Prepared for the Office of the Superintendent of Financial Institutions
For more information on this report, please contact the Office of the Superintendent of Financial Institutions at: information@osfi-bsif.gc.ca.
Ce rapport est aussi disponible en français.
Prepared for the Office of the Superintendent of Financial Institutions
July 2019
The Office of the Superintendent of Financial Institutions (OSFI) commissioned Sage Research Corporation to conduct a qualitative public opinion research study to explore perceptions of the Office of the Superintendent of Financial Institutions (OSFI) as the regulator and supervisor of federally regulated deposit-taking institutions. The objectives of the research included assessment of OSFI’s guidance to the industry, its supervisory activities and its approvals process for regulatory approval applications. Interviews were completed with 63 executives from 38 deposit-taking institutions, between February 14 and May 8 2019. This publication reports on the findings of this public opinion research study.
Cette publication est aussi disponible en français sous le titre : Consultation du secteur des institutions de dépôts (CSID) 2018-2019
This publication may be reproduced for non-commercial purposes only. Prior written permission must be obtained from the Office of the Superintendent of Financial Institutions. For more information on this report, please contact the Office of the Superintendent of Financial Institutions at: information@osfi-bsif.gc.ca.
Communications and Consultations Division
Office of the Superintendent of Financial Institutions
255 Albert St.
Ottawa, ON K1A 0H2
Catalogue Number:
IN4-31/2019E-PDF
International Standard Book Number (ISBN):
978-0-660-31849-3
Related publications (registration number: POR 019-18):
Catalogue Number IN4-31/2019F-PDF (Final Report, French)
ISBN 978-0-660-31850-9
© Her Majesty the Queen in Right of Canada, as represented by the Minister of Finance, 2019
The primary purpose of the research was to explore perceptions of the Office of the Superintendent of Financial Institutions (OSFI) as the regulator and supervisor of federally regulated deposit-taking institutions. The objectives of the research included assessment of OSFI’s guidance to the industry, its supervisory activities and its approvals process for regulatory approval applications.
A total of 44 interviews were conducted with 38 deposit-taking financial institutions (DTIs) regulated by OSFI, ranging from small deposit-taking institutions to domestic systemically important banks (D-SIBs). A total of 63 individuals participated in the interviews. The participants were CEOs, CFOs, CROs, CCOs and other senior executives.
The interviews were conducted either in-person or by telephone between February 14 and May 8, 2019. The average interview length was 60 minutes.
The research conducted was qualitative in nature and designed to reveal a rich range of opinions and interpretations rather than to measure what percentage of the target population holds a given opinion. As such, the results provide an indication of participants’ views on the issues explored but cannot be generalized to the full population of senior executives representing those deposit-taking institutions regulated by OSFI. Rather, the findings from this research provide themes and direction. The findings cannot be used to estimate the numeric proportion or number of individuals in the population who hold a particular opinion because they are not statistically projectable.
In addition to prioritizing cyber/emerging technologies and the unregulated financial sector, the more common suggestions were:
This topic was addressed in two contexts in the interview, once with respect to guidance (asked of Small and Medium DTIs), and again with respect to supervision (asked of all DTIs).
The majority of Small and Medium DTIs perceived there to be at least some consideration in OSFI’s guidance of the nature, size and complexity of DTIs:
Among the minority of smaller DTI participants who were less satisfied:
Overall evaluations of OSFI’s supervision are very positive, and are widespread across all sizes and types of DTIs. Positive assessments included:
Many participants are satisfied with their supervisory team, but there are relatively small numbers of DTIs where there are opportunities for improvement:
The cost of this research was $70,246.45 (HST included).
The research findings will help OSFI assess how well it is achieving its mandate overall and will enable OSFI to improve on performance, as required, in its regulatory and supervisory activities as they pertain to federally regulated deposit-taking institutions.
I hereby certify as Senior Officer of Sage Research Corporation that the deliverables fully comply with the Government of Canada’s political neutrality requirements outlined in the Policy on Communications and Federal Identity and the Directive on the Management of Communications. 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 leaders.
Anita Pollak
President, Sage Research Corporation
Since 1998, the Office of the Superintendent of Financial Institutions (OSFI) has commissioned consultations with senior members of the financial services community to obtain their assessment of OSFI’s effectiveness as a supervisor and regulator. In 2018, OSFI commissioned Sage Research Corporation, an independent research firm, to undertake a consultation with key stakeholders in the deposit-taking institution (DTI) sector in order to explore perceptions of OSFI.
The objectives of the research were to:
The following details the breakdown of the completed interviews by size and type of institution:
| Number of Institutions | Number of Interviews | Number of Participants | |
|---|---|---|---|
| N=38 | N=44 | N= 63 | |
| Size of Institution | |||
| Large deposit-taking institutions (DSIBs) | 6 | 12 | 17 |
| Medium-sized deposit-taking institutions | 8 | 8 | 13 |
| Small-sized deposit-taking institutions | 24 | 24 | 33 |
| Type of Institution | |||
| Domestic banks | 16 | 22 | 28 |
| Domestic trust companies | 8 | 8 | 12 |
| Foreign banks (full or branch) | 14 | 14 | 23 |
The following summarizes the title or position of the individuals who participated in the interviews:
| Number of Participants | |
|---|---|
| N= 63 | |
| Title/Position of Participant | |
| CEOs/POs | 14 |
| CFOs | 15 |
| CROs | 18 |
| CCOs | 10 |
| Legal counsel | 3 |
| Other position | 3 |
Sample: OSFI provided Sage Research Corporate with a list of names and contact information for 86 deposit-taking institutions. Sage Research recommended a sampling plan to OSFI. The target plan aimed to represent CEOs, CFOs, CROs and CCOs across deposit-taking institutions. Sage Research randomly selected potential interviewees across the different types and sizes of institutions.
Recruitment Process: The selected individuals were mailed a package containing:
Approximately one week after mail out, senior consultants from Sage Research who were also responsible for conducting the interviews, contacted each potential participant to confirm their willingness to participate in the consultation and to schedule a time for the interview. In some cases, the selected individual designated another person in their organization for the interview, and in other cases they requested the interview be conducted with more than one person in their institution (11 of the 44 interviews involved more than one participant).
