OSFI's fall Quarterly Release: Unveiling new risk guidelines, adjusting mortgage standards and easing regulatory burden

Today, the Office of the Superintendent of Financial Institutions (OSFI) held its fall Quarterly Release and announced measures that will streamline and strengthen its regulatory and supervisory oversight.

This quarter OSFI released the following:

• Minimum Qualifying Rate (MQR) industry letter
  • Confirms that the prescribed Minimum Qualifying Rate (MQR) for uninsured straight switches at renewal is no longer required.
• Revised Regulatory Notice on Commercial Real Estate (CRE) Lending
  • Clarifies and reinforces expectations around forbearance practices for CRE lending.
• Regulatory Notice on Culture Risk Management
  • Sets expectations for managing culture risk in areas of governance and enterprise-wide culture management. 
• Final Liquidity Adequacy Requirements (LAR) Guideline
  • Updates monitoring tools used to address intraday liquidity risk, introduces a new regulatory return and updates the treatment of Banker’s Acceptances.
• Final Life Insurance Capital Adequacy Test (LICAT) Guideline
  • Outlines a new framework to improve segregated fund guarantee risk sensitivity including adjustments to the available capital calculation, adjustments to the Base Solvency Buffer, and transition measures. 
• Final Mortgage Insurer Capital Adequacy Test (MICAT) Guideline
  • Updates the capital rules for multi-unit residential mortgage insurance risk by standardizing the approach and leveraging the Capital Adequacy Requirements.
• Final International Financial Reporting Standard (IFRS) 17 Guideline
  • Replaces the IFRS 17 Advisory and brings together existing accounting expectations, removes redundant information, clarifies accounting expectations, and addresses specific comparability concerns.

OSFI also shared the results from the first phase of its Policy Review in which OSFI will rescind 20 guidelines and regulatory advisories. This ongoing initiative ensures OSFI’s guidance remains current, fit-for-purpose, and able to adapt to emerging risks. It also supports and aligns with OSFI’s risk appetite and new Supervisory Framework.

On December 5, 2024, OSFI will hold a virtual Quarterly Release Industry Day to give stakeholders further insight on the Quarterly Release items and the opportunity to ask related questions. Stakeholders are invited to register here.

Quote

Today’s updates on liquidity, capital, culture, and mortgage and commercial real estate lending help keep federally regulated financial institutions safe and sound. By continuously reviewing our policies, we reduce unnecessary regulation, enabling industry and OSFI to focus on the right risks, at the right time.

- Peter Routledge, Superintendent of Financial Institutions