Office of the Superintendent of Financial Institutions
Encyclopedia
The Office of the Superintendent of Financial Institutions (OSFI) is an independent agency
of the Government of Canada
reporting to the Minister of Finance
created "to contribute to public confidence in the Canadian financial system". It is the sole regulator of banks, and the primary regulator of insurance companies, trust companies, loan companies and pension plans in Canada.
The current head of the Office is Julie Dickson
, as of July 4, 2007. She replaced Nicholas Le Pan who resigned in July 2006. The term of the appointment is scheduled to be seven years.
OSFI's role is to:
OSFI’s legislation has due regard to the need to allow institutions to compete effectively and take reasonable risks. The legislation also recognizes that management, boards of directors and plan administrators are ultimately responsible and that financial institutions and pension plans can fail.
The Office of the Chief Actuary, which is part of OSFI, provides actuarial services to the Government of Canada.
1925 – the Office of the Inspector General of Banks was established in response to the Home Bank failure and was responsible for regulating Canada's chartered banks.
Early 1930s – Royal Commission on Banking and Currency
reviewed banking and currency issues in the Canadian financial system.
Early 1960s – Porter Royal Commission reviewed structural and operational issues affecting the financial system and financial institutions in Canada. The Commission's report concluded the financial system was sound, but developments had moved beyond the current state of laws and regulatory practices. Porter argued the public could not be insulated from loss in dealing with public institutions and markets. The Commission called for a system that would provide for adequate disclosure and that would set high standards of self-regulation, backed by strong government supervision and powers to enforce proper practices.
1967 – the Minister of Finance introduced legislation to establish the Canada Deposit Insurance Corporation
(CDIC) to ensure the safety of small deposits and bring about a gradual improvement in the minimum financial standard of deposit-taking institutions in Canada. In 1983, legislative amendments extended CDIC's mandate to include assisting to maintain public confidence and stability in the financial system.
Mid-1980s – increased international competition and the failure of two Canadian banks and the subsequent enquiry into these failures by the Honourable Willard Z. Estey highlighted the need to ensure a sound approach to handling the risks associated with the financial marketplace.
July 1987 – to ensure a coordinated approach to supervision and a modern regulatory framework for Canada's financial system, and acting on the recommendations of the Estey commission, the government proclaimed the Financial Institutions and Deposit Insurance Amendment Act and the Office of the Superintendent of Financial Institutions Act. This latter Act joined the Department of Insurance and the Office of the Inspector General of Banks to form OSFI, which was given the powers to supervise and regulate all federally regulated financial institutions.
May 1996 – Bill C-15 receives Royal Assent. This new legislation clarifies OSFI's prime responsibilities as helping to minimize losses to depositors and shareholders, and contributing to public confidence in the Canadian financial system. Preventing failure of financial institutions is not part of OSFI's mandate; however, promoting sound business practices helps reduce the risk that financial institutions will fail. The mandate stresses the importance of early intervention to achieve OSFI's objectives and establishes the basis for OSFI's mission, objectives, priorities and strategies.
Structure of the Canadian federal government
The following list outlines the Structure of the Canadian federal government.Cabinet-level Departments, Agencies, Secretariats and Offices are denoted in bold with the corresponding Minister listed alongside.-Crown:* Monarchy of Canada...
of the Government of Canada
Government of Canada
The Government of Canada, formally Her Majesty's Government, is the system whereby the federation of Canada is administered by a common authority; in Canadian English, the term can mean either the collective set of institutions or specifically the Queen-in-Council...
reporting to the Minister of Finance
Minister of Finance (Canada)
The Minister of Finance is the Minister of the Crown in the Canadian Cabinet who is responsible each year for presenting the federal government's budget...
created "to contribute to public confidence in the Canadian financial system". It is the sole regulator of banks, and the primary regulator of insurance companies, trust companies, loan companies and pension plans in Canada.
The current head of the Office is Julie Dickson
Julie Dickson
Julie Dickson is the current Superintendent of the Office of the Superintendent of Financial Institutions, since July 4, 2007.As Superintendent, Ms. Dickson serves on the Council of Governors of the Canadian Public Accountability Board, the board of directors of the Canada Deposit Insurance...
, as of July 4, 2007. She replaced Nicholas Le Pan who resigned in July 2006. The term of the appointment is scheduled to be seven years.
Mandate
The Office of the Superintendent of Financial Institutions (OSFI) was created to contribute to public confidence in the Canadian financial system.OSFI's role is to:
- Supervise institutions and pension plans to determine whether they are in sound financial condition and meeting minimum plan funding requirements respectively, and are complying with their governing law and supervisory requirements;
- Promptly advise institutions and plans in the event there are material deficiencies and take or require management, boards or plan administrators to take necessary corrective measures expeditiously;
- Advance and administer a regulatory framework that promotes the adoption of policies and procedures designed to control and manage risk;
- Monitor and evaluate system-wide or sectoral issues that may impact institutions negatively.