In the Greater Toronto area (GTA) and Montreal, participants were given the choice of completing the interviews in person or by telephone. Those outside of these two areas where the interviewers are located were interviewed by telephone. Of the 44 interviews completed, 29 were conducted by phone and 15 were in person.
Method: Qualitative research using a semi-structured, one-on-one interview approach was used to provide a depth of insight that is not achievable through other research methods and, in particular, through strictly quantitative surveys. One-on-one interviews allow deep probing into underlying assessments of OSFI’s effectiveness.
Interviewing:
The research conducted was qualitative in nature and designed to reveal a rich range of opinions and interpretations rather than to measure what percentage of the target population holds a given opinion. As such, the results provide an indication of participants’ views on the issues explored but cannot be generalized to the full population of senior executives representing those deposit-taking institutions regulated by OSFI. Rather, the findings from this research provide themes and direction. The findings cannot be used to estimate the numeric proportion or number of individuals in the population who hold a particular opinion because they are not statistically projectable.
Q.1 Overall, how satisfied are you with OSFI as the principal prudential regulator and supervisor of Canada’s financial services industry?
Satisfaction with OSFI is widespread. While to varying degrees some DTIs have certain issues or suggestions, the overall assessment is generally positive.
Widespread positive perceptions of OSFI include:
Some also comment positively on OSFI’s good reputation with the international community making it an effective representative for the Canadian financial industry.
While overall impressions of OSFI are positive, some participants raised various issues or made suggestions for improvements OSFI should consider. These are noted in relevant sections of the report.
Q.2 How would you assess OSFI on the extent to which it focuses on the appropriate areas of risk in the deposit-taking sector?
Q.3 How would you assess OSFI with respect to how proactive it is in responding to emerging issues pertaining to the deposit-taking sector?
Q.4 What one or two risk areas do you believe should be priorities for OSFI in the next couple of years pertaining to institutions in the deposit-taking sector?
OSFI is perceived to be focusing on many appropriate areas of risk. These include what some described as its "traditional" risk areas, and also those addressed in recently issued/updated guidance. Very few participants singled out what they considered to be currently an inappropriate or unnecessary risk focus.
Where assessment of OSFI is more mixed is on how proactive it is on emerging risk areas. OSFI is seen to be proactive in some areas, but almost all participants had suggestions for where OSFI needs to do more than it has done to date.
Several participants said OSFI has sometimes been overly reactive to an issue, particularly when it’s covered in the media – the example they cited was how OSFI responded to an issue a few years ago when concerns were raised about a DTI in the mortgage lending business, and they suggested OSFI over-reacted to the situation.
Assessment of OSFI’s progress in addressing risk areas can be divided into several categories:
OSFI’s focus in the last several years, includes risk areas where OSFI has recently issued/updated guidance, such as liquidity (LAR – Liquidity Adequacy Requirements), corporate governance, model risk (E-23 Enterprise-Wide Model Risk Management for Deposit-Taking Institutions), and mortgage debt (B-20, Residential Mortgage Underwriting Practices and Procedures).
Some of these risk areas were flagged as perhaps in need of future revision or fine-tuning. However, unlike the risk areas in the next category, participants did not say the scope of attention needs to be expanded. For example, some participants suggested B-20 may need to be revised as the existing rules take effect and the housing market evolves. One suggested E-23 may need revision in the future as model usage evolves, including for example use of artificial intelligence and machine learning in developing models.
Cyber/Emerging technologies: Many participants flagged this as a very important priority for OSFI to deal with. This includes not just cybersecurity, but also regulatory response to all the various developing technologies impacting the financial services industry. It is recognized and appreciated that OSFI has been focusing on this area and building up its resources. However, the magnitude of the issues and the rapid ongoing digitalization of financial services is such that they feel OSFI needs to continue a strong focus here and continue to build up its technical resources and expertise. Some feel OSFI has been slow to address cyber issues, and some expressed concerns about OSFI’s ability to be competitive in attracting people with strong technology and banking expertise.
Some participants noted other areas of guidance impacted by emerging technologies that they feel OSFI will need to prioritize on updating, including:
Particularly D-SIB participants, but also some other DTIs, suggested OSFI needs to do more to coordinate on cyber risks with other government authorities. For example, references were made to the Department of Finance, the Bank of Canada, the Office of the Privacy Commissioner, Public Safety Canada and CSIS. Cyber risk is a broad-based issue, and cyber incidents outside of federally regulated DTIs can impact the federally regulated sector. Several said that sometimes it is unclear from a regulatory perspective what the boundaries are between OSFI and other authorities. Examples mentioned included the Bank of Canada with respect to cyber risks, and the Office of the Privacy Commissioner with respect to data breeches that affect data privacy.
Other suggestions, each made by a few participants, for roles OSFI could play related to cyber/emerging technology risk included:
Culture and conduct risk: Some participants, spanning all institution sizes, felt OSFI needs to take a more proactive, systemic approach to culture and conduct risk. Several noted they have seen OSFI being more proactive on this area, but others said OSFI has been largely reactive to media coverage about this topic.
Unregulated financial sector: "Unregulated" here means not regulated by OSFI because the institution does not qualify as a FRFI. By definition, it is recognized that OSFI does not have actual regulatory authority over these institutions. Nonetheless, many participants across all institution sizes feel OSFI should be doing more than it is now. Their basic point is that risk in these unregulated sectors can cause systemic problems that impact risk for FRFIs, and therefore OSFI should be prepared to help mitigate risk coming from the unregulated financial sector.
"Shadow banking", in the sense of unregulated lending, was widely mentioned, particularly in the context of mortgage lending. Also often mentioned was "fintech", and the increasing role of technologically-driven companies outside of the FRFI space in providing financial services.
Participants suggested that OSFI should at least monitor the risk in the unregulated sector in order to identify whether and how this might impact risk for FRFIs. Several said they were concerned OSFI might not do this because of a "not in my back yard" mentality. Or, it was suggested that if OSFI does not feel it can take on this role alone, it should work with other authorities (e.g. Department of Finance, Financial Consumer Agency of Canada) to coordinate monitoring.
