2016-17 Financial Institutions Survey (FIS)
Final Report

POR number: 014-16
Contract number: 59017-160005/001/CY
Contract award date: 29/06/2016
Submission date: 02/2017

Prepared for:
Office of the Superintendent of Financial Institutions (OSFI)

For more information on this report:
information@osfi-bsif.gc.ca

Ce rapport est aussi disponible en français.

Prepared by: Environics Research Group

Table of contents

• Executive Summary
• Background and Objectives
  • Research methodology
  • Key findings
  • Political neutrality statement
• Background and Objectives
  • Report synopsis
  • Research methodology
  • Sample
  • Sample profile and non-response bias analysis
  • Questionnaire design and pre-testing
  • Data collection
  • Completion results
  • A note about tables and statistical significance testing
• Key Findings
  • Overall Impressions
  • Guidance
  • Approvals
  • Supervision
  • Small and medium-sized institutions
  • Dealing with emerging issues and final comments
• Appendix
  • Research instruments
  • Invitation Letter
  • Questionnaire
  • Reminder e-mails

Executive Summary

Background and Objectives

The Office of the Superintendent of Financial Institutions (OSFI) is the primary regulator of federally regulated financial institutions and federally administered pension plans. To help assess how well it is achieving its mandate, OSFI undertakes consultations with senior executives within the financial community for their perceptions of OSFI's performance.

A key element of OSFI's stakeholder consultations program is a biennial survey of CEOs of all federally regulated financial institutions, including banks and other deposit-taking institutions, and life and property and casualty insurance companies.

The research objective of the 2016-17 Financial Institutions Survey (FIS) is to provide a high level assessment of OSFI's overall performance on a series of core measures, including:

• Overall impressions of OSFI;
• Impressions of OSFI's guidance;
• Impressions of OSFI's approvals process;
• Impressions of OSFI's supervisory activities; and,
• Assessments of emerging key issues.

Where relevant, the 2016-17 results are compared to the three previous research waves to understand how perceptions of OSFI's performance have changed over time.

Research Methodology

The results are based on an online survey conducted with senior executives of federally regulated financial institutions, between September 26 and October 26, 2016.

A list of eligible financial institutions (225) was provided by OSFI to Environics, all of whom were invited to participate in this research.

These institutions comprise all active deposit-taking institutions and insurance companies supervised by OSFI, meaning that the survey represents an attempted census of these financial institutions. As with previous iterations of this survey, financial institutions in windup were not included as the questions would not be relevant. The data presented in this report are unweighted.

Almost all responses to the survey (119) were completed by small and medium-sized institutions. For the purposes of this study, small and medium-sized institutions are defined as all financial institutions excluding Canada's six largest banks and three largest life insurance companies. All nine large financial institutions completed the survey, bringing the total sample to 128 respondents. The response rate for the survey is 57%. This is calculated as the number of responding participants (128), divided by the total eligible sample (225). This is an excellent response rate for a survey with busy senior executives, and is higher than achieved in the previous FIS survey (e.g., the response rate for the 2014-15 online survey was 43%).

Since the approach was an attempted census (i.e., entire population of active financial institutions regulated by OSFI was invited to participate in this study), there is no margin of sampling error to be estimated or reported. The good response rate and the similarity of responding institutions to the entire population on key characteristics (industry sector, asset size) indicates that the results are likely to be representative of financial institutions regulated by OSFI.

Key findings

Overall, the findings in the 2016-17 survey show positive momentum on OSFI’s performance in a number of areas across guidance, approvals and supervision. Indeed, the survey this year shows that all key metrics were consistent or increased from 2014-2015.

Overall, respondents are satisfied with OSFI as the prudential regulator and supervisor of Canada’s financial services industry, and the findings this year are more positive than previous iterations of the survey. Specifically, over nine in ten (93%) are very or somewhat satisfied with OSFI. The level of satisfaction has increased overall and in particular among the number of insurance companies providing positive ratings.

There is also widespread agreement among respondents that OSFI focuses on the appropriate areas of risk in their sector. In anticipating future areas of priority, the threat of cyber risk continues to be a priority that stakeholders would like to see OSFI focus on.

There is continuing positive momentum on performance ratings for consulting with the industry when developing guidance. The findings indicate modest opinions on the scaling of guidance to reflect the nature of smaller organizations. Having said that, there has been a decline in the number of respondents providing negative ratings.

Respondents also provide high scores for OSFI’s performance in the approvals process and there has been an increase in the number who say they are very satisfied with this area from the last survey. There has also been an increase in perceived understanding of the approvals process in that more respondents believe they understand very well the basis on which decisions are made in comparison to the previous wave of the survey.

When considering supervision, there is a majority view that OSFI is doing a good job in providing opportunities to discuss issues of concern before coming to a conclusion, as well as with regard to the clarity of their written correspondence. The findings also highlight an increase in performance on consistency of written and oral communications.

The findings among small and medium-sized institutions largely echo those outlined above in that the metrics remain either consistent with the findings from 2014-15 or have increased.

The total expenditure for the POR project is $40,068.95 (including HST).

Political neutrality statement

I hereby certify as a Senior Officer of Environics Research Group that the deliverables fully comply with the Government of Canada political neutrality requirements outlined in the Communications Policy of the Government of Canada and Procedures for Planning and Contracting Public Opinion Research. Specifically, the deliverables do not contain any reference to electoral voting intentions, political party preferences, standings with the electorate, or ratings of the performance of a political party or its leader.

Megan Tam
Vice President, Public Affairs
Environics Research Group
megan.tam@environics.ca
613.699.8905

Background and Objectives

The Office of the Superintendent of Financial Institutions (OSFI) is the primary regulator of federally regulated financial institutions and federally administered pension plans. To help assess how well it is achieving its mandate, OSFI undertakes consultations with senior executives within the financial community for their perceptions of OSFI's performance.

