Office of the Superintendent of Financial Institutions
The Office of the Superintendent of Financial Institutions is an independent agency of the Government of Canada reporting to the Minister of Finance created "to contribute to public confidence in the Canadian financial system". It is the sole regulator of banks, and the primary regulator of insurance companies, trust companies, loan companies and pension plans in Canada. The current Superintendent is Jeremy Rudin, who was appointed in June 2014. He replaced Julie Dickson, who retired. The term of the appointment is seven years.
Mandate
The Office of the Superintendent of Financial Institutions was created to contribute to public confidence in the Canadian financial system. OSFI's role is to:
Supervise institutions and pension plans to determine whether they are in sound financial condition and meeting minimum plan funding requirements respectively, and are complying with their governing law and supervisory requirements;
Promptly advise institutions and plans in the event there are material deficiencies and take or require management, boards or plan administrators to take necessary corrective measures expeditiously;
Advance and administer a regulatory framework that promotes the adoption of policies and procedures designed to control and manage risk;
Monitor and evaluate system-wide or sectoral issues that may impact institutions negatively.
OSFI’s legislation has due regard to the need to allow institutions to compete effectively and take reasonable risks. The legislation also recognizes that management, boards of directors and plan administrators are ultimately responsible and that financial institutions and pension plans can fail. The Office of the Chief Actuary, an independent unit operating within OSFI, provides a range of actuarial valuation and advisory services to the Government of Canada.
Related legislation
Office of the Superintendent of Financial Institutions Act
Late 1800s – establishment of the Office of the Superintendent of Insurance, which subsequently became the Department of Insurance. The DOI was responsible for overseeing federally licensed life insurance companies, property and casualty insurance companies, trust and loan companies and pension plans, and for providing actuarial services to the government. 1925 – the Office of the Inspector General of Banks was established in response to the Home Bank failure and was responsible for regulating Canada's chartered banks. Early 1930s – Royal Commission on Banking and Currency reviewed banking and currency issues in the Canadian financial system. Early 1960s – Porter Royal Commission reviewed structural and operational issues affecting the financial system and financial institutions in Canada. The Commission's report concluded the financial system was sound, but developments had moved beyond the current state of laws and regulatory practices. Porter argued the public could not be insulated from loss in dealing with public institutions and markets. The Commission called for a system that would provide for adequate disclosure and that would set high standards of self-regulation, backed by strong government supervision and powers to enforce proper practices. 1967 – the Minister of Finance introduced legislation to establish the Canada Deposit Insurance Corporation to ensure the safety of small deposits and bring about a gradual improvement in the minimum financial standard of deposit-taking institutions in Canada. In 1983, legislative amendments extended CDIC's mandate to include assisting to maintain public confidence and stability in the financial system. Mid-1980s – increased international competition and the failure of two Canadian banks and the subsequent enquiry into these failures by the Honourable Willard Z. Estey highlighted the need to ensure a sound approach to handling the risks associated with the financial marketplace. July 1987 – to ensure a coordinated approach to supervision and a modern regulatory framework for Canada's financial system, and acting on the recommendations of the Estey commission, the government proclaimed the Financial Institutions and Deposit Insurance Amendment Act and the Office of the Superintendent of Financial Institutions Act. This latter Act joined the Department of Insurance and the Office of the Inspector General of Banks to form OSFI, which was given the powers to supervise and regulate all federally regulated financial institutions. May 1996 – Bill C-15 receives Royal Assent. This new legislation clarifies OSFI's prime responsibilities as helping to minimize losses to depositors, policy holders, and pension plan members and to maintain public confidence in the Canadian financial system. Preventing failure of financial institutions is not part of OSFI's mandate; however, promoting sound business practices helps reduce the risk that financial institutions will fail. The mandate stresses the importance of early intervention to achieve OSFI's objectives and establishes the basis for OSFI's mission, objectives, priorities and strategies.