Open banking: Some suggested OSFI needs to do more to address open banking. It was acknowledged that the Department of Finance recently launched a consultation, but at present the perception is that OSFI has done little to address the impacts of open banking. A few participants were focused on the risks open banking can pose to such things as privacy and data protection, while a few others were concerned that OSFI may introduce regulations that overly restrict open banking.
Cannabis: A few participants suggested OSFI needs to address risks associated with the legalization of cannabis. An example was impact on correspondent banking relationships with FIs in countries where cannabis is not legal.
Q.5 What one or two things does OSFI need to improve upon as a regulator and supervisor?
As noted previously, there was widespread overall satisfaction with OSFI as the principal prudential regulator and supervisor of the financial services industry. Keeping this in mind, the following are the more frequently mentioned suggestions for improvement.
There were a variety of suggestions that were each made by one or a few participants:
Q.6 How would you assess OSFI with respect to responding in a timely manner to market developments or to industry suggestions that guidance needs updating?
Overall impressions of OSFI were generally positive, albeit with some specific exceptions. On the positive side, comments included:
As described earlier, there are some areas where a number of participants felt OSFI needs to do more, most notably on cyber/emerging technologies, and the unregulated financial sector.
There are some specific guidelines that some participants said have not been updated in a long time and they suggest need to be updated to keep up with where the market is now:
Q.7 How would you assess OSFI with respect to developing guidance that strikes an appropriate balance between prudential considerations and the need for institutions to compete?
Overall, the large majority of participants had a positive view of OSFI developing guidance that strikes an appropriate balance between prudential considerations and the need for institutions to compete. There were some variations in the results by size and type of DTI, as detailed below.
D-SIBs: D-SIBs are generally satisfied with OSFI striking a good balance, but with two specific exceptions:
Going forward, some specifically mentioned concern about the accelerated adoption of the Basel III output floor standard: instead of a 5 year transition starting in 2022, it would be fully adopted in Canada in 2022. A few participants said this would adversely impact the competitiveness of their corporate lending business.
A few also mentioned the early adoption of the SA-CCR (Standardized Approach to Counterparty Credit Risk), and of the FRTB (Fundamental Review of the Trading Book, also referred to as Basel 3.5 or Basel IV).
Some said they believe OSFI adopts standards ahead of other countries in order to bolster its reputation internationally as "the best regulator."
Medium: Some of the Medium DTIs were satisfied with OSFI’s balancing of prudential considerations and the need for institutions to compete, while some others – mostly medium domestic banks - felt that guidance sometimes favours D-SIBs and can make it hard for smaller DTIs to compete. This was particularly perceived to be the case for some liquidity requirements.
Small: The large majority of Small DTIs were satisfied with OSFI’s balancing of prudential considerations and the need for institutions to compete. Factors mentioned that contributed to this positive view included:
Among the remaining relatively small number of Small DTIs are less satisfied:
Q.8 Overall, how effective do you think OSFI’s guidance is in providing a clear indication of OSFI’s expectations?
There is widespread satisfaction with how effective OSFI is in providing a clear indication of its expectations. As many noted, OSFI’s guidance is principles-based, which means DTIs have some latitude to apply the guidance in a way suited to their organization. For those who found guidance not to be fully clear as to what is expected, many noted they have found it straightforward to ask for and get clarification. The supervisory team often plays an important and effective role in this regard. Some also mentioned that industry sessions, seminars and OSFI speeches can be helpful as well. So, the overall positive reaction is based on the written guidance itself plus the ease of getting clarification when necessary.
Two circumstances were mentioned that were associated with some frustration around clarity of expectations:
Q.9 [ASKED ONLY OF SMSBs] How would you assess OSFI’s guidance on the extent to which it considers the nature, size and complexity of financial institutions?
The interview guide had two general questions on the extent to which OSFI considers the nature, size and complexity of DTIs: Q.9 with respect to OSFI’s guidance, and Q.18 with respect to OSFI’s supervision. Overall, OSFI is perceived more positively on the supervision question than on the guidance question. The discussion here focusses on Q.9 guidance.
The majority of Small and Medium DTIs perceived there to be at least some consideration in OSFI’s guidance of the nature, size and complexity of DTIs.
A minority of the participants representing Small and Medium DTIs said they do not perceive OSFI to be considering nature, size and complexity in its guidance. They believe they are subjected to the same requirements as D-SIBs, or that OSFI guidance does not take into consideration their type of business. This was particularly the case for some DTIs which offer specialized or non-traditional services. These participants feel the regulatory regime needs to be somewhat different for their types of business and risk profiles.
When there are complaints about lack of consideration of nature/size/complexity, these often focus on the reporting and compliance requirements in the guidance. Small and Medium DTIs say they do not have anywhere near the resources of D-SIBs to comply with the same requirements as D-SIBs. They feel applying the same requirements can be disproportionately onerous for Small DTIs.
Q.10 Overall, how would you assess the consultative process OSFI followed in the development of the IFRS 9 Financial Instruments and Disclosures Guideline (e.g. means by which institutions could provide feedback, timing for feedback, timing of OSFI’s response)?
Some participants did not comment on the consultative process either because their institution was not involved in the consultation or the interviewees themselves were not involved. In some cases, the parent company or head office directed all efforts related to IFRS 9.
Among those who were able to offer an opinion about the IFRS 9 consultative process, the majority were satisfied with the process that OSFI put in place. There were no negative comments related to timelines nor to the means by which institutions could provide their input to OSFI.
There were some negative comments made about the consultation by a small number of participants:
Q.11 Accompanying the final IFRS 9 Guideline was a summary of stakeholder comments, which included an explanation of how OSFI dealt with the issues raised through the consultation process. How effective was the summary in communicating the decisions OSFI took on the issues raised by stakeholders regarding IFRS 9 Guideline?
Just over half did not comment on the summary of stakeholder comments because they had not seen it or did not recall it.
Among those who were able to offer an opinion, the majority felt the summary of OSFI’s position in response to the issues raised by stakeholders was effective – it was perceived to be clear and helpful.