A key element of OSFI's stakeholder consultations program is a biennial survey of CEOs of all federally regulated financial institutions, including banks and other deposit-taking institutions, and life and property and casualty insurance companies.

The research objective of the 2016-17 Financial Institutions Survey (FIS) is to provide a high-level assessment of OSFI's overall performance on a series of core measures, including:

• Overall impressions of OSFI;
• Impressions of OSFI's guidance;
• Impressions of OSFI's approvals process;
• Impressions of OSFI's supervisory activities; and,
• Assessments of emerging key issues.

Where relevant, the 2016-17 results are compared to the three previous research waves to understand how perceptions of OSFI's performance have changed over time.

Report synopsis

This report presents a detailed analysis of the study results, with comparisons to previous waves of the FIS where applicable.

A set of tabulated data tables is provided presenting the results of each question in the survey for all participants.

Unless otherwise noted, all results are expressed as a percentage. Charts and tables may not add to 100% due to rounding or multiple mentions. Results for most questions have been recalculated to exclude the small number of respondents who answered "don't know" or who did not offer a response.

Research Methodology

The results are based on an online survey conducted with CEOs of federally regulated financial institutions, between September 26 and October 26, 2016.

Since the approach was an attempted census (i.e., entire population of active financial institutions regulated by OSFI was invited to participate in this study), there is no margin of sampling error to be estimated or reported. The good response rate and the similarity of responding institutions to the entire population on key characteristics (industry sector, asset size) indicates that the results are likely to be representative of financial institutions regulated by OSFI.

Sample

A list of eligible financial institutions (225) was provided by OSFI to Environics, all of whom were invited to participate in this research. These institutions comprise all active deposit-taking institutions and insurance companies supervised by OSFI, meaning that the survey represents an attempted census of these financial institutions. As with previous iterations of this survey, financial institutions in windup were not included as the questions would not be relevant. The data presented in this report are unweighted.

Almost all responses to the survey (119) were completed by small and medium-sized institutions. For the purposes of this study, small and medium-sized institutions are defined as all financial institutions excluding Canada's six largest banks and three largest life insurance companies. All nine large financial institutions completed the survey, bringing the total sample to 128 respondents.

Sample profile and non-response bias analysis

The following table profiles the number of completed surveys within each sub-group and how this compares to the entire population of financial institutions regulated by OSFI. The final sample is largely consistent with the population by industry sector and asset size, and can therefore be considered representative of the population according to these known characteristics.

Table 1: Sample profile

Questionnaire design and pre-testing

The questionnaire was based upon the 2014-15 survey, but was updated to ensure the content is relevant to current issues of interest to OSFI.

Prior to finalizing the survey for field, Environics conducted a pre-test with ten "live" respondents, in both English and French. This consisted of an online survey with a small number of respondents and the inclusion of a small set of pre-test questions. The results of the pre-test interviews were reviewed by Environics' senior research consultant and representatives from OSFI. Only one small text change was made to the questionnaire following the pre-test. A copy of the final version of the questionnaire is included in the Appendix.

Data collection

The online survey was conducted according to the following steps:

• Environics programmed the questionnaire onto its survey software in English and French and hosted the survey on a secure server located in Canada. Steps were taken to guarantee complete confi­den­tiality and anonymity of survey responses.
• OSFI distributed the initial invitation by email to financial institutions to ensure that the message was not treated as spam and to confirm that Environics was conducting the survey on OSFI's behalf. A letter from the Superintendent of OSFI was attached. Environics provided the survey link and a unique ID for each financial institution to embed into the invitation.
• Environics sent reminder e-mails to financial institutions who had not participated in the survey by a certain deadline, to encourage their response.
• Environics electronically captured all survey responses as they were submitted and created an electronic data file for coding and analysis.

All research instruments are included in the Appendices.

All surveys were conducted in the respondent's official language of choice. Two surveys were completed in French; the remainder were completed in English.

All research work was conducted in accordance with the professional standards established by MRIA, as well as applicable federal legislation (Personal Information Protection and Electronic Documents Act, or PIPEDA). The survey was registered under the MRIA's Research Registration System, which permits the public to verify a survey call, inform themselves about the industry and/or register a complaint.

Completion results

The response rate for the survey is 57%. This is calculated as the number of responding participants (128), divided by the total eligible sample (225).

This is an excellent response rate for a survey with busy senior executives, and is higher than achieved in the previous FIS survey (e.g., the response rate for the 2014-15 online survey was 43%).

A note about tables and statistical significance testing

All results in tables are expressed as percentages. Percentages may not add to 100 due to rounding or multiple responses.

Differences in comparison to the prior FIS results, and differences between DTIs and insurance companies, are indicated if they are statistically significant (at the 95% confidence level).

↑ indicates a significantly greater proportion than the prior FIS results
↓ indicates a significantly lower proportion than the prior FIS results

○ indicates a significantly greater proportion than the comparison group

Key Findings

Overall Impressions

Overall satisfaction with OSFI

The vast majority (93%) are satisfied with OSFI as the regulator and supervisor of Canada's financial institutions, a slight increase from the previous wave of the survey in 2014-15 (86%). The proportion of respondents who are “very satisfied” with OSFI has risen substantially since 2014-15 (60%, up from 43% in 2014-15).

Table 2: Overall Satisfaction with OSFI (total sample) over time

BASE: Total sample, excluding those with no opinion (2016-17 n=127)
Q1 Overall how satisfied are you with OSFI as the principal prudential regulator and supervisor of Canada's financial services industry?

While the difference in satisfaction levels between DTIs and insurance companies is not statistically significant, these results indicate that the proportion of insurance companies that are "very satisfied" has increased greatly compared to the previous three waves.

Table 3: Overall satisfaction with OSFI – Comparison between DTIs and Insurance Companies over time

BASE: Total sample, excluding those with no opinion (n = 127, DTI n=62; Insurance n=65)
Q1 Overall how satisfied are you with OSFI as the principal prudential regulator and supervisor of Canada's financial services industry?

