The Office of the Superintendent of Financial Institutions has released a draft guideline entitled “Legislative Compliance Management,” geared to assist financial institutions with regulatory risk. OSFI is seeking comments from the industry by September 30.

This new guideline updates the May 2000 Interim. Changes to the interim guideline are intended to align OSFI’s guidance on LCM more closely with a risk-based supervisory approach. They changes are also a response to industry comments on the interim guideline. In particular, OSFI wants to convey its recognition that “effective LCM involves smaller, simpler structures in smaller organizations and simpler operations.”

Management of regulatory risk, worldwide on a consolidated basis, is critical to financial institutions’ well being, says OSFI. “The overriding question in supervisory reviews of LCM process and procedures is whether institutions can control the risk in the particular circumstances.”