Some offered negative comments about the summary not in terms of clarity, but rather with the decisions OSFI made. They felt OSFI should have accommodated more of the industry’s concerns.
While both the assessment of OSFI’s consultative process and industry feedback mechanism were mainly viewed positively, there were some comments related to concerns about the implementation of the IFRS 9 Guideline. These comments were made exclusively by D-SIBs:
Q.12 Overall, how would you assess the consultative process OSFI followed in the development of Guideline B-20 (e.g. means by which institutions could provide feedback, timing for feedback, timing of OSFI’s response)?
Just under half of the Small and Medium DTI participants did not comment on the B-20 Guideline consultative process, either because they were not personally involved or because their institutions do not offer residential mortgages.
Among those who were able to offer an opinion about the B-20 consultative process, most were satisfied with the process that OSFI put in place. There was plenty of time to review the draft guidance and to provide input. OSFI responded to the industry’s questions and suggestions. There were almost no negative comments related to timelines or to the means by which institutions could provide their input to OSFI.
Where there were some differences in opinion was in how OSFI revised B-20 in response to the consultation. The majority perceived OSFI to be reasonably responsive. Some, however, said that while OSFI ran a good consultation, there seemed to be a pre-determined desired outcome on OSFI’s part going in to the consultation and thus some felt that OSFI was not responsive to the concerns of the industry.
Q.13 Thinking about the final Guideline B-20, how effective was OSFI in communicating its expectations to the industry?
How useful were the industry information sessions that OSFI held in December 2017?
Among those institutions in the residential mortgage business, almost all felt that OSFI clearly communicated what was expected from the industry in the final B-20 Guideline issued in October 2017.
Most either attended the information sessions themselves or they were represented by someone else from their institution. They felt the guidance together with the industry information sessions were very useful to help understand OSFI’s expectations for implementation.
Participants liked that the information session allowed the opportunity to ask questions and to get immediate responses. The OSFI staff at the sessions were well-informed and able to address questions.
A small number of participants voiced some complaints:
There were a few negative comments related to OSFI’s implementation of B-20:
Q.14 [ASKED ONLY OF SMSBs ] In June 2016 OSFI released Guideline E-21: Operational Risk Management. Thinking about the final Guideline E-21, how effective was OSFI in communicating its expectations to the industry?
Some participants did not comment, in most cases because the interviewee was not directly involved with Guideline E-21.
Most of the DTIs, both Medium and Small, felt that it was a well-written document which clearly communicated OSFI’s principles-based expectations for the industry. Among this group, quite a few referred to having some type of interaction with OSFI about this guideline which contributed to their better understanding of how to apply the guidance to their institution. Examples of interaction with OSFI included meetings with OSFI, an OSFI review and subsequent feedback, and an industry risk management day session. A few said that they were largely already in compliance and only needed to make minor adjustments after input from OSFI.
Some participants voiced a few issues:
Q.15 [ASKED ONLY OF SMSBs ] How effective was the self-assessment template (issued April 2017) in supporting your institution in assessing current practices against the principles outlined in Guideline E-21?
Some participants did not comment on the self-assessment template, in most cases because the interviewee was not directly involved in using it. A few did not use the template because they said they were already largely compliant prior to its release.
The majority of DTIs found the self-assessment template useful to identify gaps in their own practices and as a checklist during implementation. A few said they shared the template with the supervisory team and it helped them create a structure for discussions with the supervisory team and subsequently helped the supervisor and the institution with the plan for compliance.
A few participants observed that there is a need for considerable interpretation as to which template items they needed to apply to their institution, and how to apply them. These participants said that whether or not they correctly applied the guideline in light of this will only be evident once OSFI does its review.
Q.16 [ASKED ONLY OF DSIBs ] In September 2017 OSFI released Guideline E-23: Enterprise-wide Model Risk Management for Deposit-Taking Institutions. Thinking about the final Guideline E-23, how effective was OSFI in communicating its expectations to the industry?
All the D-SIBs felt that Guideline E-23 clearly communicated OSFI’s expectations to the industry. Some also referenced the value of CBA’s involvement in the consultation process which led to the final guideline.
There were two suggestions on how the process could have been improved, each from one participant:
Q.17 Overall, how effective do you think OSFI is in supervising your institution (e.g. ongoing monitoring, on-site reviews including supervisory recommendations, reporting requirements, etc.)?
The overall evaluations of OSFI’s supervision are very positive, and are widespread across all sizes and types of DTIs. Positive assessments included:
One participant summed up the importance of the supervisory team and the Lead Supervisor as follows: "For FIs, especially small ones, the relationship with the regulator is really dependent on who your Lead Supervisor is. If you get somebody who has a wealth of experience and street smarts and they bring a practicality to the table, your ability to deal with that regulator is a lot better than somebody who’s more junior or inexperienced or is conservative."
Relatively small minorities of participants expressed concerns, of several different sorts:
Participants expect that there will be turn-over, and some commented this can be a good thing because it can be good from time to time to get a "fresh set of eyes" on the business. However, turn-over brings with it the potential for temporary minor disruption – or a "bump in the road" as one participant put it – as the new OSFI staff come up to speed.
The large majority of participants did not view OSFI turn-over as an issue. The frequency of turn-over is acceptable, and/or there is good knowledge transfer to new team members.
The participants who expressed concern or frustration were some of those who had what they considered to be frequent turn-over – meaning turn-over in less than two years, and particularly multiple sequential instances of turn-over with each less than two years. The result is a feeling that there is a disproportionate amount of time and effort spent bringing a new person up to speed. Among these participants, a related complaint is that they have not seen good knowledge transfer at OSFI to the new people.
Q.18 How would you assess OSFI on the extent to which its supervisory activities (e.g., ongoing monitoring, on-site reviews, reporting requirements, etc.) are scaled to reflect the nature, size, complexity and risk profile of your institution?
Most of the D-SIB and Medium DTI participants were satisfied that OSFI’s supervisory activities take into consideration the nature, size, complexity and risk profile of their institution. A concern was that it appears that OSFI sometimes takes what it considers to be a best practice at one D-SIB and then requires all other D-SIBs to adopt it without taking into account the feasibility or applicability of this to the other institutions.
