A. What is the LCO’s Project about?
Each of us receives support with decision-making as a natural part of daily life. Family members and friends often ask for advice when they are faced with a choice and come to a decision together. Service providers, such as financial advisors, also present clients with information and counsel them in their areas of expertise. In this sense, the activity that underlies every individual’s decisions is inevitably dynamic, depending on his or her own choice. Nevertheless, there are circumstances where adults will be required by law to have another person make decisions on their behalf. The Law Commission of Ontario’s (LCO) project on the RDSP concerns one such circumstance.
The RDSP is a long-term savings vehicle created by the federal government for persons with disability. Under the Income Tax Act (ITA), adults can open an RDSP for themselves and decide the plan terms as the “plan holder”. However, the ITA provides that where an adult is not “contractually competent to enter into a disability savings plan” with a financial institution that issues the RDSP, another legally authorized person must act as the plan holder. Therefore, a financial institution may decline to enter into an RDSP arrangement with a beneficiary who does not meet the common law test of capacity to enter into a contract. An adult or another interested person, such as a family member, may also believe that an adult lacks legal capacity to establish an RDSP and wish to appoint a plan holder before approaching a financial institution.
The ITA does not contain a process to appoint a plan holder for adult beneficiaries. Instead, it requires that a guardian, attorney or other legally authorized person be appointed under provincial laws. In Ontario, the Substitute Decisions Act, 1992 (SDA) governs the appointment of guardians and attorneys for property management. However, this framework has been a source of concern for adults and their family and friends, who have faced challenges establishing an RDSP as a result of the SDA requirements. For instance, adults have been unable to appoint a plan holder through a power of attorney (POA) because the threshold for capacity under the SDA that would entitle them to do so may be out of reach. Furthermore, the exigencies of applying for guardianship have been perceived as disproportionate to appointing a plan holder due to associated costs, time and possible repercussions on an adult’s well-being.
In the course of the LCO’s project, we heard from a range of individuals and organizations that an alternative process that is inexpensive, user-friendly and narrowly focused on the RDSP could alleviate the above concerns and improve participation in the program. This report responds to these aspirations in recommending the creation of a streamlined process to appoint an RDSP legal representative who can act as the plan holder for beneficiaries in Ontario.
The report was approved by the LCO Board of Governors in June 2014.
Our recommendations are intended to be pragmatic and strike an appropriate balance between the rights of adults with disabilities, the risks of financial abuse and the interests of other important actors who could be affected.
The Law Commission of Ontario recommends that the Government of Ontario implement a process that would enable adults to personally appoint an RDSP legal representative to open and manage funds in an RDSP. The process would be available to adults where there are concerns about their capacity to enter into an RDSP contract with a financial institution and they do not have an attorney or guardian for property.
We recommend that the criteria to grant such a personal appointment be based on the definition of legal capacity to grant a power of attorney at common law. However, if the Government of Ontario believes these criteria are not flexible enough to improve access to the RDSP, we recommend that they be based on section 8(2) of the British Columbia Representation Agreement Act. Once appointed, the RDSP legal representative would have the duties of an attorney for property under the Substitute Decisions Act, 1992, as applicable, and be held to the same standard of care.
We also make recommendations with respect to questions that flow from the process described above, such as who could be eligible to be an RDSP legal representative, how third parties can be provided with certainty and finality, and what measures could be put in place to effectively safeguard adults against the risks of financial abuse.
A full list of our recommendations is found in Chapter V at page 57.
C. How Our Project Came to Be
1. Request from the Government of Ontario
This project came to the LCO as a request from the Government of Ontario. The LCO is currently engaged in a large, multi-year project that comprehensively reviews Ontario’s laws regarding legal capacity, decision-making and guardianship. Acknowledging our work in that area, the Ontario government asked the Law Commission of Ontario to undertake an additional review that would focus on how adults with developmental or mental disabilities might be better enabled to participate in [the RDSP].
The LCO Board of Governors approved this project in April 2013. The Ontario government announced its request and the LCO’s agreement in the Ontario Budget, A Prosperous and Fair Ontario, in May 2013.
The genesis of this project does, however, extend further back than the LCO’s involvement and it merits the brief explanation provided below.
2. The Federal Government’s 2011 Review of the RDSP and Subsequent Activities
The RDSP is a federal benefit that has been available since December 2008. Similar to other registered savings plans, it is regulated under the ITA and offered through participating financial institutions – such as banks and credit unions – alongside mainstream investment products.
Opening an RDSP requires a plan holder to enter into a contract with a financial institution. Beneficiaries who have reached the age of majority can be the plan holder of their own RDSP. However, the ITA provides that where an adult is not “contractually competent” to open an RDSP, a guardian or another “legally authorized” person must be the plan holder. The ITA itself does not provide for a process to appoint such persons to act as a plan holder. Instead, as mentioned above, they must be appointed under separate provincial laws.
In 2011, the federal government undertook a review of the RDSP program. During that review, adults and their families voiced concerns with respect to existing processes within provincial jurisdictions to designate an RDSP plan holder. In response to those concerns, the federal government put in place a provisional remedy to permit a parent, spouse or common-law partner to become a plan holder where, in a financial institution’s opinion, the beneficiary’s capacity to open an RDSP “is in doubt”. However, the federal government’s measures will expire at the end of 2016.
Some stakeholders have asked the federal government to amend the ITA permanently to address the subject matter of this project out of concern that, as a federal benefit, the RDSP should be treated uniformly across the country. They claim that the federal government has constitutional jurisdiction to regulate the issue of legal representation for the RDSP because it is essential to an effective, national legislative scheme. They point to examples under the Canada Pension Plan (CPP) and Old Age Security (OAS), where the federal government administers the appointment of representatives for persons who have been found to be incapable of managing their payments.
