OFSI Keeping Banks under Surveillance

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Canada’s top banking regulator has noted that it is inadequate to have global regulators simply create new rules for the financial sector, because preventing another crisis also requires an equivalent focus on day to day supervision of the industry.

Julie Dickson, superintendent of the Office of the Superintended of Financial Institutions (OFSI) made remarks on this topic during an address at the Women in Capital Markets luncheon in Toronto.

OFSI is currently updating its supervisory framework and increasing its oversight of risk management, Dickson does not want to cross the line by intruding into the management of banks.

Regulation tend to focus on issues such as banks’ capital requirements, supervision centres on when and how regulators intervene in the industry noted Dickson.

An increase in supervision means more on site visits and a proactive intervention when a company’s risk management process appears to be weak.

OFSI is developing guidance on minimum expectation for firms in setting risk appetite, while raising its scrutiny of risk management around the use of models.

With respect to board compensation, Dickson said that Canadian financial institutions should be filling out more seats with bankers in an effort to deepen expertise on financial issues.

It has also been made clear that the regulator will not hesitate to step up its onsite verification if it feels that a financial institution is deliberately being opaque about its business.

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