Download OSFI`s approach can be defined as: Reliance based

OSFI Role and Profile
Neville Henderson
November 19, 2013
Toronto, Ontario, Canada
About OSFI
• Independent federal agency established in
1987;
• Primary prudential regulator and supervisor
for all federally regulated financial
institutions and pension funds in Canada;
• As at March 31, 2012, these organizations
managed total assets of $4.9 billion.
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OSFI Area of Responsibility
OSFI regulates and supervises:
• All banks operating in Canada (77);
• Federal trust and loan companies (68);
• Cooperative credit or retail associations (7);
• Life insurance companies (78);
• Fraternal benefit societies (16);
• Property and casualty insurance companies (181);
• Pension plans sponsored by federally regulated
industries (approximately 1,400 plans, or 7% of
plans in Canada).
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OSFI Facts
• OSFI is an independent agency funded on a cost
recovery basis through the assessment of fees
(2011-12 budget: $124m);
• OSFI has over 620 employees in four offices
(Montreal, Ottawa, Toronto and Vancouver);
• Central to OSFI’s mandate and its accountability to
Canadians are its activities to:
– Protect the rights and interests of depositors, policyholders,
pension plan members of financial institutions;
– Contribute to public confidence in a safe and sound financial
system.
Our mandate does not include social policy,
promotion of business or market conduct.
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How OSFI works
OSFI activities can be divided into two
broad categories:
• Regulation: enhances the financial system’s safety
and soundness by evaluating system-wide risks and
promoting sound business and financial practices
through guidelines, policy and recommendations.
• Supervision: identifies institution-specific and
systemic risks and trends, and intervenes in a timely
manner to minimize losses to policyholders,
depositors and pension plan members.
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OSFI Philosophy
OSFI’s approach can be defined as:
• Reliance based
– Financial Institutions manage themselves;
– Independent auditors and actuaries (accounting
and actuarial policy shop within OSFI).
• Risk based
– Focus on substantive prudential risks (internal
risk tolerance policy);
– Financial Institution failures are permitted and
sometimes the best option (OSFI mandate).
• Principles based
– OSFI Guidance.
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