The majority of Small DTIs were satisfied with OSFI’s consideration of nature, size, complexity and risk profile. Some commented they have seen improvements in this regard in the past several years (note that some of the other participants had only been in their jobs for several years or less, and may not have a historical perspective on this). Some noted that in cases where the guidance does not explicitly refer to nature, size, complexity and risk profile, the supervisory team will help in scaling the principles-based guidance appropriately to their institution. Some commented that OSFI’s risk based approach allows smaller institutions to focus their resources on the most important areas.
Among the minority of Small DTIs who had concerns:
Some smaller institutions said OSFI’s specialist teams do not always have a good understanding of their business. A few commented that the supervisory team has helped mitigate this problem by working with the specialist teams, but a few others said it has been a challenge for them to make specialist teams understand their business.
Q.19 How would you assess OSFI on the extent to which its supervisory recommendations balance expectations of FRFI controls with the risks, and are scaled to reflect the nature, size and complexity of your institution?
Most participants are satisfied that OSFI supervisory recommendations balance expectations of FRFI controls with the risks.
The exceptions:
Q.20 How would you assess OSFI with respect to providing an opportunity for your institution to discuss issues of concern with OSFI prior to OSFI coming to a conclusion?
As described earlier in Q.17, there is a widespread positive assessment of members of the OSFI supervisory teams being good communicators, in several respects:
Consistent with this, there is widespread positive assessment of OSFI providing an opportunity to discuss issues of concern prior to OSFI coming to a conclusion. There are occasional instances where this does not happen, but that is viewed as the exception, not the norm.
That said, a few smaller DTIs differentiated between their supervisory team and specialist teams: they said they have ample opportunity for discussion with their supervisory team, but have sometimes not had these opportunities with specialist teams.
Q.22 How would you assess the overall knowledge level of your supervisory team (e.g. knowledge of legislation; OSFI guidelines; regulatory policy; deposit-taking sector issues and risks; your institution)?
All participants reported that they have had dealings with their supervisory team in the past 12 months.
In all DTI segments, most participants gave an overall positive assessment of the knowledge level of the supervisory team. The team is perceived to be knowledgeable, and to bring in experts when necessary. Many – but not all – say the team has a good understanding of their institution and its business model.
The concerns expressed included:
Q.23 Thinking about your institution’s interactions with your supervisory team, what, if anything, do you believe needs to be improved?
Note that participants who had dealings with their supervisory team in the past 12 months were directed to include your Lead Supervisor, other members of the supervisory team and/or supervisory specialists in responding to this question.
Participant concerns and suggestions related to supervision can be found in several parts of the report, including the other supervision questions (Q.17 to Q.22), and the questions on communication (Q.24 to Q.27). This section summarizes concerns and suggestions not already addressed in those other parts of the report.
Q.28 To the best of your knowledge, has your institution ever made a request for a regulatory approval from OSFI?
Q.29 Has your institution made a request for regulatory approval in the past 1-2 years?
Q.30 Overall, how satisfied are you with OSFI in processing applications from your institution?
With only a few exceptions, all DTIs have been involved in requests for regulatory approval and about two-thirds have been involved in the past 1 to 2 years.
A large majority of those involved in the past 1 to 2 years were satisfied with the processing of their applications. OSFI set clear expectations on what was required from institutions in their submissions, provided opportunities for discussion if needed, and processed the applications in a reasonable time given the nature of the requests.
There were some who were dissatisfied because they experienced some problems during the application process: These included:
The length of time it takes OSFI to process certain types of applications, such as model approval or more complex types of requests for regulatory approval, is perceived to be too long. In most cases, the hold-up was attributed to OSFI and not to the Department of Finance.
Some suggested this could be due to insufficient staffing at OSFI.
Q.31 How would you assess OSFI with respect to communicating its expectations as it relates to the information required in support of processing a request for a regulatory approval?
Among those involved in requesting regulatory approvals, almost all felt that OSFI was clear, detailed and precise in its instructions on the information that institutions needed to provide. A few also commented that in instances when more information or clarification may be required, it is easy to get this from OSFI.
Q.32 How well do you understand the basis on which OSFI makes decisions about your institution’s applications?
Q.33 How would you assess OSFI with respect to responding to your institution’s requests for updates on the status of applications?
Q.34 How would you assess OSFI with respect to providing an opportunity for your institution to discuss issues of concern with OSFI prior to OSFI coming to a conclusion?
Almost all said that the basis on which OSFI makes decisions about their institution’s applications is clear.
A few participants said they would be interested in learning more about OSFI’s decision-making process. They felt that having a better understanding of OSFI’s process could help on future requests for regulatory approval.
Almost all of the DTIs who requested updates from OSFI felt that OSFI responded in a very timely manner.
Among those who had a need to discuss any concerns, OSFI was viewed as being very open to discussions. A few remarked positively on how during their discussions:
Q.24 Overall, how would you assess OSFI with respect to responding to questions your institution has brought forward concerning final OSFI guidance, including questions related to interpretation (e.g., consistency, clarity, timeliness)?
Almost without exception, OSFI is rated highly on being responsive to questions brought forward on final guidance. OSFI is seen to be receptive and open to discussion on any questions institutions may have about final guidance and to respond to these types of enquires promptly and clearly.
While there is almost unanimous support for OSFI’s principles-based regulatory approach, OSFI’s response to a question on interpretation of the final guidance may fall short of giving concrete direction or of clarifying which parts of the final guidance may apply to a certain type of DTI.
Q.25 Overall how would you assess OSFI with respect to responding to other enquiries your institution has brought forward (e.g. consistency; clarity; timeliness)?
As with enquiries about final guidance, most see OSFI as approachable and accessible as well as responsive to enquires in a clear and timely manner.
A few participants made the following observations:
Q.26 Overall, how would you assess OSFI with respect to its written correspondence (e.g. clarity; timeliness; and, consistency between written and oral communications)?
Most participants gave OSFI high marks for the clarity and timeliness of its written correspondence and the consistency between oral and written communications.
Some participants rated OSFI as being generally good when it comes to written correspondence, but also made the following observations:
Several participants responded to this question with concerns about OSFI’s reluctance to put things in writing in some circumstances:
There were some other suggestions made by a few DTIs related to better preparation for meetings with the supervisory team:
Q.27 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)?
