Ontario 2026 Pre-Budget Submission
Canadian Lenders Association (CLA)
Ontario 2026 Pre-Budget Submission
Supporting responsible credit, innovation, and consumer choice in Ontario
Summary Points: The Canadian Lenders Association (CLA) submitted its recommendations to the Ontario Ministry of Finance in advance of the Government of Ontario’s upcoming budget. The recommendations focus on targeted, practical reforms that would strengthen Ontario’s credit ecosystem, enhance consumer protections, and enable responsible innovation across the financial services sector.
Our recommendations emphasize:
- Supporting an open, competitive credit market that enables borrowers to progress toward prime credit.
- Modernizing a provincial statute affecting the automotive financing sector;
- Enabling the safe and competitive adoption of artificial intelligence in financial services;
- Ensuring proportionate, risk-based application of AML and beneficial ownership requirements.
Introduction
The Canadian Lenders Association (CLA) supports the growth and responsible operation of companies that provide credit to individuals and businesses across Canada. We represent over 300 companies spanning the full financial services ecosystem, including fintech innovators, digital lenders, specialty finance providers, payment and embedded-finance platforms, and established credit institutions operating across consumer, commercial, and asset-based markets.
The CLA was founded by some of Canada’s leading financial technology companies and has since evolved into a national, cross-sector business association working at the forefront of financial innovation. Our members collectively operate across home, automotive, consumer, and commercial lending, as well as emerging areas such as buy-now-pay-later, embedded finance, sustainable finance, and digital-asset–enabled credit models.
CLA members use advanced data, technology, and risk-management practices to expand access to credit, improve underwriting accuracy, and deliver faster, more inclusive financial services. We work closely with regulators, governments, and law enforcement agencies to promote transparency, system integrity, and consumer protection, while ensuring that regulation remains proportionate, evidence-based, and adaptable to technological change.
In Ontario, credit plays a foundational role in economic participation, enabling individuals to purchase homes and vehicles, small businesses to invest in equipment and growth, and households to manage liquidity and build long-term financial resilience. Yet access to credit is increasingly shaped by complex and overlapping regulatory frameworks, many of which were designed for an earlier financial system and have not kept pace with digital delivery models, real-time data, and evolving consumer behaviour.
The CLA’s objective is to ensure that Ontario’s policy environment supports innovation while maintaining strong consumer outcomes. This submission reflects coordinated input from lenders across multiple sectors and is intended to support a regulatory framework that is competitive, technologically enabled, proportionately regulated, and aligned with how Ontarians actually access and use financial services today.
Recommendation 1
Preserve an Open and Competitive Credit Market
Ontario’s financial system benefits from a diverse and competitive lending ecosystem that includes banks, credit unions, fintechs, and other specialty and alternative credit providers. A plurality of credit sources contributes to competition, consumer choice, systemic resilience, and economic participation, particularly for individuals and small businesses whose needs may not be fully met by traditional financial institutions. In this context, non-bank and specialty lenders play an important functional role by serving borrowers earlier in their credit lifecycle, supporting financial rehabilitation, and enabling progression toward mainstream or “prime” credit over time.
Market participants have indicated that access to responsible non-bank credit is often a prerequisite for broader financial inclusion. For many consumers and small enterprises, alternative lenders act as a transitional channel- facilitating access to vehicles, equipment, working capital, or liquidity that would otherwise be unavailable through conventional channels. These segments are also characterized by higher demand for speed, simplicity, and digitally enabled service delivery, which has driven innovation across underwriting, onboarding, and customer experience.
At the same time, the CLA has concerns that overly restrictive or misaligned regulatory frameworks may unintentionally reduce the diversity of credit providers in the market. Where compliance costs, operational complexity, or regulatory uncertainty disproportionately affect smaller or specialized lenders, there is a risk that certain providers may exit specific product segments or geographic markets despite operating as compliant and responsible actors. Over time, such dynamics may contribute to greater market concentration, reduced consumer choice, and increased reliance on informal or unregulated sources of credit- outcomes that are inconsistent with Ontario’s financial inclusion and productivity objectives.
