The Government of Canada is amending the Bank Act and
other associated statutes. The amending legislation (the
Financial System Review Act
("FSRA")) received royal assent on March
29, 2012.
Clearer Priority Provisions for Secured Creditors
The amendments clarify the order of priority where multiple
secured parties have a security interest in the same collateral,
particularly where there are competing interests under the Bank
Act and a provincial Personal Property Security Act
("PPSA"). The amendments overrule two
companion Supreme Court of Canada decisions, Bank of Montreal
v. Innovation Credit Union1 and Royal Bank of
Canada v. Radius Credit Union.2 Both cases involved
priority disputes between the credit union's prior unregistered
security interest under a provincial PPSA, and the bank's
subsequent security interest taken and registered under the
Bank Act. The Court found that the credit union's
"first-in-time" unperfected PPSA security interest took
priority