Focus on appropriate areas of risk

Most respondents believe that OSFI focuses on the appropriate areas of risk in their sector (87% good). Positive views about how well OSFI focuses on the appropriate areas of risk in their sector are similar for both DTIs and insurance companies although DTIs are more likely to provide a rating of “very good” as compared to insurance companies (49% vs. 30%).

Table 4 - Extent to which OSFI focuses on appropriate areas of risk

BASE: Total sample, excluding those with no opinion (2016-17 n=123)
Q3 How would you rate OSFI on the extent to which it focuses on the appropriate areas of risk in the (insurance/deposit-taking) sector?

Table 5 - Extent to which OSFI focuses on appropriate areas of risk – Comparison between DTIs and Insurance Companies

BASE: Total sample, excluding those with no opinion (2016-17 n=123, DTI n=59, insurance n=64)
Q3 How would you rate OSFI on the extent to which it focuses on the appropriate areas of risk in the (insurance/deposit-taking) sector?

Risk areas that should be priorities for OSFI

DTIs and insurance companies tend to agree that OSFI should prioritize cyber risk/IT security, regulatory burden, and capital risk issues.

There is greater focus on FinTech disruption (22%), mortgage-related risks (16%), and shadow banking (10%) among DTIs, and on environmental risks (17%), interest-related risks (13%), and insurance-related risk (13%) among insurance companies.

Table 6 - Risk areas that should be priorities for OSFI (unprompted comments) – Comparison between DTIs and Insurance Companies

BASE: Total sample, excluding those with no opinion (Total sample n=104; DTI n=51; Insurance n=53, responses <5% not shown)
Q4 What one or two risk areas do you believe should be priorities for OSFI in the next couple of years pertaining to [companies in the insurance sector / institutions in the deposit-taking sector]?

Guidance

OSFI continues to receive overall positive ratings for consulting with industry when developing guidance (83% total good). The proportion who say OSFI is doing a very good job in this area is similar to 2014-2015 (up 3 points to 42%).

Table 7 - Rating of OSFI's performance on "consulting with the industry when developing guidance" over time

BASE: Total sample, excluding those with no opinion (2016-17 n=124)
Q6B How would you rate OSFI with respect to consulting with the financial services industry when developing guidance?

The overall jump in the proportion who say OSFI does a very good job consulting with industry is due primarily to the significant increase in positive views among deposit-taking institutions (47% very good, up 12 points since 2014-15). Deposit-taking institutions rate OSFI more positively (90% total good) than do insurance companies (77% total good).

Table 8 - Rating of OSFI's performance on "consulting with the industry when developing guidance" – Comparison between DTIs and Insurance Companies over time

BASE: Total sample, excluding those with no opinion (DTI n=60; Insurance n=64)
Q6B How would you rate OSFI with respect to consulting with the financial services industry when developing guidance?

Performance on responsiveness

A majority (80% total good) give OSFI a positive rating for its timely response to market changes or industry suggestions that guidance needs updating. This rating has remained stable since the previous wave in 2014-15 (77%).

Table 9 - Rating of OSFI's performance on "responding in a timely manner to market changes/industry suggestions that guidance needs updating" over time

BASE: Total sample, excluding those with no opinion (2016-17 n=124)
Q5 How would you rate OSFI with respect to responding in a timely manner to market developments or to industry suggestions that guidance needs updating?

DTIs and insurance companies give OSFI similar ratings for its timely response to market changes or industry suggestions that guidance needs updating.

Table 10 - Rating of OSFI's performance on "responding in a timely manner to market changes/industry suggestions that guidance needs updating" – Comparison between DTIs and Insurance Companies over time

BASE: Total sample, excluding those with no opinion (Total sample n=124; DTI n=58; Insurance n=66)
Q5 How would you rate OSFI with respect to responding in a timely manner to market developments or to industry suggestions that guidance needs updating?

Performance on balance

Two thirds (65%) give OSFI an overall positive rating for balancing prudential considerations and industry's need for competitiveness when developing guidance.

Overall positive ratings for OSFI on this measure have not changed significantly but are moving in a positive direction over the past two surveys (12 points up from 53% 2012-2013).

Table 11 - Rating of OSFI's performance on "developing guidance that strikes an appropriate balance between prudential considerations and need for institutions to compete" over time

BASE: Total sample, excluding those with no opinion (2016-17 n=128)
Q12 How would you rate OSFI with respect to developing guidance that strikes an appropriate balance between prudential considerations and the need for institutions to compete?

Overall ratings for OSFI on balancing prudential considerations and competitiveness when developing its guidance remain within the historic range for both DTIs and insurance companies (66% DTI and 64% Insurance), although the proportion of insurance companies who provide “very good” ratings is significantly lower than DTIs (6% very good vs. 26% DTI).

Table 12 - Rating of OSFI's performance on "developing guidance that strikes an appropriate balance between prudential considerations and need for institutions to compete" – Comparison for DTIs and Insurance Companies over time

BASE: Total sample, excluding those with no opinion (DTI n=62; Insurance n=66)
Q12 How would you rate OSFI with respect to developing guidance that strikes an appropriate balance between prudential considerations and the need for institutions to compete?

Extent to which OSFI considers nature, size and complexity of financial institutions

Similarly to 2014-15, slightly under half of small and medium-sized institutions give OSFI guidance an overall good rating (47%) for considering the nature, size, and complexity of financial institutions, while the plurality of institutions give a rating of fair (42%).

Table 13 - Rating of OSFI's guidance on “extent to which it considers the nature, size, and complexity of financial institutions” – among small and medium-sized institutions only

BASE: Total small and medium-sized institutions, excluding those with no opinion (n=118)
Q13 How would you rate OSFI’s guidance on the extent to which it considers the nature, size and complexity of financial institutions?

