According to the CanTrust index run by an independent market agency, there was evidence that trust in the Canadian banking sector dropped to 41% in 2019.1 A number of misconduct-related penalties were issued over the past year: faulty mortgage documents and misrepresentations were found at Home Capital Group,2 the Royal Bank of Canada and Toronto Dominion Bank settled charges for failures in supervision with the Ontario Securities Commission (OSC) for CAD $22.85 million, and with senior executives found personally liable for non-compliance with Ontario securities laws.3 According to an analysis by Thomson Reuters, personal liability risk for senior executives of regulated financial institutions and other firms overseen by the OSC is “expected to escalate sharply in the coming years… particularly where intentional misrepresentation or omission is found by the OSC.”4
In the spring of 2019, OSFI began an industry culture assessment as part of its research work. The assessment considered culture and conduct risk management frameworks, communication mechanisms, relevant software tools, key performance and risk indicators, and the various initiatives firms may have undertaken so as to better gauge their cultures.5 The work was done through interviews and questionnaires with senior staff and board members at financial firms. The regulator also took account of internal policies, codes of conduct, conflict of interests, and other metrics.6
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