27b) [If dissatisfied] In which areas are you dissatisfied (e.g. OSFI’s capacity to speak, write or read materials in the official language of my choice)?
Among DTIs headquartered outside of Quebec, all participants are satisfied with their interactions with OSFI in English.
Among Quebec based DTIs, there are no major concerns:
I am writing to invite you to participate in an important confidential study that is being conducted by Sage Research Corporation, an independent research firm, on behalf of the Office of the Superintendent of Financial Institutions (OSFI) with representatives of the deposit-taking institutions we regulate and supervise. Since 1998, OSFI has commissioned consultations with senior members of the financial community to obtain their assessment of its effectiveness as a regulator and supervisor. The results of this consultation will help OSFI to improve its performance, which we believe will be of ultimate benefit to you and your organization.
This consultation among deposit-taking institutions differs from the short Financial Institutions Survey (FIS) that you may have recently completed online. The deposit-taking consultation comprises one-on-one interviews among senior executives of deposit-taking institutions intended to obtain in-depth feedback about OSFI in areas such as guidance and supervision, whereas the FIS is conducted with all federally regulated financial institutions every two years to help track progress over time on key performance measures.
Within the next week, a representative of Sage Research Corporation will contact you to arrange a suitable time for an interview of about one hour in length. Prior to the interview, we ask that you review the enclosed interview guide as it will form the basis of the questions you will be asked. Please feel free to canvass your colleagues for their views to obtain a broader perspective, if you feel this would be helpful.
OSFI is committed to a confidential consultation process, which includes ensuring that the identities of those who participate are not disclosed to us. Although I have signed this letter personally, it has been addressed and mailed to you by Sage Research Corporation. In addition, the report that OSFI will ultimately receive from Sage Research Corporation will include only summary form, non-attributable feedback. The findings from this consultation will be posted on OSFI’s website in 2019.
If you would like to discuss the study at any time during the process, please contact Anita Pollak, President, Sage Research Corporation at (905) 577-4040 ext. 3, or Laura Buckland, Manager of OSFI Consultations, at (613) 990-9959.
We hope we can count on your participation.
Sincerely,
Jeremy Rudin
Superintendent
Encl.
La présente a pour but de vous inviter à prendre part à une importante étude confidentielle qui sera administrée par le cabinet de recherche indépendant Sage Research Corporation pour le compte du Bureau du surintendant des institutions financières (BSIF) auprès de représentants d’institutions de dépôts que nous réglementons et surveillons. Depuis 1998, le BSIF s’enquiert de l’opinion des dirigeants du secteur financier au sujet de son efficacité à titre d’organisme de réglementation et de surveillance. Les résultats de cette étude l’aideront à améliorer sa prestation, ce qui, en bout de ligne, sera bénéfique pour vous et votre organisme.
Permettez-moi de préciser que l’étude auprès des institutions de dépôts diffère du Sondage auprès des institutions financières auquel vous avez peut-être répondu en ligne récemment. L’étude se déroule sous forme d’entretiens personnalisés avec des dirigeants d’institutions de dépôts et vise à obtenir une image aussi précise que possible de l’impression qu’ils ont du BSIF, notamment au chapitre des directives qu’il émet et de la surveillance qu’il exerce, alors que le Sondage auprès des institutions financières est un exercice biennal auquel toutes les institutions financières fédérales sont conviées et qui vise à suivre les progrès réalisés à l’égard de ses principales mesures de rendement.
Dans quelques jours, un représentant du groupe Sage Research Corporation communiquera avec vous pour planifier un entretien d’une soixantaine de minutes. Nous vous demanderons de bien vouloir prendre connaissance du guide d’entrevue que vous trouverez en pièce jointe avant la date convenue, duquel sont tirées les questions de base qui vous seront posées. N’hésitez pas à demander l’opinion de vos collègues pour avoir une perspective plus vaste si vous le désirez.
Le BSIF accorde une grande importance à la confidentialité du processus, ce qui exige notamment qu’il n’y ait aucun moyen pour lui de connaître l’identité des participants. Ainsi, bien que cette lettre soit signée de ma main, je tiens à préciser qu’elle vous est adressée et transmise par Sage Research Corporation. Qui plus est, les réponses dont Sage Research Corporation rendra compte dans son rapport seront présentées sous forme de condensé ne pouvant être attribué à qui que ce soit. Les résultats de cet exercice seront publiés sur notre site Web en 2019.
Pour obtenir des précisions au sujet de cette étude à tout moment durant le processus, je vous invite à appeler M. Sylvain Laroche, associé principal, Sage Research Corporation, au 514-572-1489, poste 3, ou Mme Laura Buckland, gestionnaire, Consultations – BSIF, au 613-990-9959.
Espérant pouvoir compter sur votre participation.
Mes meilleures salutations,
Jeremy Rudin
Le surintendant
p.j.
I am writing to invite you to participate in an important confidential study that is being conducted by Sage Research Corporation, an independent research firm, on behalf of the Office of the Superintendent of Financial Institutions (OSFI) with representatives of the deposit-taking institutions we regulate and supervise. Since 1998, OSFI has commissioned consultations with senior members of the financial community to obtain their assessment of its effectiveness as a regulator and supervisor. The results of this consultation will help OSFI to improve its performance, which we believe will be of ultimate benefit to you and your organization.
Within the next week, a representative of Sage Research Corporation will contact you to arrange a suitable time for an interview of about one hour in length. Prior to the interview, we ask that you review the enclosed interview guide as it will form the basis of the questions you will be asked. Please feel free to canvass your colleagues for their views to obtain a broader perspective, if you feel this would be helpful.
OSFI is committed to a confidential consultation process, which includes ensuring that the identities of those who participate are not disclosed to us. Although I have signed this letter personally, it has been addressed and mailed to you by Sage Research Corporation. In addition, the report that OSFI will ultimately receive from Sage Research Corporation will include only summary form, non-attributable feedback. The findings from this consultation will be posted on OSFI’s website in 2019.
