the OSB, on an annual basis, financial statements that would attest to both their solvency and level of financial resources to run the trustee's practice.
2. Whether a specific format for financial statements should be used by trustees if they are required to submit them on an annual basis (statement of net worth, unaudited statements, audited statements).
3. What action should be taken by the OSB if trustees fail to comply with a requirement to submit financial statements.
4. Whether any exceptions should be made to a requirement to submit financial statements for corporate trustees.

Professional Liability Insurance and Bonding

1. Require trustees to provide confirmation to the OSB that they have adequate insurance.
2. Require that the specific amount of insurance be provided.
3. Ensure that the trustee provides a confirmation letter from the insurance company (or from the broker) to the OSB certifying that insurance, including the amount, is in place.
4. What action should be taken by the OSB to deal with trustees who do not maintain adequate insurance.
5. Whether the OSB should return to the general bonding practices that required a bond be in place at the time the trustee licence is issued.
6. Whether the Directive on Estate Security (Directive No. 21) should be amended to provide more clarity on the amount to be issued as security for an estate bond instead of simply providing guidance to the official receiver.