The CLA therefore emphasizes the importance of maintaining a policy environment that supports a broad, competitive, and innovation-friendly credit ecosystem. Regulatory frameworks should continue to safeguard consumers and system integrity, while remaining proportionate to risk and reflective of the operational realities of different lending models. Preserving diversity in credit provision is not only a competition issue, but a structural component of ensuring that Ontarians can access appropriate, regulated, and transparent financial services across all stages of their financial journey.
Recommendation: The CLA recommends that the Government of Ontario continue to support an open and competitive credit market by ensuring that regulatory frameworks remain proportionate, technologically neutral, and conducive to lender diversity, in order to promote financial inclusion, borrower mobility, and sustainable access to credit for households and small businesses.
Recommendation 2
Modernize Ontario’s Repair and Storage Liens Act (RSLA)
The CLA recognizes the important role of the Repair and Storage Liens Act (RSLA) in governing disputes between consumers, repair facilities, and secured creditors. However, members across the automotive finance sector have identified that key elements of the Act are no longer operating as intended in the context of modern lending and vehicle ownership structures. In particular, the current statutory framework does not sufficiently distinguish between essential safety-related repairs and discretionary or cosmetic services, and this lack of clarity has contributed to inconsistent lien practices and increased disputes.
Members have expressed concern that the breadth of the current definition of “repair,” combined with the way lien amounts may be calculated and assigned, has created opportunities for lien claims that exceed the reasonable scope or value of the underlying services. This has resulted in higher costs for consumers, greater legal uncertainty for secured lenders, and growing operational risk across the automotive financing ecosystem. From the CLA’s perspective, the core issue is not the existence of lien rights, but the absence of clear statutory guardrails that reflect how vehicles are financed, insured, and transacted in today’s market.
The CLA believes that targeted legislative amendments could restore balance and predictability to the RSLA framework. In particular, clarifying the scope of repairs covered under the Act, aligning lien amounts more closely with consumer protection principles, and strengthening transparency and notice requirements would materially reduce dispute risk while preserving the legitimate interests of repairers and creditors alike. These reforms would not require a wholesale restructuring of the statute, but rather a focused modernization to ensure the Act continues to serve its original purpose in a contemporary financial environment.
Recommendation: The CLA recommends that the Government of Ontario advance a targeted modernization of the Repair and Storage Liens Act by introducing legislative amendments that clarify the scope of lien-eligible repairs, improve transparency and predictability in lien amounts, and strengthen notice and fairness protections for consumers and secured lenders. The CLA would appreciate the opportunity to continue working alongside the Ministry of Finance and relevant provincial partners in advancing a practical, industry-informed reform bill.
Recommendation 3
Enable Responsible Adoption of Artificial Intelligence in Financial Services
Artificial intelligence is rapidly becoming embedded across the financial services sector, including in credit underwriting, fraud detection, identity verification, collections, customer service, and risk management. These applications have the potential to materially improve efficiency, accuracy, and consumer outcomes, particularly in high-volume, digital-first financial services environments. In practice, however, the effective deployment of AI systems in regulated financial markets is constrained not only by technological capability, but by the availability of trusted infrastructure for identity verification, data provenance, authentication, interoperability, and governance.
For lenders and financial services providers operating in Ontario, AI adoption increasingly depends on the ability to integrate with reliable, privacy-respecting digital trust frameworks. AI-driven decisioning systems require confidence in the authenticity of users, the integrity of data sources, and the traceability of automated processes. Where these foundational elements are fragmented or inconsistent across jurisdictions, institutions face higher compliance costs, slower deployment timelines, and greater legal and operational risk. This, in turn, limits the ability of Canadian firms to scale AI-enabled services domestically and compete internationally.
Ontario has an opportunity to position itself as a leading jurisdiction for responsible AI in financial services by emphasizing interoperability, trust infrastructure, and principles-based governance rather than prescriptive, technology-specific regulation. Regulatory frameworks that prioritize outcomes; such as transparency, accountability, privacy protection, explainability, and auditability, provide a more durable foundation than sector-specific rules that risk becoming obsolete as technologies evolve. In regulated environments such as financial services, public confidence in AI systems depends not only on algorithmic performance, but on the strength of the surrounding governance ecosystem, including identity assurance, credential verification, data-sharing standards, and risk management frameworks.