While overall ratings for DTIs and insurance companies are similar, DTIs are considerably more likely to give a rating of ‘very good’ (23%) than are insurance companies (11%).

Table 14 - Rating of OSFI's guidance on “extent to which it considers the nature, size, and complexity of financial institutions” – among small and medium-sized institutions only – comparison of DTIs and

BASE: Total small and medium-sized institutions, excluding those with no opinion (DTI n =56, Insurance n = 62)
Q13 How would you rate OSFI’s guidance on the extent to which it considers the nature, size and complexity of financial institutions?

Effectiveness in providing a clear indication of expectations

Almost all believe OSFI's guidance is at least somewhat effective (91%) in providing a clear indication of its expectations, and two in five (39%) say it is very effective in this area (a significant increase from 2014-15 where only 24% believed OSFI was “very effective”). Deposit-taking institutions and insurance companies reported similar ratings of effectiveness.

Table 15 – Rating on perceived effectiveness of OSFI's guidance in providing a clear indication of its expectations

BASE: Total sample, excluding those with no opinion (n=128).
Q14 Overall, how effective do you think OSFI's guidance is in providing a clear indication of its expectations?

* The question was modified in 2014-15 and a split sample approach was used. The 2016-2017 iteration is compared to the split sample that has the directly comparable wording.

Of the few institutions that felt that OSFI did not provide a clear indication on its expectations in its guidance, insurance companies tend to believe that the guidance was poorly communicated or uses unclear guidelines.

Table 16 – Rating on perceived effectiveness of OSFI's guidance in providing a clear indication of its expectations - comparison of DTIs and Insurance

BASE: Total sample, excluding those with no opinion (n=128).
Q14 Overall, how effective do you think OSFI's guidance is in providing a clear indication of its expectations?

Approvals

Overall satisfaction with processing applications as part of OSFI's approvals process

Three in five (59%) institutions indicated that they had made a request for a regulatory approval to OSFI in the past two years. This does not differ between DTIs and insurance companies.

A majority (89%) of institutions who have submitted applications are satisfied with OSFI in this area, an increase from 78% in 2014-15. Notably, the percentage of institutions very satisfied with OSFI in processing applications increased substantially to 63% from 40%.

Table 17 - Overall satisfaction with OSFI in processing regulatory approval applications – among applicants

BASE 2016-17: Have submitted an application to OSFI (n=70)
Q16 What is your overall level of satisfaction with OSFI in processing applications from your company/institution?

Table 18 - Overall satisfaction with OSFI in processing regulatory approval applications – among applicants ─ comparison of DTIs and Insurance

BASE 2016-17: Have submitted an application to OSFI (n=70)
Q16 What is your overall level of satisfaction with OSFI in processing applications from your company/institution?

Understanding of basis for application decisions

More than eight in ten (89%) say they understand somewhat well or very well the basis on which OSFI makes decisions about their applications for approval, similar to the previous wave (88%). Over half of institutions say that they understand very well (54%), an increase from the previous wave where about a third (36%) indicated that they understand very well the basis for application decisions.

Table 19 - Understanding of the basis on which OSFI makes applications decisions ─ among applicants

BASE 2016-17: Have submitted an application to OSFI (n=70)
Q17 How well do you understand the basis on which OSFI makes decisions about your company/institution's applications?

Table 20 - Understanding of the basis on which OSFI makes applications decisions ─ among applicants ─ comparison of DTIs and Insurance

BASE 2016-17: Have submitted an application to OSFI (n=70; DTI n=32; Insurance n=38)
Q17 How well do you understand the basis on which OSFI makes decisions about your company/institution's applications

Supervision

Performance on providing an opportunity for discussion

More than eight in ten (87%) give OSFI overall positive ratings for providing an opportunity for discussion, consistent with previous waves (84% in 2014-2015).

Table 21 - Rating of OSFI's performance on "providing an opportunity to discuss issues of concern prior to OSFI coming to a conclusion" over time

BASE: Total sample, excluding those with no opinion (2016-17 n=127)
Q20 How would you rate OSFI with respect to providing an opportunity for your company/institution to discuss issues of concern with OSFI prior to OSFI coming to a conclusion?

Performance on clarity of written correspondence

Similar to previous waves, almost nine in ten (88%) also give an overall positive rating for the clarity of OSFI's written correspondence, up slightly from the previous wave (83% in 2014-15).

Table 22 - Rating of OSFI's performance on "clarity of OSFI's written correspondence outlining issues of concern" over time

BASE: Total sample, excluding those with no opinion (2016-17 n=126)
Q21How would you rate OSFI with respect to the clarity of OSFI's written correspondence (e.g., Management Reports and Supervisory Letters) outlining issues of concern?

Performance on consistency of communications

A similarly large majority (86%) also give OSFI an overall positive rating for the consistency between its written and oral communications, which is an increase from previous waves (78% in 2014-2015).

Table 23 - Rating of OSFI's performance on "the consistency between OSFI's written and oral communications" over time

BASE: Total sample, excluding those with no opinion (2016-17 n=125)
Q22. How would you rate OSFI with respect to the consistency between OSFI's written and oral communications?

Opinions about OSFI's performance on supervision-related activities are similar for both DTIs and insurance companies.

Table 24 - Rating of OSFI's performance on supervision-related activities – Comparison between DTIs and Insurance Companies

BASE: Total sample, excluding those with no opinion
Q20-22 The following questions pertain to OSFI's supervision as it relates to your [company/institution]. How would you rate OSFI with respect to…?

Perceived effectiveness of performance in supervising

As before, a very large majority (94%) believe OSFI is effective in supervising their company or institution, a slight increase over the previous wave of the survey (89%).

Table 25 - Perceived effectiveness of OSFI's performance in "supervising your company/institution" over time

BASE: Total sample, excluding those with no opinion (2016-17 n=127)
Q23 Overall, how effective do you think OSFI is in supervising(i.e. ongoing monitoring, on-site reviews including supervisory recommendations, reporting requirements, etc.) your company/institution?

