OSFI Seeks to Modernize Prudential Framework

In a fireside chat at a recent conference hosted by the Institute of International Finance and the Canadian Bankers Association, Angie Radiskovic, Deputy Superintendent for Supervision at the Office of the Superintendent of Financial Institutions (OSFI), said Canada is modernizing its prudential framework “from a position of strength,” including by reviewing its supervisory risk appetite and making supervision more risk-based and tailored.

Radiskovic pointed to a two-year reform effort spanning supervision, policy development, approvals, and data and analytics. OSFI has reviewed and simplified its guidance, introduced more predictable release dates for guidance and consultations, and renewed its supervisory framework to focus attention on the risks that matter most while reducing unnecessary burden. It has also strengthened coordination with other regulators in areas where risks are increasing, including integrity, security, and financial crime.

Radiskovic explained that, since becoming Deputy Superintendent for Supervision earlier this year, she has focused on “resetting” the supervisory agenda. As part of this effort, OSFI is reviewing its risk appetite statement so the regulator can be “more focused, more efficient, and concentrate our efforts on the risks that matter most.” The broader approach, she said, is intended to make supervision more risk-based, tailored, and proportionate while maintaining prudential standards.

Radiskovic also argued that resilience and growth “are not competing objectives.” She pointed to Canadian banks’ strong capital positions and profitability, while highlighting measures intended to support competition and growth without creating material risks to financial stability. These include pausing key elements of the final Basel III reforms, reducing the Domestic Stability Buffer, creating a streamlined approvals process for eligible new entrants, and adjusting capital requirements for some construction and small business lending.

“[M]odernization isn’t about reducing prudential standards,” Radiskovic said. “It’s about making regulation clearer, more proportionate, and more targeted to today’s risks, maintaining resilience and public confidence while also creating the conditions for innovation and competition.”