Office of the Superintendent of Financial Institutions
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The year under review was notable for the continuing low interest rate environment globally, growing levels of household debt in Canada, and unsettled international markets. In 2015-16, the Office of the Superintendent of Financial Institutions (OSFI) undertook a number of initiatives to address growing risks in these areas, and others, in order to further strengthen Canada’s system of financial regulation and supervision.
In August 2015, OSFI issued a draft Operational Risk Management guideline for public consultation. The guideline recognizes that regulated entities will have different operational risk management practices depending on such factors as their size, ownership structure, complexity of operations and risk profile. This principles-based approach to regulation gives Canadian financial institutions some flexibility in how they manage their risks, supporting effective competition.
In March 2016, OSFI issued the draft Life Insurance Capital Adequacy Test (LICAT). The LICAT is the culmination of over a decade of work undertaken to replace the current Minimum Continuing Capital and Surplus Requirements guideline, which has been in place since 1992. The draft guideline takes into account the current economic realities of the life insurance business, recent developments in actuarial and financial reporting standards as well as economic and financial practices, and international trends in solvency frameworks. OSFI will be receiving input from the industry over the summer months and expects to be able to release the guideline in final form in the fall of 2016.
The year under review saw OSFI’s continuing collaboration with our federal financial regulatory partners. During the year, I chaired four meetings of the Financial Institutions Supervisory Committee (FISC) composed of the Governor of the Bank of Canada, the Deputy Minister of Finance, the chair of the board of directors of Canada Deposit Insurance Corporation and the Commissioner of the Financial Consumer Agency of Canada. Bi-laterally, we worked with the Bank of Canada to conduct macro stress-tests and with Canada Deposit Insurance Corporation and the Department of Finance on a bail-in regime. Our strong relationships with our FISC partners continued to support Canada’s robust financial system.
Internally, our focus continued to be on supporting a high-performing workforce. In this area, we developed a cyber security strategy and action plan, which will be implemented in the coming years. We also began migrating content into a new documents and record management system, which will ensure employees have access to the information they need when they need it. Our intranet was upgraded so that all employees can be kept informed in a timely manner of corporate news as well as well as the initiatives being worked on by their colleagues across the office.
I continue to be impressed by the sustained dedication of my OSFI colleagues. Their professionalism, knowledge and integrity greatly contribute to our collective success as Canada’s financial services regulator and supervisor.