As part of its quarterly release, the Office of the Superintendent of Financial Institutions (OSFI) has announced the commencement of a 90-day public consultation regarding the capital requirements for credit risk in its draft Capital Adequacy Requirements (CAR) Guideline (2027).
In a news release, OSFI noted that this consultation suggests changes aimed at aligning capital requirements to reflect the risks encountered by financial institutions and enhancing bank capacity to extend credit and promote growth.
“These revisions are designed to align capital requirements more closely with risks by increasing the granularity and risk sensitivity of the capital treatment, while freeing capacity for institutions to extend credit and support economic growth,” said Jacqueline Friedland, executive director of the Risk Assessment and Intervention Hub, in a speech accompanying the quarterly release.
Friedland noted that the consultation will close on Feb. 18, 2026.
OSFI’s latest quarterly release also addressed the new Final Minimum Capital Test (MCT) Guideline (2026), which will come into force on Jan. 1, 2026.
In its news release, OSFI said the new guideline will simplify the unexpired coverage formula, clarify how property and casualty insurance companies hold capital for foreign branches, adjust the capital confirmation requirements, and adjust the framework’s application.
OSFI added that the changes in the new guideline seek to improve and modernize the capital requirements to ensure their efficient and consistent application.
“These changes help ensure insurers maintain adequate capital to meet obligations and cover potential losses,” Friedland said.
OSFI’s quarterly release included the Supervisory Framework Renewal Post-Implementation Report. In its news release, OSFI noted that the report focuses on a review of its new supervisory framework and its practical application since the April 2024 implementation. The report includes stakeholder feedback and identifies potential improvement areas.
In the speech, Friedland noted that the areas for improvement were the ‘weakest link’ risk rating approach and clarity and transparency in methodology.
OSFI’s latest release also included a report on its insights from the 2025 climate risk returns and updated returns, as well as an outline of planned amendments.
OSFI noted that Canada’s six systemically important banks and four internationally active insurance groups were the first institutions this year to file standardized reporting forms to gather climate-related financial data.
Friedland noted that initial submissions “revealed key challenges such as data gaps, reliance on proxies, and inconsistent reporting practices, while capturing new physical risk data from banks and insurers that had not been included in previous regulatory returns.”
OSFI’s quarterly release also addressed its initiative, launched 18 months ago, to rescind or remove documents from its guidance library. OSFI shared that it will rescind or eliminate 32 additional documents by Dec. 31.
According to OSFI, thus far, it has removed a total of 52 documents, comprising over 600 pages of English and French content.
“This work enhances regulatory efficiency by streamlining our guidance library so expectations are clearer, targeted, and aligned with OSFI’s mandate,” said Theresa Hinz, executive director of policy and risk response, in remarks accompanying the release.
“Through modernized capital requirements, simplified guidance, and refined supervisory practices, OSFI will ensure that Canada's financial system remains resilient, adaptable, and ready to meet the challenges of tomorrow,” said Peter Routledge, superintendent of financial institutions, in OSFI’s news release.
More on quarterly release
OSFI claimed that its latest release shows how it, through an approach focusing on smart oversight and regulatory efficiency, seeks to:
- Target material risks
- Simplify requirements
- Prepare for emerging risks
- Lessen unnecessary burden
- Ensure the safety and soundness of the financial system
- Help institutions focus on lending, investment, and economic growth
“Over the past 15 years, OSFI has played a key role in building resilience in Canada's financial system,” Routledge said in the news release. “We can leverage this foundation to help financial institutions help Canadians and the Canadian economy.”