OSFI published its departmental plan for 2020-2021. The published information covers the planned work and the results OSFI will strive to achieve during the upcoming year. To support Strategic Plan priorities, OSFI will focus on a number of key initiatives in the areas of capital, accounting, reinsurance, governance, crisis management, and non-financial risks.
The departmental plan highlights the key focus areas of OSFI over the coming year, including the following:
- Capital rule-making initiatives will focus on implementing Basel III capital and liquidity reforms. The ongoing work of OSFI to tailor its domestic capital and liquidity frameworks for small and medium-size deposit-taking institutions will continue.
- OSFI will continue to review Domestic Stability Buffer semi-annually and will publicly disclose any change to its level and the rationale for the change stemming from these reviews.
- OSFI will prepare for the implementation of the IFRS 17 on insurance contracts by adapting its capital tests for mortgage, life, and property and casualty (P&C) insurers, monitoring industry progress, and publicly consulting on new regulatory returns.
- OSFI will conduct public consultations on the implementation of the market discipline (Pillar 3) disclosure requirements and assess the interaction of the expected credit loss framework with the regulatory capital framework for deposit-taking institutions.
- Following the issuance of a discussion paper in June 2018 and the analysis of industry feedback in 2019-20, OSFI will put forward draft proposals for changes to expectations and guidance relating to its reinsurance framework.
- OSFI plans to build on its industry culture scan and reviews conducted in 2019-20 to enhance its ability to assess and address issues related to risk governance and culture.
In the coming year, OSFI will enhance its understanding and share its findings with the financial industry on the potential financial impact associated with climate risks. OSFI has asked larger insurers to develop climate change scenarios for their Own Risk and Solvency Assessment or ORSA. OSFI will also ask life and P&C insurers to perform a biennial climate change stress test with specific scenarios, following the implementation of IFRS 17. OSFI also plans to examine to what extent private pension plans investment decisions should involve consideration of climate change, environmental, social, and governance factors. OSFI aims to enhance its capabilities and expectations related to technology and cyber risk. Building on a public discussion paper to seek input in areas such as operational resilience, cyber risk, and emerging technologies, OSFI will conduct consultations to inform future revisions to regulatory guidance and expectations. Finally, OSFI will continue to evolve its expectations around model risk management, including developing regulatory expectations on the use of artificial intelligence tools.
Related Link: Departmental Plan
Keywords: Americas, Canada, Banking, Insurance, Departmental Plan, Basel III, IFRS 17, Pillar 3, Climate Change Risk, ESG, ORSA, Pensions, Governance, Cyber Risk, Fintech, Artificial Intelligence, Stress Testing, OSFI
Previous ArticleNCUA Proposes to Amend Risk-Based Capital Rule for Credit Unions
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.