During the 2011 RDSP review, the federal government held extensive consultations to consider this proposal. However, it has stated that it considers the issue to fall within provincial responsibility. In the Economic Action Plan 2012, the federal government suggested that the provinces and territories develop “more appropriate, long-term solutions to address RDSP legal representation issues”. It also encouraged certain provinces and territories, including Ontario, to “examine whether streamlined processes would be suitable for their jurisdiction”.
The following year, in April 2013, the Minister of Finance asked the Standing Senate Committee on Banking, Trade and Commerce (the Senate Committee) to study the ability of individuals to establish an RDSP, with particular emphasis on legal representation and the ability of individuals to enter into a contract. The Senate Committee heard testimony on the respective jurisdictions of the federal and provincial governments to deal with the subject matter of this project, and on other impediments to accessing to the RDSP.
In its report, The Registered Disability Savings Plan Program: Why Isn’t it Helping More People?, the Senate Committee found that it was “unable to examine fully the effectiveness of the provincial and territorial procedures…that are currently in place” based on the testimony it heard. Moreover, it stated that “the Committee is not certain that a federal form of the type described by some of the witnesses would resolve the problem with legal capacity and representation in relation to the RDSP”.
The Senate Committee urged provinces that have not yet examined their legislation to do so and recommended that the “federal government continue to work with the provinces to improve access to the program”. The Senate Committee also recommended that if the federal measures expire before the provinces have implemented changes to their frameworks, “the federal government should study two options: the feasibility of other proposals to ensure access to the RDSP program, and the possibility of extending the existing temporary measures”. In March 2013, the federal Minister of Finance wrote the Premier of Ontario requesting that Ontario, along with other provinces and territories, address this issue in light of their existing processes.
As indicated previously, the Ontario government asked the LCO to undertake this project with a view to making recommendations for reform in this province. In the Economic Action Plan 2014, the federal government noted that some provinces have instituted streamlined processes or have indicated that their system already provides sufficient flexibility to address the concerns of RDSP beneficiaries. It also stated that it appreciates the recent efforts of the Government of Ontario in tasking the LCO with this project.
D. The Project Scope
The scope of the LCO’s project has been narrowly defined to address a specific barrier to accessing the RDSP: the appointment of an RDSP legal representative for beneficiaries who require another person to make decisions about their RDSP in Ontario.
1. Recommending a Streamlined Process for the Jurisdiction of Ontario
As a provincial reform agency, we consider the LCO’s mandate to apply to Ontario laws, policies and practices and we do not make recommendations to the federal government or other jurisdictions in this report. The preceding section, “How this Project Came to Be”, summarizes proposals as to whether the federal or provincial governments should implement a solution to address the concerns of RDSP beneficiaries. Although the LCO acknowledges stakeholders’ proposals with respect to a federal solution, we consider our mandate to apply to Ontario only.
As will become clear in the remainder of this report, however, we have taken the approaches of other provinces and territories into account in coming to our recommendations. We have also suggested that Ontario enact provisions to enable adults travelling from elsewhere in the country to continue to have a plan holder who was previously appointed through a valid arrangement make decisions about their RDSP. The SDA contains a conflict of laws provision that could be used as a model.
2. Impediments to Accessing the RDSP Other than Legal Representation
The scope of this project is also restricted in terms of its review of the RDSP. The RDSP is a recent program, which the federal government formally reviewed shortly before the commencement of the LCO’s project. Consultations and submissions to the federal government identified a number of areas for reform to increase uptake. Changes that the federal government has made since – and others that may not have been made – are still fresh in the minds of stakeholders. Furthermore, the Standing Senate Committee on Banking, Trade and Commerce recently released its report on impediments to accessing the RDSP. However, the LCO’s project cannot address all barriers to accessing the RDSP that have been identified over the years, and is limited to recommending a streamlined process to appoint an RDSP legal representative for beneficiaries.
3. Respecting the LCO’s Larger Project on Legal Capacity, Decision-Making and Guardianship
Another significant aspect of the project scope is how it interacts with the LCO’s ongoing project on Legal Capacity, Decision-Making and Guardianship. It was in the context of our work on that project that we were asked to undertake this review. The former will evaluate Ontario’s framework for substitute decision-making, including powers of attorney and guardianship under the SDA and other relevant legislation.
There are many issues that overlap between the two projects and this report has certainly benefitted from insights gained in the larger project to date. For instance, we used research papers that were commissioned for that project as an important source of information in this project. While we have maintained a high level of coordination, however, our work is being conducted separately so that we can provide the Ontario government with recommendations in the RDSP project well before the federal government’s measures expire in 2016.
The two-track delivery of the LCO’s projects has had necessary implications. To the extent possible, we have tailored our research and analysis in this project to respond to stakeholders’ aspirations for a streamlined process that is narrowly focused on the RDSP. Furthermore, we have sought to limit our recommendations in major areas of overlap in order to avoid precluding options in the larger project.
Limiting our recommendations has been particularly important for contentious questions that we have been unable to answer in the short timeline for the RDSP project but that we know could greatly impact the broader system of asset management for Ontarians under the SDA. Throughout the report, we have noted the areas where our research is ongoing on these questions in the Legal Capacity, Decision-Making and Guardianship project, so that readers can follow our progress into the future. For more information, you are also invited to visit the LCO’s website at www.lco-cdo.org.