The Office of the Superintendent of Financial Institutions issued a notice indicating that it will not punish violations of equity investment limits caused by the adoption of new accounting standards.

The regulator says that it is aware that the imposition of new accounting rules may have placed additional pressure on the ratios reported regarding the equity investment limits set in federal legislation. OSFI says it has been reviewing these regulations and intends to advance recommendations for their amendment to address the unintended impact of the new accounting standards and other known issues.

The process for implementing these changes could take several months, it says. In the meantime, OSFI says that where a federally-regulated financial institution or bank holding company inadvertently commits a violation that is subject to the Administrative Monetary Penalties Regulations by exceeding an equity investment limit, the Superintendent will not issue a notice of violation or impose a monetary penalty if the Superintendent is of the opinion that the violation can reasonably be attributed to the adoption of the new accounting standards.

“FRFIs and bank holding companies are expected to maintain prudent investment policies and OSFI will continue to monitor each entity’s investment practices as part of its supervisory process,” it says.