Table 26 - Perceived effectiveness of OSFI's performance in "supervising your company/institution" over time - comparison of DTIs and Insurance

BASE: Total sample, excluding those with no opinion (2016-17 n=127)
Q23 Overall, how effective do you think OSFI is in supervising(i.e. ongoing monitoring, on-site reviews including supervisory recommendations, reporting requirements, etc.) your company/institution?

The most frequently mentioned reasons that companies and institutions give when asked why OSFI is effective in supervising is that supervision takes into account the size and complexity of businesses (32%) and that supervision has clear communication across their institution (29%). Other frequently mentioned reasons include good follow-up or supervision of institutions (23%), that supervision is professional or knowledgeable (18%), and regular or continuous contact with OSFI’s team (17%).

Insurance companies are more likely to say that OSFI is timely in response to questions or requests (18%) than DTIs (3%).

Table 27 – Reasons for perceiving effectiveness of OSFI's performance in "supervising your company/institution"

BASE: OSFI effective in supervising institution (2016-17 n=66, DTIs n=32, Insurance n=34, responses <5% not shown)
Q23B What are the main reasons why you say OSFI is very effective in supervising your company/institution?

The most frequently mentioned reasons given by companies and institutions for a lack of effectiveness in OSFI’s supervision of companies or institutions are that supervision does not often scale to the size or complexity of the industry (32%), and that OSFI personnel does not have a sound understanding of industry practices (32%). Reasons less frequently cited include high turnover of relationship managers or having to educate a new relationship manager on institutions’ business (13%), and a discrepancy between the group creating the regulations and the supervision group (13%).

Table 28 – Reasons for perceiving lack of effectiveness of OSFI's performance in "supervising your company/institution"

BASE: OSFI not effective in supervising institution (2016-17 n=31, DTI n=12, insurance n=19, responses <5% not shown)
Q23C What are the main reasons why you say OSFI is not more effective in supervising your company/institution?

Satisfaction with official language of choice capabilities

Almost all (98%) participating institutions are satisfied with OSFI staff's ability to communicate with the institution in its official language of choice, including nine in ten (90%) who are very satisfied. This remains consistent with previous waves (97% in 2014-15).

Table 29 - Satisfaction with OSFI staff's ability to interact with financial institutions in their official language of choice (English or French) over time

BASE: Total sample, excluding those with no opinion (2016-17 n=123).
Note: Two surveys were completed in French, all others in English.
Q24 Thinking about your dealings with OSFI staff on any supervisory or regulator matter, how satisfied are you with OSFI's capacity to interact with you in the official language of your choice (i.e., English or French)?

Table 30 - Satisfaction with OSFI staff's ability to interact with financial institutions in their official language of choice (English or French) over time - comparison of DTIs and Insurance

BASE: Total sample, excluding those with no opinion (2016-17 n=123).
Note: Two surveys were completed in French, all others in English.
Q24 Thinking about your dealings with OSFI staff on any supervisory or regulator matter, how satisfied are you with OSFI's capacity to interact with you in the official language of your choice (i.e., English or French)?

Small and medium-sized institutions

This section presents the results of a subset of questions introduced in the 2014-15 FIS for small and medium-sized institutions as a result of new initiatives underway at OSFI focusing on issues specific to this segment. For the purposes of this study, small and medium-sized institutions are defined as all financial institutions excluding Canada's six largest banks and three largest life insurance companies.

Performance on guidance-related activities

Small and medium-size institutions give OSFI an overall positive rating for guidance-related activities. Institutions and companies are most positive about OSFI providing the opportunity to comment on revised or proposed guidance (32% very good), though the proportion has declined since 2014-15 (45% very good). Views about the transparency of the process (27% very good) or OSFI communicating its response once feedback has been provided (23% very good) are similar to the 2014-15 wave.

Table 31 - Ratings of OSFI's performance on guidance-related activities – Small and medium-sized institutions only

BASE: Small and medium-sized institutions, excluding those with no opinion
Q7-9 As needed, OSFI develops Guidance (which may include guidelines and advisories) for [companies in the insurance sector/institutions in the deposit-taking sector]. How would you rate OSFI with respect to…?

While both small and medium-sized institutions consider OSFI to provide them with enough opportunity to comment on proposed guidance and to communicate its response to feedback, DTIs consider the process to be somewhat more transparent.

Table 32 - Ratings of OSFI's performance on guidance-related activities - small and medium-sized institutions only – Comparison between DTIs and Insurance Companies

BASE: Small and medium-sized institutions, excluding those with no opinion
Q7-9 As needed, OSFI develops Guidance (which may include guidelines and advisories) for [companies in the insurance sector/institutions in the deposit-taking sector]. How would you rate OSFI with respect to…?

Improving consultation process

A majority of institutions (61%) are aware that OSFI includes a summary of stakeholder comments with the final version of all revised or new guidelines. Awareness is slightly higher among insurance companies, with two-thirds (67%) aware of the summaries, compared to 55% of deposit-taking institutions that are aware of the summaries.

Table 33 – Awareness of summary of stakeholder comments in revised and new guidelines – among small and medium-sized institutions only

BASE: Small and medium-sized institutions (total n = 119, DTI n =56, insurance n=63)
Q10 Were you aware that OSFI includes with the final version of all revised or new guidelines a summary of stakeholder comments including an explanation of how OSFI dealt with the issues raised through the consultation process?

When asked for suggestions for improving the consultation process, small and medium-sized institutions would most like to see more consultation (21%), greater discussions with companies in the process of guidance development (21%), and continuous communication/sessions to discuss and review new guidelines (13%).

