OSFI releases new Supervisory Framework to modernize financial supervision

Today, the Office of the Superintendent of Financial Institutions (OSFI) released its new framework for supervision. The framework will guide OSFI’s supervision of federally regulated financial institutions (FRFIs) and private pension plans.

The new framework is the most significant change to OSFI’s supervisory approach in 25 years. It brings notable changes, including:

• expanding the 4-point risk rating scale to an 8-point scale which will provide an earlier indication to FRFIs of changes in OSFI’s risk assessment of their organizations;
• including more information for FRFIs about the drivers of their risk rating; and
• the introduction of new risk assessment categories: business risk, financial resilience, operational resilience, risk governance together with the integration of climate risk considerations.

By providing enhanced rating information and tailoring supervision to the size and complexity of a regulated institution or private pension plan, the new framework is intended to result in more timely interventions, reduce burden where appropriate, and help regulated institutions and private pension plans better understand OSFI’s supervisory priorities and expectations.

The new framework is the result of an extensive development process, including benchmarking and international peer reviews. It will come into force in April 2024.

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We are launching a new supervisory framework on April 1, 2024, to ensure a faster, more effective response to critical risks faced by federally regulated financial institutions and private pension plans. The new framework will enhance the transparency of OSFI’s risk assessments and thereby deepen the resilience of the Canadian financial system.