OSFI’s legislation has due regard to the need to allow institutions to compete effectively and take reasonable risks. The legislation also recognizes that management, boards of directors and plan administrators are ultimately responsible and that financial institutions and pension plans can fail.
The Office of the Chief Actuary, which is part of OSFI, provides actuarial services to the Government of Canada.
Related legislation
- Office of the Superintendent of Financial Institutions Act
- Bank ActCanada Bank ActThe Bank Act is an Act of the Government of Canada respecting banks and banking.The Act groups banks in three schedules. Schedule I banks are banks allowed to accept deposits that are not a subsidiary of a foreign bank, Schedule II banks are banks allowed to accept deposits that are a subsidiary...
- Trust and Loan Companies Act
- Cooperative Credit Associations Act
- Insurance Companies Act
- Pension Benefits Standards Act, 1985 (PBSA)
History
Late 1800s – establishment of the Office of the Superintendent of Insurance (OSI), which subsequently became the Department of Insurance (DOI). The DOI was responsible for overseeing federally licensed life insurance companies, property and casualty insurance companies, trust and loan companies and pension plans, and for providing actuarial services to the government.1925 – the Office of the Inspector General of Banks was established in response to the Home Bank failure and was responsible for regulating Canada's chartered banks.
Early 1930s – Royal Commission on Banking and Currency
Royal Commission on Banking and Currency
The Royal Commission on Banking and Currency was a 1933 Canadian royal commission tasked with reviewing the Canadian government's involvement in monetary policy...
reviewed banking and currency issues in the Canadian financial system.
Early 1960s – Porter Royal Commission reviewed structural and operational issues affecting the financial system and financial institutions in Canada. The Commission's report concluded the financial system was sound, but developments had moved beyond the current state of laws and regulatory practices. Porter argued the public could not be insulated from loss in dealing with public institutions and markets. The Commission called for a system that would provide for adequate disclosure and that would set high standards of self-regulation, backed by strong government supervision and powers to enforce proper practices.
1967 – the Minister of Finance introduced legislation to establish the Canada Deposit Insurance Corporation
Canada Deposit Insurance Corporation
-External links:*** Official CDIC site*...
(CDIC) to ensure the safety of small deposits and bring about a gradual improvement in the minimum financial standard of deposit-taking institutions in Canada. In 1983, legislative amendments extended CDIC's mandate to include assisting to maintain public confidence and stability in the financial system.
Mid-1980s – increased international competition and the failure of two Canadian banks and the subsequent enquiry into these failures by the Honourable Willard Z. Estey highlighted the need to ensure a sound approach to handling the risks associated with the financial marketplace.
July 1987 – to ensure a coordinated approach to supervision and a modern regulatory framework for Canada's financial system, and acting on the recommendations of the Estey commission, the government proclaimed the Financial Institutions and Deposit Insurance Amendment Act and the Office of the Superintendent of Financial Institutions Act. This latter Act joined the Department of Insurance and the Office of the Inspector General of Banks to form OSFI, which was given the powers to supervise and regulate all federally regulated financial institutions.
May 1996 – Bill C-15 receives Royal Assent. This new legislation clarifies OSFI's prime responsibilities as helping to minimize losses to depositors and shareholders, and contributing to public confidence in the Canadian financial system. Preventing failure of financial institutions is not part of OSFI's mandate; however, promoting sound business practices helps reduce the risk that financial institutions will fail. The mandate stresses the importance of early intervention to achieve OSFI's objectives and establishes the basis for OSFI's mission, objectives, priorities and strategies.
See also
- Canada Deposit Insurance CorporationCanada Deposit Insurance Corporation-External links:*** Official CDIC site*...
- Banking in CanadaBanking in CanadaBanking in Canada is widely considered the most efficient and safest banking system in the world, ranking as the world's soundest banking system for the past three years according to reports by the World Economic Forum. Released at October 2010, Global Finance magazine put Royal Bank of Canada at...
- Economy of CanadaEconomy of CanadaCanada has the tenth largest economy in the world , is one of the world's wealthiest nations, and is a member of the Organization for Economic Co-operation and Development and Group of Eight . As with other developed nations, the Canadian economy is dominated by the service industry, which employs...
- Canadian securities regulationCanadian securities regulationCanadian securities regulation is managed through laws and agencies established by Canada's 13 provincial and territorial governments. Each province and territory has a securities commission or equivalent authority and its own piece of provincial or territorial legislation.Unlike any other major...