OSFI updates Corporate Governance Guideline

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The Office of the Superintendent of Financial Institutions (OSFI), Canada’s banking, insurance and financial services regulator, has released draft revisions to its Corporate Governance Guideline.

OSFI said the changes reflect current industry best practices and international standards, setting out the regulator’s expectations for corporate governance of federally-regulated financial institutions (FRFIs).

The Corporate Governance Guideline was first published in 2003. “However, corporate governance practices have evolved significantly since then,” says a statement from OSFI. “Over the past several years, a number of domestic regulators, international standard setters and various commenters have published reports highlighting industry best practices and standards for the effective corporate governance of financial institutions. Among them are the OECD Findings (PDF), the UK Walker Report (PDF), the G30 Report (PDF), and the BCBS Principles (PDF). As a result, OSFI believes the time has come to update its own guidance in this area to incorporate the changes that have taken place over the last ten years. “

Specific revisions to the Guideline include:

  • Enhancement of the effectiveness of the Board of Directors by providing clarity around Board responsibilities and competencies;
  • Strengthening of the risk governance of FRFIs by requiring the development of a ‘Risk Appetite Framework’ to guide FFRIs’ risk-taking activities; and
  • Improving the overall internal control framework of FRFIs by clarifying the roles of the Chief Risk Officer and the Audit Committee.

The full draft can be read online (PDF).

Interested parties are invited to provide comments on the Guideline by September 14, 2012. All comments, which may be provided directly to OSFI or through industry associations, should be sent by e-mail to Vlasios Melessanakis, Director, Policy Development (vlasios.melessanakis@osfi-bsif.gc.ca).