From an investment and competitiveness perspective, AI firms and financial institutions are increasingly evaluated on their ability to demonstrate robust governance, data integrity, identity assurance, and compliance readiness. Jurisdictions that offer clear, interoperable, and trusted digital infrastructure are more attractive to capital and better positioned to support scalable AI deployment across both public and private sectors. Conversely, fragmented regulatory approaches and inconsistent technical standards raise barriers to entry, discourage experimentation, and entrench existing incumbents that can absorb higher compliance costs.
The CLA therefore encourages the Government of Ontario to support a policy environment that recognizes digital trust, identity verification, authentication, and interoperability as critical enablers of AI adoption in financial services. Investments in shared standards, certification frameworks, and reusable trust infrastructure can materially reduce duplication, lower systemic risk, and accelerate responsible deployment. Such an approach would strengthen Ontario’s position as a competitive, innovation-friendly jurisdiction while ensuring that AI systems used in financial decision-making remain safe, transparent, and aligned with consumer and public-interest objectives.
Recommendation: The CLA recommends that the Government of Ontario adopt a principles-based approach to AI governance in financial services that emphasizes interoperability, digital trust infrastructure, and outcome-focused regulatory standards, and that aligns with federal and international frameworks, rather than introducing fragmented or prescriptive provincial rules that may inhibit responsible innovation and investment.
Recommendation 4
Proportionate Application of PCMLTFA and Beneficial Ownership Rules
The CLA supports strong and effective anti–money laundering and counter-terrorist financing controls. At the same time, recent developments in beneficial ownership (“UBO”) expectations may be increasing compliance burdens in ways that are not always aligned with the underlying risk profile of certain transactions. In particular, some equipment finance lenders and other specialty financing providers have expressed concern regarding their ability to remain operationally compliant with evolving PCMLTFA obligations in the context of low-value, high-volume, and asset-secured transactions.
Members have indicated that the uniform application of UBO requirements across all business-purpose financing may introduce additional time, cost, and process complexity for transactions that are typically characterized by low margins, standardized structures, and strong asset security. In these environments, the individual arranging financing often does not have access to detailed ownership information, and full beneficial ownership disclosure may not be reasonably accessible at the point of transaction. As a result, some lenders have raised the possibility that continued expansion of UBO obligations could make certain segments of small-ticket equipment finance economically difficult to sustain, despite these firms operating as compliant and regulated market participants.
These concerns highlight the importance of proportionality within a risk-based AML framework. A calibrated approach to UBO expectations would allow reporting entities to assess and apply diligence measures by reference to relevant risk factors, including transaction size, deal structure, nature of the financed asset, customer profile, availability of ownership information, and the presence of fraud indicators. Such an approach would support the effective allocation of compliance resources toward higher-risk activity, while reducing the likelihood that low-risk, routine transactions become subject to compliance processes that are disproportionate to their actual risk exposure.
Recommendation: The CLA encourages the Government of Ontario to work alongside the CLA to advocate for a proportionate, risk-based, federal application of beneficial ownership requirements under the PCMLTFA, particularly for low-risk, small-ticket, and asset-secured transactions. In particular, the CLA supports further guidance on proportional expectations, reasonable measures where ownership information is not readily available at the point of transaction, and the use of risk segmentation to ensure that AML objectives are met without unintentionally discouraging compliant lenders from participating in certain segments of the Ontario credit market.
Conclusion
The CLA very much appreciates the opportunity to contribute to the Government of Ontario’s 2026 pre-budget consultation. The recommendations outlined in this submission reflect coordinated input from companies across the financial services ecosystem, and are intended to support a policy environment that balances innovation, system integrity, and consumer protection.
Taken together, these recommendations emphasize the importance of modernizing provincial frameworks where they no longer reflect operational realities, enabling responsible adoption of emerging technologies such as artificial intelligence, and ensuring that regulatory obligations (particularly in areas such as anti–money laundering and beneficial ownership) remain proportionate to risk and feasible for compliant market participants.
The CLA’s objective is not deregulation, but effective regulation: a framework that protects consumers, supports law enforcement and financial stability, and allows Ontario’s financial services sector to remain competitive, diverse, and responsive to the evolving needs of households and businesses.
We welcome continued dialogue with the Ontario Ministry of Finance and relevant provincial authorities, and remain committed to providing evidence-based input to support Ontario’s long-term economic resilience and financial competitiveness.