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June 10, 2021

Lift “Veil of Secrecy” Around OSFI Supervision of Banks, Insurers

  • Banks and insurers would benefit from greater clarity on how the Office of the Superintendent of Financial Institutions (OSFI) conducts prudential supervision.
  • In this report Mark Zelmer, former Deputy Superintendent of Financial Institutions at OSFI, reviews the prudential supervisory frameworks used by OSFI and its provincial counterparts to oversee banks, insurers, credit unions and other deposit-taking institutions, then examines the current accountability arrangements surrounding prudential supervision, the accompanying economic rationales for secrecy, and offers a suite of reforms which would lead to greater public accountability.
  • The need for secrecy has traditionally been defended on the grounds that in the case of complex financial institutions like banks and insurers, there is a significant risk that if it becomes known that a prudential supervisor has concerns, it could bring forward a failure that might otherwise have been avoided. But, asks Zelmer, how much secrecy is truly required to conduct effective prudential supervision?