Table 34 - Suggestions for improving consultation process on guidance (unprompted comments) ─ small and medium-sized institutions only – Comparison between DTIs and Insurance Companies

BASE: Small and medium-sized institutions (Total sample n=62; DTI n=28; Insurance n=24)
Q11 Do you have any suggestions for improving the consultation process OSFI follows when developing guidance?

Performance on scaling supervision and guidance

Small and medium-sized institutions hold moderately positive views about the extent to which OSFI scales its supervision (71%) and the application of its guidance (69%) taking into account the nature, size and complexity of the institution.

Table 35 - Ratings of OSFI's performance on scaling its supervision and guidance – among small and medium-sized institutions only

BASE: Small and medium-sized institutions, excluding those with no opinion
*Note: Question wording was adjusted slightly compared to 2014-15.
Q18-19 The following questions pertain to OSFI's supervision as it relates to your [company/institution]. How would you rate OSFI with respect to…?

Small and medium-sized insurance companies and DTIs rate OSFI similarly on the extent to which OSFI scales its supervision and applies guidance.

Table 36 - Rating of OSFI's performance on scaling its supervision and guidance ─ small and medium-sized institutions only – Comparison of results between DTIs and Insurance Companies

BASE: Small and medium-sized institutions, excluding those with no opinion
Q18-19 The following questions pertain to OSFI's supervision as it relates to your [company/institution]. How would you rate OSFI with respect to…?

Priority issues for next year

The top priority issues suggested by small and medium-sized institutions is reducing the regulatory burden/pace of change for small institutions (23%), and capital requirements suitable for small and medium-sized institutions (17%), followed by scaling expectations to size and complexity of business (15%).

The priorities mentioned by DTIs and insurance companies are largely similar. Priorities mentioned only by DTIs include balancing prudential considerations with financial institutions’ need to compete or grow (21%).

Table 37 - Issues pertaining to small and medium-sized institutions that OSFI should prioritize in the next year (unprompted comments among small and medium-sized institutions) – Comparison between DTIs and Insurance Companies

BASE: Small and medium-sized institutions (Total sample n=78; DTI n =43; Insurance n=35)
Note: Excludes responses of "don't know/no answer"
Q26 What one or two issues pertaining to small and medium-sized [insurance companies/deposit-taking institutions] do you believe OSFI should make priorities in the next year?

Dealing with emerging issues and final comments

Most give OSFI an overall positive rating (85%) for being proactive on emerging issues and this is essentially unchanged from previous waves (79% in 2014-2015).

Table 38 - Impressions of how proactive OSFI is in dealing with emerging issues pertaining to their sector over time

BASE: Total sample, excluding those with no opinion (2016-17 n=123)
Q2 How would you rate OSFI with respect to how proactive it is in responding to emerging issues pertaining to the [insurance/deposit-taking] sector?

DTIs and insurance companies give OSFI similar ratings for being proactive on emerging issues and have not changed significantly from previous waves.

Table 39 - Impressions of how proactive OSFI is in dealing with emerging issues pertaining to their sector – Comparison between DTIs and Insurance Companies over time

BASE: Total sample, excluding those with no opinion (Total sample n=123; DTI n=59; Insurance n=64)
Q2 How would you rate OSFI with respect to how proactive it is in dealing with emerging issues pertaining to the [insurance/deposit-taking] sector?

Final comments

Relatively few institutions provided additional comments about issues raised in the survey. Final comments mostly suggest OSFI is doing a good job and a few also mention that more service support is required related to OSFI systems. The remaining comments echo the themes seen in other lines of questioning, such as scaling regulation to size and complexity of institutions, continuing to focus on small and medium-sized institutions and continued awareness of regulatory burden.

Appendix

Research instruments

Invitation Letter

September 2016

To: Federally Regulated Financial Institutions

Subject: Confidential on-line survey commissioned by OSFI

I am writing to invite your participation in an important confidential on-line survey that is being conducted by Environics Research Group on behalf of the Office of the Superintendent of Financial Institutions (OSFI). Since 1998, OSFI has commissioned consultations with senior members of the financial community to obtain their assessment of OSFI's effectiveness as a regulator and supervisor. Your participation in the survey is voluntary. Your acceptance or refusal to participate will not affect your relationship with OSFI. The results will help OSFI to improve our performance, which we believe is of ultimate benefit to you and your organization.

In the accompanying e-mail, you will find a link to the survey, which is hosted on a secure Internet site. Only Environics will have access to your electronic responses. The survey should take approximately 15 minutes to complete and you may pause and save your responses at any time. We encourage you to canvass your colleagues for their views, if you feel this would be helpful.

OSFI is committed to a confidential research process and the resulting report will present responses in summary form and without attribution. As part of OSFI's commitment to transparency and accountability, the final results will be posted on OSFI's website in spring 2017.

If you would like to discuss this consultation, please feel free to contact Laura Buckland, Manager of OSFI Consultations, at (613) 990-9959, or Sarah Roberton, Senior Research Associate, Environics at 613-230-5089.

We hope we can count on your participation.

Sincerely,
Jeremy Rudin,
Superintendent

Questionnaire

Environics Research Group has been retained by the Office of the Superintendent of Financial Institutions (OSFI) to conduct the 2016 edition of its biennial survey with Chief Executive Officers of Federally Regulated Financial Institutions.

You are invited to provide your assessment of OSFI’s effectiveness as a supervisor and regulator. Your feedback is critical for OSFI to understand how well it is achieving its strategic objectives, in order to be accountable to stakeholders like yourself and to improve its effectiveness. Participation in the survey is voluntary and will take about 15 minutes.

You can be assured that Environics, as an independent third party, will hold your responses in strict confidence. OSFI will not know who participated in the research or what specific institutions/companies have said about it.

As a standard industry practice, Environics has put in place secure procedures to ensure that confidentiality is maintained at all times. The survey is registered with the Market Research and Intelligence Association. Click here if you wish to verify its authenticity.

