Go to the Globe and Mail homepage

Jump to main navigationJump to main content

(Gloria Nieto/The Globe and Mail)

(Gloria Nieto/The Globe and Mail)

Financial watchdog proposes board and executive appointment rules Add to ...

To cement a common industry practice, Canada’s banking watchdog has proposed rules that determine how much of a heads-up financial institutions must give the regulator when appointing executives and filling board seats.

Under new proposed guidelines, drafted by the Office of the Superintendent of Financial Institutions and now open for public comment, federally regulated banks and insurers will be required to give the regulator 30 days’ notice for senior management appointments, such as a chief financial officer or a chief risk officer.

More Related to this Story

Board directors will have to be reported to OSFI as soon as the nominee is identified.

Many Canadian financial institutions already inform the regulator of their plans ahead of time. The new rules ensure OSFI is given enough time to do its due diligence – and in the event that the candidate is considered to not be up to snuff, the regulator can inform the financial institution’s board of its feelings with more than enough notice.

In a statement, OSFI said it understands there is fine line between institutional independence and a regulatory crackdown, and in an interview spokesperson Brock Kruger said the proposed rules are simply designed to comply with the Basel Committee on Banking Supervision’s core principles.

“This isn’t a burdensome process to try to scare banks,” he said, adding that “this is not an approval process.”

“This is something that our supervisory teams have been doing for a while,” he said.

OSFI bolstered its oversight of boards and executive management teams coming out of the financial crisis. In 2011, Julie Dickson, who heads the regulator, told the Globe said OSFI planned to spend more time with directors and would place higher expectations on them, and would also press banks and insurers to recruit more directors with industry experience.

The latest proposal comes after OSFI made some major governance strides in 2013, particularly by releasing a new set of corporate governance guidelines, the first major revision in a decade. These guidelines addressed areas such as board composition, organizational risk appetite and the roles of the chief risk officer and the audit committee.

Two months later, in March 2013, OSFI released a new set of guidelines for what it classifies as ‘domestic systemically important banks,’ comprised of the country’s six largest lenders. These banks must meet tougher capital requirements than their smaller peers, and “are expected to have advanced practices in terms of the design and operation of oversight functions and internal controls,” according to OSFI.

OSFI’s newest proposal is open for public comment until February 28.

Follow me on Twitter.

 

Topics:

In the know

Most popular videos »

Highlights

More from The Globe and Mail

Most popular