Canada’s Office of the Superintendent of Financial Institutions (OSFI) has revealed that it plans to gradually restart its work on upcoming policy developments as the country takes steps towards economic recovery.
Canadian financial regulators, including the OSFI, were quick to take decisive action as the coronavirus pandemic hit in March this year. As we noted in our blog post, ‘Canadian regulators’ response to COVID-19: how are they managing the uncertainty?’, Canada’s Department of Finance suggested at the time that financial institutions should focus on ‘managing the uncertainty’ instead of allocating resources towards meeting previously announced regulatory changes. As such, the regulatory change landscape in Canada has been at a standstill, giving financial institutions breathing space in which to manage new challenges posed by the pandemic. The OSFI’s latest statement suggests this period of quiet will now begin to slowly lift.
In early March this year, the OSFI lowered its Domestic Stability Buffer, in a bid to quell instability and financial uncertainty. This resulted in the release of around $300bn in lending capacity for Canada’s banks. The OSFI has made clear that its intention was to “support lending and absorb losses” and has supported both businesses and consumers throughout by publishing regular updates and FAQs.
As Canada takes its first steps towards economic recovery, the OSFI has said “we must now look ahead.” It is with that in mind that it has announced it will gradually restart its work on policy developments – though it will “remain ready to act to ensure that the work […] keeps pace and responds appropriately to Canada’s economic environment.”
The OSFI will be publishing more information and seeking input from the relevant sectors in the coming months, adding “the OSFI is planning for our new normal; but at our core, we remain ever vigilant so that the Canadian financial system remains strong and resilient.”
As the coronavirus pandemic took hold, financial regulators across the globe were quick to ensure that they slowed the pace of regulatory change. Most regulators have delayed or paused consultations, policy releases and regulatory work with the intention of giving financial institutions breathing space from upcoming financial regulatory obligations – allowing them to instead manage the unprecedented challenges presented by COVID-19.
Some parts of the globe are seeing a gradual decline of coronavirus and are now looking to restart their economies and mitigate any damage done (where possible). The OSFI appears to be in the first wave of financial institutions committing to a gradual return to regulatory normality – other regulators will be sure to follow.
This quieter regulatory period may well have a knock-on effect for financial institutions, who could see a substantial volume of policies and regulations finalised and implemented later in the year. Firms will need to keep on top of new or revised implementation dates, as well as keeping abreast of regulatory change.
However, with the future of the pandemic remaining uncertain, it’s difficult to predict the path the regulators may take if coronavirus does not subside. Either way, an automated regulatory compliance platform that enables horizon scanning and utilises regulatory intelligence will be hugely advantageous for financial institutions looking to manage and mitigate the challenges of the ‘new normal’; outdated legacy or manual systems may struggle to cope.