Environics will provide OSFI with a report aggregating the findings from this survey. The results of the research will be posted on OSFI’s web site.

To begin the survey, please click on the [>>] button below.

Please only use the [<<] or [>>] buttons to navigate through the survey.

Overall Impressions

1. Overall, how satisfied are you with OSFI as the principal prudential regulator and supervisor of Canada’s financial services industry?

• Very Dissatisfied 1
• Somewhat Dissatisfied 2
• Neither Satisfied nor Dissatisfied 3
• Somewhat Satisfied 4
• Very Satisfied 5
• Don't Know 99

2. How would you rate OSFI with respect to how proactive it is in responding to emerging issues pertaining to the (insurance / deposit-taking) sector?

• Very Poor 1
• Poor 2
• Fair 3
• Good 4
• Very Good 5
• Don't Know 99

3. How would you rate OSFI on the extent to which it focuses on the appropriate areas of risk in the (insurance/deposit-taking) sector?

• Very Poor 1
• Poor 2
• Fair 3
• Good 4
• Very Good 5
• Don't Know 99

4. What one or two risk areas do you believe should be priorities for OSFI in the next couple of years pertaining to (companies in the insurance sector/institutions in the deposit-taking sector)?

[NON-MANDATORY]

Guidance

As needed, OSFI develops Guidance (which may include guidelines and advisories) for (companies in the insurance sector/institutions in the deposit-taking sector).

How would you rate OSFI with respect to:

5. Responding in a timely manner to market developments or to industry suggestions that guidance needs updating

• Very Poor 1
• Poor 2
• Fair 3
• Good 4
• Very Good 5
• Don't Know 99

6. Consulting with the financial services industry when developing guidance

• Very Poor 1
• Poor 2
• Fair 3
• Good 4
• Very Good 5
• Don't Know 99

7. [Programming instruction: Only ask of small and mid-sized Institutions ] Providing your (company/institution) with the opportunity to comment on revised or proposed guidance

• Very Poor 1
• Poor 2
• Fair 3
• Good 4
• Very Good 5
• Don't Know 99

8. [Programming instruction: Only ask of small and mid-sized Institutions ] The transparency of the consultation process OSFI follows when developing guidance (e.g., the means by which industry members may provide feedback, the timing for feedback, the timing of OSFI’s response)

• Very Poor 1
• Poor 2
• Fair 3
• Good 4
• Very Good 5
• Don't Know 99

9. [Programming instruction: Only ask of small and mid-sized Institutions ] Communicating its response, including rationale, to feedback provided by your industry sector during consultations related to guidance development

• Very Poor 1
• Poor 2
• Fair 3
• Good 4
• Very Good 5
• Don't Know 99

10. Were you aware that OSFI includes with the final version of all revised or new guidelines a summary of stakeholder comments including an explanation of how OSFI dealt with the issues raised through the consultation process?

• Yes
• No

11. [Programming instruction: Only ask of small and mid-sized Institutions ] Do you have any suggestions for improving the consultation process OSFI follows when developing guidance?

[NON-MANDATORY]

12. How would you rate OSFI with respect to developing guidance that strikes an appropriate balance between prudential considerations and the need for institutions to compete?

• Very Poor 1
• Poor 2
• Fair 3
• Good 4
• Very Good 5
• Don't Know 99

13. [Programming instruction: Only ask of small and mid-sized Institutions ] How would you rate OSFI’s guidance on the extent to which it considers the nature, size and complexity of financial institutions?

• Very Poor 1
• Poor 2
• Fair 3
• Good 4
• Very Good 5
• Don't Know 99

14. Overall, how effective do you think OSFI’s guidance is in providing a clear indication of its expectations?

• Very Ineffective 1
• Somewhat Ineffective 2
• Neither Effective nor Ineffective 3
• Somewhat Effective 4
• Very Effective 5
• Don't Know 99

b) [If Q14=1-2] What are the key reasons why you say OSFI’s guidance is ineffectivein providing indication of its expectations?

[NON-MANDATORY]

Approvals

As you know, OSFI’s Superintendent, and in some cases the Minister of Finance, must approve certain business transactions or initiatives (companies in the insurance sector/institutions in the deposit-taking sector) wish to take.

The following questions pertain to OSFI’s approvals process as it relates to your (company/institution).

15. Has your (company/institution) made a request for a regulatory approval in the last two years?

• Yes
• No [Skip to TEXT BEFORE Q18]
• Don’t know (99) [Skip to TEXT BEFORE Q18]

16. What is your (company’s/institution’s) overall level of satisfaction with OSFI in processing regulatory approval applications?

• Very Dissatisfied 1
• Somewhat Dissatisfied 2
• Neither Satisfied nor Dissatisfied 3
• Somewhat Satisfied 4
• Very Satisfied 5
• Don't Know 99

17. How well does your (company/institution) understand the basis on which OSFI makes decisions about your applications?

• Very Poorly 1
• Somewhat Poorly 2
• Neither Well Nor Poorly 3
• Somewhat Well 4
• Very Well 5
• Don't Know 99

Supervision

The following questions pertain to OSFI’s supervision as it relates to your (company / institution).

How would you rate OSFI with respect to:

18. [Programming instruction: Only ask of small and mid-sized Institutions ] The extent to which it applies guidance in a manner that is scaled to reflect the nature, size and complexity of your (company/institution), when carrying out supervisory work.

• Very Poor 1
• Poor 2
• Fair 3
• Good 4
• Very Good 5
• Don't Know 99

19. [Programming instruction: Only ask of small and mid-sized Institutions ] The extent to which its supervisory activities are scaled to reflect the nature, size and complexity of your (company/institution).

• Very Poor 1
• Poor 2
• Fair 3
• Good 4
• Very Good 5
• Don't Know 99

20. Providing an opportunity for your (company/institution) to discuss issues of concern with OSFI prior to OSFI coming to a conclusion.

