Estimated reading time: 3 minutes
What is the Office of the Superintendent of Financial Institutions?
The Office of the Superintendent of Financial Institutions (OSFI) is an independent Canadian governmental agency that supervises and regulates over 400 financial institutions and 1,200 pension plans.
These 400 federal financial institutions cover all major banks, financial associations, private pension plans and more. OSFI’s main role is to oversee these financial institutions to ensure they are in good financial condition. Since the majority of the Canadian public rely heavily on these institutions for their life savings, the Canadian government must ensure these institutions remain in good condition for the safety of the public.
The history of OSFI
The OSFI was established in 1987 to bolster the Canadian financial markets. Under the leadership of the Canadian Minister of Finance, OSFI was established by combining the Department of Insurance and the Office of the Inspector General of Banks. Following a recession in the early 1980’s, confidence in the Canadian financial system was low. OSFI was established to prevent losses incurred by Canadian citizens and improve the public’s confidence in the financial markets.
OSFI was crucial to the Canadian economy in navigating through several financial crises that have occurred since its establishment. In addition to combating crises, OSFI helped modernise the financial system and adapt to the global economy’s shift towards a digital world. Today, OSFI regulates and oversees financial institutions and plays a pivotal role in advising the Canadian government in major financial decisions.
Key provisions and features of OSFI
Maintain integrity and confidence in the Canadian markets
OSFI focuses on crafting and implementing strategies that make sure financial institutions are in good standing. The majority of the workforce in Canada relies on banks and pension institutions to safeguard their livelihoods and earnings. By rigorously overseeing these institutions, OSFI prevents citizens from being impacted by institutions that are heavily leveraged.
Regulation of financial institutions
OSFI is an independent arm of the Canadian government. It has authority to make and implement legislation related to the regulation of financial institutions. OSFI has the backing of the government to fine and penalise large financial institutions that seem too big to fail. OSFI works hard to ensure that the regulations they enact are in keeping with emerging financial tools and technology (FinTech) available to modern financial institutions.
Who must comply?
Banks are the primary financial institution that Canadian citizens interact with daily. With financial crises occurring due to mismanagement within many global banks, OSFI takes banking regulation very seriously.
Canadian citizens rely heavily on pension companies (private and public) to retire comfortably. OFSI manages the risk that pension companies take to ensure Canadian citizens are protected.
Insurance companies range in size, but can stretch to large financial institutions that unwittingly form the backbone of the lives of Canadian citizens; whether it’s auto, home or health insurance. In the event that these companies fail, citizens will be at enormous financial risk. OSFI supervises insurance companies and ensures they follow good practices to protect consumers.
Find out how CUBE streamlines compliance in Canada