OSFI Proposes Senior Leader Accountability Regime

In a consultative document published in January, Canada’s Office of the Superintendent of Financial Institutions (OSFI) proposed a new “senior leader regime” designed to modernize accountability expectations.

Under this regime, institutions would be required to create an Accountability Framework explaining how accountability is “defined and monitored for senior leaders.” OSFI defines senior leaders broadly, encompassing board members, executives, and heads of oversight or business units. Boards would be charged with approving the framework and submitting it to OSFI annually.

OSFI explains that core components of these Accountability Frameworks would include:

• suitability criteria, applying on appointment and on an ongoing basis;
• mapping of clear individual responsibilities;
• mapping of the institution’s governance arrangements and oversight procedures;
• process for regular, individual attestations by senior leaders as to their roles and responsibilities;
• practices for compensation, which embed accountability in senior leader performance assessments by linking remuneration to governance outcomes; and
• practices for monitoring and addressing lapses or breaches, including disciplinary measures.

Consultation on the proposal runs until October 31, 2026.

The proposal reflects a broader international trend toward individual accountability. In an In Focus article contributed to Starling's 2023 Compendium, Raihan Zamil and Ruth Walters, both Senior Advisors at the Financial Stability Institute, detailed the philosophy behind Individual Accountability Frameworks and reviewed how they have evolved in recent years.

"It goes without saying, but it is individuals and not abstract corporations that commit corporate wrongdoing," they wrote. "So, the question becomes, who is to blame? While individuals who commit the alleged infraction should obviously be held to account, bank executives should also be held personally accountable if they contributed to the broader context that enabled such breaches to occur or if they failed to properly oversee individuals in their areas of responsibility." ▸ Read More