The Office of the Superintendent of Financial Institutions (OSFI) is generally doing a good job, according to a survey of financial industry directors, but shouldn’t it be quite so eager to adopt new international regulatory standards.
OSFI on Monday published the findings of confidential consultations with the directors of the major banks and insurers to assess their perceptions of OSFI performance. Although the overall impression of OSFI is positive, the directors cited areas for improvement.
Many directors “reported that they believe OSFI has been proactive in responding to emerging issues. However, OSFI’s perceived early adoption of international regulatory initiatives was often referenced as an example of how proactivity can serve to disadvantage Canada’s financial services sector,” the report’s executive summary says.
In addition, “some concerns were raised regarding the perception that, when applying [corporate governance guidelines], OSFI does not always scale its assessments based on the nature, scope, complexity and risk profile of each institution or company”, the summary says, and “… there was a perception among some that the guideline is driving boards into areas of responsibility that are beyond their mandate, areas that have traditionally been understood to be the responsibility of management. Board directors expressed the view that the role of boards should not be extended in this manner.”
Communications between OSFI and industry board members have “improved significantly over the past three to four years,” the summary adds.
OSFI commissioned The Strategic Counsel, an independent research firm, to conduct interviews with 30 directors on the boards of Canada’s largest banks, life insurers, and property and casualty insurance companies, between March and June.