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OSFI’s role is to contribute to the safety and soundness of the Canadian financial system, while allowing federally regulated financial institutions and private pension plans to take reasonable risks and remain competitive. With a focus on prudence, we balance international rules with Canadian marketplace realities, and efficiency with thoroughness. Last year’s Annual Report listed four priorities to achieve OSFI’s strategic outcomes for 2012-2013. This section reports major accomplishments under each of those priorities. OSFI achieved its goals for the reporting year and continues to work on these multi-year priorities. More details are available in various chapters of the report.

Priority A – Responding to Risks Emanating from the Economy

Steps Taken

  • Responded to concerns about low interest rates and rising household indebtedness by issuing new guidelines to promote financial system stability and reviewing residential mortgage credit portfolios
  • Conducted significant cross-sector reviews in the areas of
    • Commercial real estate lending and auto lending
    • Measurement and management of counterparty credit risk
    • Risk data aggregation in management information systems
    • Stress tests (including adverse macroeconomic and earthquake scenarios)
  • Continued to conduct
    • Risk management seminars
    • Supervisory colleges
    • Crisis management and industry information sessions
  • Participated actively on various international committees, including
    • Financial Stability Board (FSB)
    • Basel Committee on Banking Supervision (BCBS)
    • Senior Supervisors Group (SSG) • International Association of Insurance Supervisors (IAIS)
  • Prepared documentation for the 2013 Financial Sector Assessment Program Canada review by the International Monetary Fund

Priority B – Responding to Risks Emanating from Regulatory Reform (including banking, insurance, pensions and accounting reforms)

Steps Taken

  • Issued new/revised guidelines, advisories or letters on
    • Corporate Governance
    • Mortgage Underwriting
    • Capital Adequacy Requirements (final Basel III rules for banks and trust and loan companies)
    • Domestic systemically important banks
    • Progress made in implementing G20 reforms for over-the-counter derivatives markets
    • Minimum Continuing Capital and Surplus Requirements (MCCSR) update
    • Minimum Capital Test (MCT) update
  • Released a Life Insurance Regulatory Framework outlining OSFI initiatives through 2016
  • Worked with IAIS towards developing a global framework to guide the supervision of internationally active insurance groups (ComFrame)
  • Continued to work with banks and insurance companies to gather data and assess the impact of new capital and liquidity requirements
  • Continued to monitor International Accounting Standards Board and Financial Accounting Standards Board decisions as they impact the Canadian capital regime
  • Contributed to the Canadian Institute of Chartered Accountants (CICA) / Canadian Public Accountability Board (CPAB) task force on audit committees

Priority C – A High-Performing and Effective Workforce

Steps Taken

  • Created a new unit to provide new regulatory oversight of Canada Mortgage and Housing Corporation (CMHC)
  • Revised the Training and Development framework to ensure the right processes, policies and controls are in place to continue to train and develop employees adequately to deal with the changing financial sector landscape
  • Continued to focus on developing and executing succession plans for critical positions

Priority D – An Enhanced Corporate Infrastructure

Steps Taken

  • Continued development of a new system for gathering and processing financial data obtained from banks and other deposit-taking institutions (Tri-Agency Database System) that is on track for implementation in September 2013
  • Continued to meet all targeted project milestones as part of our IT renewal program, including
    • Document/records management
    • External website
    • Business Intelligence Tool
    • Corporate Systems (HR and Finance)
    • Correspondence and Enquiry Management

The four priorities above will also guide the achievement of strategic outcomes for 2013-2014. Details can be found on OSFI website in the Plan and Priorities 2013-2016.

In conjunction with its strategic priorities, OSFI has the following ongoing areas of activity:

Federally Regulated Financial Institutions — Accurate risk assessments of financial institutions and timely, effective intervention and feedback; a balanced, relevant regulatory framework of guidance and rules that meets or exceeds international minimums; a prudentially effective, balanced and responsive approvals process

Federally Regulated Private Pension Plans — Accurate risk assessments of pension plans; timely and effective intervention and feedback; a balanced relevant regulatory framework; and a prudentially effective and responsive approvals process

Office of the Chief Actuary — Provision of expert actuarial valuation and advice to contribute to a financially sound Canadian public retirement system, including Canada Pension Plan, federal government public pension and other programs