OSFI to streamline its approach to corporate governance

Those plans start with the regulator itself. “Before we challenge boards to raise their game in this area, OSFI needs to ensure that we have created the conditions for their success,” he said.

To that end, Rudin said that OSFI is going to streamline its expectations for boards, to make them better adapted to the size, complexity and risk profile of the institutions. “This will create better opportunities for boards to concentrate on the prudential responsibilities that truly matter. And it will create opportunities for OSFI to set, and achieve, high standards for effective risk governance by boards,” he said.

Currently, he said, many boards are facing “a long and in many ways less-than-consistent list of tasks”, which can impede performance. To address this concern, OSFI is in the midst of a review of its approach to corporate governance that “will prune away some of the growth in the requirements that we have placed on boards of directors of banks and insurers over the years. We will be streamlining, we will be simplifying, and ultimately, we will be presenting boards with a more focused and effective approach to governance,” he said.

Rudin said that OSFI plans to begin consultations with the industry on the planned revisions in the fall, and that it will provide a “longer-than-usual” time for industry feedback.

“While we recognize the progress that boards of Canadian financial institutions have made in risk governance, we believe that they can and should be more effective. To enable more effective governance we will streamline our expectations of boards,” he said. “This will create better opportunities for boards to concentrate on their prudential responsibilities. Only when we have presented boards with these opportunities can we hold them accountable if they fail to become fully engaged on the important issues.”

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