Government of Canada
Symbol of the Government of Canada

Superintendent’s
Message

Staff image Jeremy Rudin
Superintendent of Financial Institutions
Photo: Jeremy Rudin, Superintendent of Financial Institutions

It has been a privilege to serve my first year as Superintendent of Financial Institutions, and to helm an agency that plays a central role in maintaining the safety and soundness of Canada’s financial system for the benefit of all Canadians. My colleagues have been most welcoming and it is a pleasure to lead such a committed and capable team.

In 2014-2015, OSFI undertook a number of initiatives to further strengthen Canada’s system of financial regulation and supervision.

With a view to reinforcing prudent mortgage insurance underwriting, in November 2014, OSFI issued the Residential Mortgage Insurance Underwriting Practices and Procedures guideline, following extensive consultation with the industry. The guideline enhances disclosure practices for mortgage insurers and outlines sound risk management principles, including setting prudent requirements for lenders and applying appropriate due diligence to lenders’ practices. As mortgages form the major portion of Canadian household debt, this is an important area of OSFI oversight. This is particularly true in the current low-interest rate environment, given the potential impact rising rates would have on household debt levels.

The global financial crisis underlined the importance of the need for financial institutions to have enough quality capital and liquidity to absorb severe losses. In the past year, OSFI issued new or updated guidelines on Leverage Requirements and Liquidity Adequacy Requirements for deposit-taking institutions, Minimum Continuing Capital and Surplus Requirements for life insurers, and the Minimum Capital Test for property and casualty insurers.

Operational risk at financial institutions was another priority area for OSFI in 2014-2015. Work in this area included conducting supervisory reviews on cyber security and outsourcing risks.

We also continued to monitor the global economy, with a special emphasis on assessing the potential impact of various events on the risk profiles of federally regulated financial institutions and pension plans. There remain a number of potential risks to continued global economic recovery, including sovereign debt issues and low growth. Further, the International Monetary Fund (IMF) has noted that protracted low inflation, or even deflation, pose risks in some advanced economies.

OSFI does not work in isolation. Canada’s strong regulatory regime is a result of the cooperation and collaboration that exists among our government partners, who are the Bank of Canada, the Department of Finance, Canada Deposit Insurance Corporation, and the Financial Consumer Agency of Canada. This collaboration was highlighted in the 2014 report of the IMF’s Financial Sector Assessment Program review of Canada, which spoke favourably of the effectiveness of the oversight of Canada’s financial system.

Internally, OSFI continues to enhance both our supervisory capacity and processes. In 2014-2015, we launched a multi-year project that will lead to improved supervisory tools, and we continued the development of a supervision training program to support the needs of supervisory employees.

In my first year as Superintendent, I have observed close at hand the sustained dedication of my OSFI colleagues. Their professionalism, knowledge and integrity continue to contribute to our collective success and allow Canadians to continue to have confidence in Canada’s financial system.

Jeremy Rudin