Insights Header image
Insights Header image
Insights Header image

OSFI’s Regulatory Adjustments in Response to COVID-19 Impacts

March 31, 2020 Financial Services Regulatory Bulletin 2 minute read

On March 27, 2020, the Office of the Superintendent of Financial Institutions (OSFI) announced a number of sector-specific measures to support federally regulated banks, insurers and private pension plans. The regulatory adjustments include changes to regulatory capital, liquidity and reporting requirements. OSFI introduced these measures in three targeted industry letters to provide sectors the flexibility to address evolving economic conditions.

Key Measures for Federally Regulated Deposit Taking Institutions (DTIs)

  • Loans (mortgage, small business, retail, mid-market capital) subject to payment deferrals are not considered past due or delinquent and are afforded the same capital treatment as performing loans. The temporary capital treatment will remain for the duration of the payment deferral, up to a maximum of 6 months.
  • DTIs can temporarily exceed the 5.5% covered bond limit.
  • Introducing transitional arrangements for the capital treatment of expected loss provisions available under the Basel Framework.
  • Adjusting OSFI’s liquidity requirements to provide flexibility within the Net Stable Funding Ratio treatment for assets.
  • Delaying the implementation of the Basel III reforms and OSFI’s Proportionality Initiative for small and medium sized banks until 2023.
  • OSFI’s specific guidance on applying IFRS 9.

For more details, see OSFI’s Letter to DTIs.

Key Measures for Federally Regulated Life and Property & Casualty Insurers

  • Mortgage insurers should not consider a mortgage loan to be delinquent or in arrears if a DTI approved the payment deferral.
  • Suspending the IFRS 17 semi-annual progress report filing, and all consultation and policy development on guidance until further notice.

For more details, see OSFI’s Letter to Insurers.

Key Measures for Federally Regulated Private Pension Plans

  • Temporarily freezing portability transfers and annuity purchases. Pension payments to retirees and other beneficiaries are not affected.
  • Deadline extensions for certain actions and annual filing requirements under the Pension Benefits Standards Act, 1985 and the Pooled Registered Pension Plans Act.

For more details, see OSFI’s Letter to Private Pension Plans.

OSFI will continue to engage sectors in further developments and address implementation and disclosure issues. OSFI officials will be responding to technical questions from analysts about these measures by teleconference on Wednesday, April 1. Please see OSFI’s News Release for further updates.

by Darcy Ammerman, Carol Lyons and Kathleen Wang (Articling Student)

A Cautionary Note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2020

Insights (5 Posts)View More

Featured Insight

Update for Federal Employers: What’s in Store For 2024

Federal employers should be preparing for key dates upcoming in 2024, including updates to the Canada Labour Code and a key deadline under the Pay Equity Act.

Read More
Dec 6, 2023
Featured Insight

Getting the Deal Through – Cartel Regulations 2024

The 24th edition of Lexology GTDT’s Cartel Regulation is the most current and comprehensive source of information about cartel laws and enforcement around the world.

Read More
Dec 5, 2023
Featured Insight

Transformative Change: Your Guide to Canada’s Breathtaking Competition Act Changes

We provide a summary of far-reaching Competition Act amendments proposed in 2023.

Read More
Dec 5, 2023
Featured Insight

Class Actions May Now Be Easier to Defeat in Ontario

It is now clear: the revised preferability analysis under the amended Class Proceedings Act is a strict, more onerous hurdle for plaintiffs to satisfy.

Read More
Dec 4, 2023
Featured Insight

R. vs Greater Sudbury Webinar

Following a brief overview of the case and the SCC’s split decision, this discussion will focus on the implications of the decision to the roles and responsibilities of each project party, including the owner, contractor and design consultant (architect and engineer). The discussion will be interactive and will include an extensive Q&A period.

Wednesday, December 13, 2023