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Appendix

Disclosure of Information

Under the OSFI Act, the Superintendent is required to report to Parliament each year on the disclosure of information by financial institutions and the progress made in enhancing the disclosure of information in the financial services industry.

OSFI promotes effective disclosure by: publishing selected financial information on OSFI’s website and through Beyond 20/20 Inc. (see their website for more information); providing guidance to FRFIs on their disclosures; and, participating in international supervisory groups with similar objectives.

Public Disclosures Associated with Building a More Stable Future

Public disclosures of risk management practices and risk exposures made by FRFIs have become a significant focus to achieving transparency, financial stability and restoring market confidence since the global financial crisis. Publications released by international organizations, such as the Financial Stability Board (FSB), the European Banking Authority, the Basel Committee on Banking Supervision (BCBS) and the CFA Institute, have stressed the need to enhance risk disclosures. OSFI believes that strong disclosures and market discipline are key elements for effective corporate governance and sound risk management practices within an institution.

During 2012-2013, OSFI performed a targeted review of public disclosures made by large banks to identify best practices and any areas for improvement. Findings were communicated to selected institutions and OSFI saw substantial improvement in liquidity disclosures in subsequent reporting periods.

Also during the period, OSFI issued guidance to implement the Basel III Pillar 3 disclosure requirements on the composition of capital that were published by the BCBS in June 2012. This included:

  • October 2012 interim disclosure guidance for the Q1 and Q2 2013 reporting periods; and
  • February 2013 draft advisory for all reporting periods subsequent to Q2 2013.  

Financial Stability Board Guidance

In 2012, the FSB established the Enhanced Disclosures Task Force to examine how the disclosure of information on bank risk exposures and risk management practices could be enhanced. The Task Force consisted of a group of senior private-sector executives from leading asset management firms, investors and analysts, global banks, credit rating agencies and external auditors.

After consulting extensively with regulators and industry groups, the Task Force provided 32 recommendations on how the disclosure of information on bank risk exposures and risk management practices could be enhanced. The FSB views the report as a valuable step to improving the quality of risk disclosures and OSFI is working with the six major banks to implement these recommendations in Canada. Indeed, one of the obligations of having been designated as domestic systemically important banks is that they are expected to adopt the recommendations of the Task Force, future disclosure recommendations in the banking arena that are endorsed by international standard setters and the FSB, as well as evolving domestic and international bank risk disclosure best practices.

In June 2012, OSFI issued a guideline that sets out OSFI’s expectations for enhanced disclosures to be made by all FRFIs that engage in residential mortgage underwriting and the purchase of residential mortgage loans. These additional disclosures were viewed positively by the market.

International Accounting Standards Board

The IASB continues to improve several accounting and disclosure standards. As an active member in the Accounting Task Force of the BCBS and the IAIS Accounting and Auditing Issues Subcommittee, OSFI participates in improving disclosures in financial reporting under international standards, including work on Financial Instruments and Insurance Contracts.

OSFI is committed to continuing to improve public disclosures in order to promote safety and soundness in the way institutions conduct business, and contribute to public confidence in the Canadian financial system. OSFI will continue to support disclosure initiatives through its membership in the BCBS and through reviewing our domestic disclosure requirements and practices.