As noted in previous newsletters, in July 2023, the BCFSA released a Natural Catastrophes and Climate-Related Risks: Managing Uncertainty and Building Resilience in the Financial Services Sector Discussion Paper for consultation, as they are concerned that B.C. is susceptible to natural catastrophes and climate-related risks (NCCR) such as earthquakes, heat waves, flooding, sea level rise, winter storms and wildfires, and that will increase in the future. The real estate sector is a focus for the BCFSA due to “… its outsized impact on B.C.’s economy and its importance to … regulated segments and to consumers.”    

They propose two pillars for future requirements for the segments they regulate (which includes developers under the Real Estate Development Marketing Act (REDMA)):    

• “Ensuring financial services providers identify, measure, and manage NCCR; and  
• Ensuring that financial services providers disclose NCCR data and information.”   

The BCFSA has now released a Natural Catastrophes and Climate-Related Risks Consultation Summary Report. Several concerns were raised by stakeholders, including the ability of BCFSA regulated entities to be able to identify and measure NCCR as well as the potential of insurance being unavailable or unaffordable in high-risk areas.   

Last November, UDI responded to consultation (please see attached), and noted “… builders are already expected to ‘Disclose all material facts related to flooding, the condition of soil and subsoil, or other environmental matters affecting the development property,’ under Section 4.6 in BCFSA’s Policy Statement 1. This is broad enough language to include NCCR risks.” In response, the BCFSA indicated it “… will review whether current disclosure standards sufficiently address NCCR and consider partnering with existing consumer advocacy groups or sharing information directly with consumers to raise awareness of existing disclosures.” 

The BCFSA is refining its approach in other areas in response to the feedback it received. There will be four priority areas:   

1. Providing guidance to financial institutions and pension funds on “… appropriate governance and accountability structures … to manage NCCR …,” and exploring “… opportunities to deliver training, education, and resources to strengthen climate risk governance in financial institutions and pension plans;”  
2. There will be a focus on “… building capacity within the credit union segment to identify, measure, and manage …,” NCCR;  
3. The BCFSA will also continue to support the “… work underway at the national and provincial levels to develop property risk scores, hazard maps, sustainability standards, and national insurance programs;” and  
4. They will be “Monitoring Insurance Availability.”   

The BCFSA plans on further consultations with industry and stakeholders “… on specific regulatory guidance for implementation starting in 2025/26.” For more information, please see their webpage on NCCR.