The Office of the Superintendent of Financial Institutions (OSFI) today released its annual report showing that its balanced approach to regulation and supervision continues to contribute to strong public confidence in Canada’s financial system.

“The continued high level of confidence expressed by Canadians in financial institutions and pension plans reflects the safety and soundness of the financial services industry and while there are several contributing factors, we believe effective regulation and supervision is a key one,” noted OSFI Superintendent Nicholas Le Pan, in a news release.

“At OSFI our job is to balance competitiveness with stability; international rules with Canadian market realities; efficiency with thoroughness. This approach to striking a balance guided our performance during 2005-2006.”

Tabled today in the House of Commons, the report highlights a number of OSFI activities during the past year designed to assess and enhance its regulatory responsibilities, including:

  1. A survey confirmed Canadians are very confident that their financial institutions are stable. The continued high level of public confidence in the Canadian financial system reflects the safety and soundness of the industry and, while there are several contributing factors, effective regulation and supervision is a key one.
  2. OSFI consulted with key industry stakeholders of private pension plans. The findings revealed that OSFI is viewed as being effective in discharging our mandate. In the upcoming year, OSFI will be taking steps to improve areas that were identified by our pension stakeholders.
  3. OSFI hosted an anti-money laundering and anti-terrorism financing information session to highlight OSFI’s key initiatives and expectations. OSFI also participated in consultations to strengthen Canada’s anti-money laundering (AML) and anti-terrorism financing (ATF) framework, and furthered our supervision program regarding AML/ATF at federally regulated financial institutions.
  4. The ongoing implementation of the Basel II Capital Accord continued to be a key priority. In 2005 OSFI hosted a college of supervisors to discuss cross-border implementation approaches. As well, OSFI participated in the development of two consultative documents on credit risk assessment and use of the fair value option. The improvements in risk measurement and management through Basel II should benefit Canadian banks’ ability to compete and maintain the strength of our financial system.

In his final message as Superintendent, Le Pan described how OSFI strikes a balance in meeting its mandate.

“We must carefully balance the interests of many groups, including depositors, policyholders, private pension plan members, financial institutions and pension plan administrators. I think we have been very successful at making effective decisions, taking into account the complexity of the financial system and the needs of individual Canadians. This is how we strike the right balance in maintaining the safety and soundness of Canada’s financial system.”