If you would like to discuss the study at any time during the process, please contact Anita Pollak, President, Sage Research Corporation at (905) 577-4040 ext. 3, or Laura Buckland, Manager of OSFI Consultations, at (613) 990-9959.
We hope we can count on your participation.
Sincerely,
Jeremy Rudin
Superintendent
Encl.
La présente a pour but de vous inviter à prendre part à une importante étude confidentielle qui sera administrée par le cabinet de recherche indépendant Sage Research Corporation pour le compte du Bureau du surintendant des institutions financières (BSIF) auprès de représentants d’institutions de dépôts que nous réglementons et surveillons. Depuis 1998, le BSIF s’enquiert de l’opinion des dirigeants du secteur financier au sujet de son efficacité à titre d’organisme de réglementation et de surveillance. Les résultats de cette étude l’aideront à améliorer sa prestation, ce qui, en bout de ligne, sera bénéfique pour vous et votre organisme.
Dans quelques jours, un représentant du groupe Sage Research Corporation communiquera avec vous pour planifier un entretien d’une soixantaine de minutes. Nous vous demanderons de bien vouloir prendre connaissance du guide d’entrevue que vous trouverez en pièce jointe avant la date convenue, duquel sont tirées les questions de base qui vous seront posées. N’hésitez pas à demander l’opinion de vos collègues pour avoir une perspective plus vaste si vous le désirez.
Le BSIF accorde une grande importance à la confidentialité du processus, ce qui exige notamment qu’il n’y ait aucun moyen pour lui de connaître l’identité des participants. Ainsi, bien que cette lettre soit signée de ma main, je tiens à préciser qu’elle vous est adressée et transmise par Sage Research Corporation. Qui plus est, les réponses dont Sage Research Corporation rendra compte dans son rapport seront présentées sous forme de condensé ne pouvant être attribué à qui que ce soit. Les résultats de cet exercice seront publiés sur notre site Web en 2019.
Pour obtenir des précisions au sujet de cette étude à tout moment durant le processus, je vous invite à appeler M. Sylvain Laroche, associé principal, Sage Research Corporation, au 514-277-6297, ou Mme Laura Buckland, gestionnaire, Consultations – BSIF, au 613-990-9959.
Espérant pouvoir compter sur votre participation.
Mes meilleures salutations,
Jeremy Rudin
Le surintendant
p.j.
Re: OSFI’s Consultation with Institutions in the Deposit-Taking Sector
OSFI has commissioned consultations with senior members of the financial community and their professional advisors to obtain their assessment of its effectiveness as a regulator and supervisor since 1998. Sage Research Corporation has been commissioned by OSFI to conduct the 2018/2019 consultation among Canada’s deposit-taking institutions.
As the accompanying letter from the Superintendent of Financial Institutions notes, we will contact you within the coming weeks to arrange a suitable time for an interview. The interview will take approximately one hour. Prior to the interview, we would request that you review the enclosed interview guide, as it will form the basis for the interview.
Rest assured that the responses you provide during the interview will remain completely confidential. To preserve confidentiality, OSFI will receive a report that presents responses in summary form with no attribution to individuals or the institutions they represent. OSFI will not know what specific institutions have said about it, nor will it have access to interview notes or recordings. As part of OSFI’s commitment to transparency and accountability, the findings from the research will be posted on OSFI’s website.
We will request your permission to audio record our interview with you. The recordings will be available only to Sage Research Corporation’s research team and used solely for the purpose of developing the final report. Once the report has been completed, the audio recordings will be destroyed. Should you prefer that the interview not be recorded, we will take only written notes.
If you would like to discuss this matter at any time during the process, please call me at 905-577-4040, ext. 3 or email me at anita.pollak@sageresearch.ca.
Sincerely,
Anita Pollak
President
Re: Consultation du BSIF auprès des institutions de dépôts
Le BSIF a commandé des consultations auprès de cadres supérieurs de la communauté financière et de leurs conseillers professionnels afin d’obtenir leur appréciation de son efficacité à titre d’organisme de réglementation et de supervision depuis 1998. Sage Research Corporation a été mandaté par le BSIF pour mener la consultation 2018/2019 auprès des institutions de dépôt.
Comme l’indique la lettre de présentation du surintendant des institutions financières, nous communiquerons avec vous au cours de la prochaine semaine pour fixer un moment convenable pour l’entrevue. Celle-ci devrait durer environ une heure et, au préalable, nous vous demandons de lire le guide joint qui servira de base.
Soyez assuré(e) que tous vos propos recueillis pendant l’entrevue demeureront entièrement confidentiels. Le BSIF recevra un rapport qui présentera uniquement un sommaire des réponses sans en identifier les auteurs (personnes et institutions qu’elles représentent); la confidentialité sera ainsi préservée. Le BSIF ne saura pas non plus ce que des institutions précises ont dit à son sujet et n’aura pas accès aux notes ou aux enregistrements des entrevues. Les résultats de l’étude seront disponibles au site Web du BSIF pour respecter son engagement en matière de transparence et de responsabilité.
Nous vous demanderons sans doute la permission d’enregistrer l’entrevue. Seule l’équipe de recherche de Sage Research Corporation aura accès à cet enregistrement audio, et celui-ci servira uniquement à la rédaction du rapport final. Une fois celui-ci complété, les enregistrements audio seront effacés. Si vous préférez que l’entrevue ne soit pas enregistrée, l’interviewer ne prendra que des notes manuscrites.
Si à tout moment pendant le déroulement de l’étude vous désirez en discuter, n’hésitez pas à communiquer avec moi en composant le 514-572-1489 ou en m’envoyant un courriel à sylvainlaroche@videotron.ca.
Cordialement,
Sylvain Laroche
Associé principal
Sage Research Corporation has been retained by the Office of the Superintendent of Financial Institutions (OSFI) to conduct this consultation with senior executives of federally regulated institutions in the deposit-taking sector.
Since 1998, OSFI has commissioned consultations with senior members of the financial community and their professional advisors to obtain their assessment of its effectiveness as a supervisor and regulator. OSFI is committed to monitoring how well it is achieving its strategic objectives, both to be accountable to stakeholders and to help improve effectiveness. It is for these reasons that we are asking your institution to participate in this research.
