On October 17, 2026, the Department of Finance published draft regulations that would set the terms and conditions needed to finally bring into force long-awaited 2018 amendments to the federal financial institutions statutes.

For fintechs, the message is simple: Canada's banks, federally regulated insurers, trust and loan companies, and other financial institutions—banks and insurance holding companies, fraternal benefit societies, and federal credit unions—are about to find it easier to invest in, acquire and partner with technology businesses. Comments are due by November 16, 2026.

Why this matters to fintechs

Today, a federally regulated financial institution (“FRFI”) can generally control, or hold a substantial investment in, only businesses whose activities are limited to those the FRFI itself may carry on. If a fintech had even a small non-financial line of business, a bank often could not invest in it.

Many technology activities carried on in Canada also require the prior written approval of the Minister of Finance. The government has recognized that these limits have hampered FRFI investment in fintechs and made it harder for FRFIs to compete with fintech and big tech players.

What changes

  • A new investable category:

    FRFIs could take control of, or have a substantial investment in, a "majority financial services entity." This is a business at least 60% of which consists of financial services the FRFI could itself provide, even if the rest is non-financial. The test looks at the highest share of revenue, operating expenses or assets, based on the latest four quarters (or the latest annual statements).

  • Fewer approvals:

    Prior ministerial approval would generally no longer be needed for these new activities and investments, which should make deals faster, cheaper and more certain.

  • Broader partnerships:

    FRFIs could carry on a wider range of technology and information-processing activities, and their referral power expands from referring customers to "a financial service provider" to referring them to "any person," subject to certain conditions. FRFIs could also act as agent for a wider range of providers.

The guardrails

FRFIs will still have limits. Their non-financial revenue generally cannot exceed 15% (or 10% for institutions with equity of $12 billion or more) of annual revenue, and their combined investments in, loans to and guarantees for these businesses cannot exceed 10% of regulatory capital at any time. For foreign bank groups, both limits are also capped at $1.5 billion.

Large institutions must also report to Finance within 30 days of closing a qualifying deal, describing the target business, how it relates to financial services and the strategic rationale for the transaction. FRFIs will remain prohibited from investing in businesses that offer consumer rentals of personal property, including vehicles, other than to finance a purchase.

What fintechs should do now

  • Know your 60%:

    Understand how your revenue, expenses and assets split between financial and non-financial activities. Even if you remain above the 60% financial-services threshold, your status can be affected by the FRFI's own position: if the FRFI breaches its revenue or capital limits, all of its investments in businesses that carry on non-financial activities, including mostly financial services businesses, would be deemed temporary investments.

  • Expect new deal terms:

    FRFI investors will likely ask for covenants and information rights so they can monitor your financial services mix on an ongoing basis.

  • Plan for timing:

    If a large FRFI acquires control of your business or makes a substantial investment in it, expect the FRFI’s 30-day post-closing reporting obligation and supporting analysis to be built into the deal timetable.

  • Look beyond the big banks:

    Smaller FRFIs with equity under $12 billion get a more generous revenue limit and are exempt from reporting, so they may become active partners and investors.

The regulations are still in draft and may change. Gowling WLG can help you assess how the new framework affects your fundraising, partnerships or exit strategy. For assistance, please contact the authors or a member of our Financial Services Regulation group.