In its most recent regular quarterly release, the Office of the Superintendent of Financial Institutions (OSFI) announced numerous guideline amendments seeking to hone its risk response, clarify regulatory expectations, and enhance overall oversight efficiency.
“OSFI has proactively established an annual discipline of refining our regulatory guidelines and advisories, looking for opportunities to remove unnecessary burden,” said Peter Routledge, superintendent of financial institutions, in a news release.
According to OSFI, the quarterly release included publishing a one-time report, jointly developed with the Autorité des marchés financiers (AMF), on the standardized climate scenario exercise.
OSFI said the joint OSFI-AMF report intends to bolster the financial sector’s comprehension of climate-related financial risks, spur the development of climate risk measurement capabilities, and standardize the view of physical and transition risks across financial institutions.
Lastly, as part of its quarterly release, OSFI revised its administrative monetary penalties (AMP) framework, applicable to violations after Sept. 11.
OSFI explained that the revision aims to update the scaling factor to determine the proper AMP amounts for small and medium-sized financial institutions, align with OSFI’s risk appetite, reflect the current risk environment, and incentivize the speedy remediation of issues.
Revised guidelines
First, OSFI said it updated the Capital Adequacy Requirements (CAR) Guideline to clarify and reflect the risks encountered by financial institutions, maintain the current criterion for income-producing real estate, add a transition period for combined loan products, and align the treatment of US government-sponsored entities with that country’s standards.
OSFI added that it introduced related updates to the Small and Medium-Sized Deposit-Taking Institutions Capital and Liquidity Requirements Guideline.
Second, OSFI said it amended Guideline E-23: Model Risk Management to expand its scope to include risks from AI and other models, not just those from traditional models. OSFI explained that this update aims to better respond to industry trends.
In its news release, OSFI noted that the guideline seeks to safeguard Canadians by advancing responsible innovation and sound decision-making.
Third, OSFI said it revised Guideline E-15: Appointed Actuary to abolish mandatory peer reviews starting January 2027, while maintaining the authority to request such reviews if necessary.
OSFI shared that this update aims to decrease duplication and reflect its findings that peer reviews’ expenses to the industry exceed their prudential benefits.
“Our actions have been clear: reduce regulatory burden where possible, sharpen our focus on the most important risks, and enable institutions to remain resilient and competitive in an uncertain world,” Routledge said in the news release. “A strong, stable financial system isn’t just a safeguard—it’s a catalyst for national prosperity.”