You can be assured that Sage Research Corporation, as an independent third party, will hold your comments in strict confidence. Your answers will remain anonymous. OSFI will not know who was interviewed or what specific institutions have said about it.
As a standard industry practice, Sage Research Corporation has put in place secure communication and usage procedures to ensure that confidentiality is maintained at all times.
Sage Research Corporation will provide OSFI with a full report aggregating the findings from this consultation.
The discussion is divided into the following six parts:
Part 1 – Overall Impressions
Part 2 – Guidance
Part 3 – Supervision
Part 4 – Communications with OSFI
Part 5 – Approvals
Part 6 – Final comments
OSFI’s mandate is to:
OSFI regulates by developing rules, interpreting legislation and regulations and providing regulatory approvals for certain types of transactions. It also contributes to new accounting, auditing and actuarial standards. All of this must balance the goals of safety and soundness with the need for institutions to operate within a competitive marketplace.
OSFI supervises by analyzing financial and economic trends to identify emerging issues that could adversely affect institutions. It assesses an institution’s financial condition, material risks and the quality of its governance, risk management and compliance. When weaknesses are identified, OSFI intervenes early and works with executive management and boards to correct matters.
From time to time, OSFI develops Guidance (which may include guidelines and advisories) for institutions in the deposit-taking sector.
The following series of questions focus on several different work streams related to Guidance that OSFI issued in 2016 and 2017.
The following questions focuses on communications and consultation with the industry regarding the IFRS 9 Financial Instruments and Disclosure (IFRS 9) Guideline. In connection with the release of the IFRS 9 Guideline, OSFI issued:
The following questions focus on communications with the industry regarding the B-20 Residential Mortgage Underwriting Practices and Procedures Guideline. In connection with the release of the Guideline B-20, OSFI issued:
The following questions pertain to OSFI’s supervision as it relates to your institution.
As you know, OSFI’s Superintendent, and in some cases, the Minister of Finance, must approve certain transactions or initiatives which institutions in the deposit-taking sector wish to undertake. The following questions pertain to OSFI’s approval process as it relates to your institution.
Thinking about request(s) for a regulatory approval your institution has submitted in the past 1-2 years…….
On behalf of OSFI, Sage Research Corporation would like to thank you for your participation.
Le Bureau du surintendant des institutions financières (BSIF) a chargé le cabinet Sage Research Corporation de réaliser le présent exercice de consultation auprès de cadres de direction d’institutions de dépôts fédérales.
Depuis 1998, le BSIF commande des consultations auprès de dirigeants des milieux financiers et de leurs conseillers professionnels pour s’enquérir de leur opinion au sujet de sa prestation à titre d’organisme de réglementation et de surveillance. Le BSIF s’est engagé à faire le point sur son rendement par rapport à ses objectifs stratégiques de manière à pouvoir en rendre compte à l’ensemble de ses interlocuteurs et à accroître son efficacité. Voilà pourquoi nous sollicitons la participation de votre institution.
À titre de tierce partie indépendante, Sage Research Corporation s’est engagé à traiter vos réponses de façon strictement confidentielle. L’identité des répondants ne sera pas dévoilée au BSIF et celui-ci ne pourra associer aucune réponse à une institution précise.
Conformément aux normes de pratique professionnelles du secteur des enquêtes d’opinion, Sage Research Corporation a mis en place un système de communication sécurisé et des procédures d’utilisation visant à garantir en tout temps la confidentialité de l’information transmise.
Sage Research Corporation rendra compte au BSIF des résultats de cet exercice de consultation sous forme de rapport complet.
La discussion est divisée en six parties :
Partie 1 –Impressions globales
Partie 2 – Consignes
Partie 3 – Surveillance
Partie 4 – Communications avec le BSIF
Partie 5 – Agréments
Partie 6 – Observations finales
Les objectifs du BSIF sont les suivants :
Pour exercer ses activités de réglementation, le BSIF élabore des règles, interprète des lois et des règlements et assure l’agrément de certains types d’opérations. Il contribue en outre aux nouvelles normes comptables, actuarielles et d’audit. Tout cela doit concilier les objectifs de sûreté et de solidité avec l’obligation qu’ont les institutions d’exercer leurs activités sur un marché concurrentiel.
Pour exercer ses activités de surveillance, le BSIF analyse les tendances financières et économiques pour cerner les questions émergentes qui pourraient avoir une incidence négative sur les institutions. Il évalue la situation financière d’une institution, les risques importants qui pèsent sur elle, de même que la qualité de ses pratiques de gouvernance, de gestion du risque et de conformité. Lorsqu’une faiblesse est mise au jour, le BSIF intervient rapidement et travaille avec les cadres supérieurs et les membres du conseil d’administration afin de corriger la situation.
Le BSIF émet des consignes ponctuelles et périodiques (sous forme de lignes directrices et de préavis) à l’intention des institutions de dépôts.
Les questions suivantes portent sur divers dossiers relatifs aux consignes que le BSIF a émises en 2016 et en 2017.
Les questions suivantes portent sur les interactions entre le BSIF et les institutions financières, du point de vue des communications et de la consultation, concernant la ligne directrice sur la norme IFRS 9, Instruments financiers et exigences en matière de divulgation financière. Lorsqu’il a produit sa ligne directrice sur la norme IFRS 9, le BSIF a publié deux documents :
Les questions suivantes portent sur les communications concernant la ligne directrice B-20, Pratiques et procédures de souscription de prêts hypothécaires résidentiels. Lorsqu’il a produit sa ligne directrice B-20, le BSIF a publié deux documents :
Les questions qui suivent portent sur les mesures de surveillance que le BSIF applique à votre institution.
Comme vous le savez, le surintendant du BSIF et, parfois, le ministre des Finances, doit approuver certaines opérations ou mesures que les institutions de dépôts veulent entreprendre. Les questions qui suivent portent sur le processus d’agrément du BSIF en ce qui a trait à votre institution.
En ce qui a trait aux demandes d’agrément réglementaire que votre institution a produites au cours des 12 ou 24 derniers mois ……
Au nom du BSIF, Sage Research Corporation vous remercie de votre participation.