


OSFI’s Regulatory Adjustments in Response to COVID-19 Impacts
OSFI’s Regulatory Adjustments in Response to COVID-19 Impacts
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)
Certified Today, Dismissed Tomorrow: Ontario Court Dismisses Automotive Class Action after Successful Certification
An Ontario court has dismissed a proposed class action against an automobile manufacturer on the merits for alleged false claims after certification.
Forecast 2022: Expected Changes to the Canadian Patent Rules (Part 2)
Canadian patent practices related to "excess claim fees" and RCEs come into force on October 3, 2022. Is your business ready?
Round One of Competition Act Amendments Passed; National Security Review Regime Amended
New amendments to the Competition Act were passed today as part of the budget implementation bill.
Privacy Reform is on the Table Once More: Canada Introduces the Digital Charter Implementation Act, 2022
New federal privacy legislation has been introduced. If passed, Bill C-27 will materially change the legal landscape for privacy and data protection in Canada.
Plan for the Ban: Canada Announces Timeline for Single-Use Plastics Prohibition
Canada's final Single-use Plastics Prohibition Regulations have been published and come into effect on December 20, 2022
Get updates delivered right to your inbox. You can unsubscribe at any time.