• Very Poor 1
• Poor 2
• Fair 3
• Good 4
• Very Good 5
• Don't Know 99

21. The clarity of OSFI’s written correspondence (e.g., Management Reports and Supervisory Letters) in outlining issues of concern.

• Very Poor 1
• Poor 2
• Fair 3
• Good 4
• Very Good 5
• Don't Know 99

22. The consistency between OSFI’s written and oral communications.

• Very Poor 1
• Poor 2
• Fair 3
• Good 4
• Very Good 5
• Don't Know 99

23. Overall, how effective do you think OSFI is in supervising (e.g. ongoing monitoring, on-site reviews including supervisory recommendations, reporting requirements, etc.) your (company/institution)?

• Very Ineffective 1
• Somewhat Ineffective 2
• Neither Effective nor Ineffective 3
• Somewhat Effective 4
• Very Effective 5
• Don't Know 99

23 b) [If Q23=5] What are the main reasons why you say OSFI is very effective in supervising your (company/institution)?

[NON-MANDATORY]

23c) [If Q23=1-4] What are the main reasons why you feel OSFI is not more effective in supervising your (company/institution)?

[NON-MANDATORY]

Final Comments

24. Thinking about your dealings with OSFI’s staff on any supervisory or regulatory matter, how satisfied are you with OSFI’s capacity to interact with you in the official language of your choice (i.e., English or French)?

• Very Dissatisfied 1
• Somewhat Dissatisfied 2
• Neither Satisfied nor Dissatisfied 3
• Somewhat Satisfied 4
• Very Satisfied 5
• Don't Know 99

25. [If Q24=1-2] Which of the following are areas in which you are dissatisfied? (SELECT ALL THAT APPLY)

• OSFI’s capacity to speak to me in my official language of choice, e.g., in meetings, over the phone.
• OSFI’s capacity to write to me in my official language of choice, e.g., in emails, letters.
• OSFI’s capacity to read materials I send to them in my official language of choice, e.g., institution-specific documents, letters.
• None of the Above

26. [Programming instruction: Only ask of small and mid-sized Institutions ] What one or two issues pertaining to small and mid-sized (insurance companies / deposit-taking institutions) do you believe OSFI should make priorities in the next year?

[NON-MANDATORY]

27. Are there any other comments you would like to make concerning the issues raised in this questionnaire?

[NON-MANDATORY]

EXIT SCREEN

Thank you. The survey is now complete. Please click on the "submit" button below to submit your results.

Environics would like to thank you for your participation on behalf of OSFI.

Reminder e-mails

First Reminder

Subject line: Reminder: OSFI’s Financial Institutions Survey closes on October 21.

Dear INSERT NAME,

This is a reminder concerning OSFI's financial institutions survey – the survey is closing on Friday, October 21, 2016.

You will have recently received a letter from Jeremy Rudin, Superintendent of OSFI, requesting your participation. If you have not received the letter, please contact us and we will share a copy with you.

Your participation in the survey is voluntary and anonymous. Your acceptance or refusal to participate will not affect your relationship with OSFI, however, the results will help OSFI to improve its performance, which we believe is of ultimate benefit to you and your organization.

The financial institutions survey is being conducted online. The link below will take you to the secure Internet site provided by Environics Research Group, the independent consulting firm that OSFI has commissioned to undertake the research, where you can complete the survey.

If you have already completed the survey, we thank you for your participation and kindly request that you disregard this reminder.

To maintain confidentiality, this message was sent to you by Environics.

INSERT LINK

If you would like to discuss this matter at any time during the process, please contact me at (613) 230-5089 (ext. 224) (sarah.roberton@environics.com), or Laura Buckland, Manager of Consultations, OSFI at (613) 990-9959 (laura.buckland@osfi-bsif.gc.ca).

Sincerely,

Sarah Roberton
Senior Research Associate
Environics Research Group
Tel: (613) 230-5089 (ext. 224)
www.environics.ca

Second Reminder

Subject line: Reminder: OSFI’s Financial Institutions Survey closes on October 21.

This is a reminder about participation in OSFI's financial institutions survey – the survey will be closing on Friday, October 21st.

If you have already completed the survey, we thank you for your participation and kindly request that you disregard this reminder.

If you have not yet participated, the link below will take you to the secure Internet site provided by Environics Research Group, the independent consulting firm that OSFI has commissioned to undertake the research, where you can complete the survey. The survey is voluntary and anonymous, and will take no longer than 15 minutes to complete.

To maintain confidentiality, this message was sent to you by Environics.

INSERT LINK

If you would like to discuss the survey at any time during the process, please contact me at (613) 230-5089 (ext. 224) (sarah.roberton@environics.ca), or Laura Buckland, Manager of Consultations, OSFI at (613) 990-9959 (laura.buckland@osfi-bsif.gc.ca).

Sincerely,

Sarah Roberton
Senior Research Associate
Environics Research Group
Tel: (613) 230-5089 (ext. 224)
www.environics.ca

Third Reminder

Subject line: OSFI’s Financial Institutions Survey - Deadline extended to October 26

Un message en français suivra

The deadline for OSFI’s survey has been extended to Wednesday, October 26 at midnight. The survey will take only 10-15 minutes of your time.

OSFI values your feedback. While participation is voluntary, the results of this survey will help OSFI to improve its performance as a regulator and supervisor.

Environics Research Group has been commissioned to conduct this research. Please be assured that all answers you share with us will remain strictly confidential and anonymous.

Please click on the link below to participate in the survey:

INSERT LINK

If you have questions, please contact me at (613) 230-5089 (ext.224) (sarah.roberton@environics.ca) or Laura Buckland, Manager of Consultations, OSFI at (613) 990-9959 (laura.buckland@osfi-bsif.gc.ca).

Sincerely,

Sarah Roberton
Senior Research Associate
Environics Research Group
Tel: (613) 230-5089 (ext. 224)
www.environics.ca