The Financial Stability Board (FSB) has published two papers designed to assist resolution planning for insurance companies. The papers are practices papers on Resolution Funding for Insurers and Internal Interconnectedness in Resolution Planning for Insurers.
The Office of the Superintendent of Financial Institutions (OSFI) has issued a final version of Guideline B-5: Asset Securitization (the Guideline), which sets out OSFI’s general expectations for asset securitization transactions undertaken by federally regulated insurance companies. The existing guideline on asset securitization was first published in November 2004, and does not
On March 22nd, the recently elected Liberal Government introduced its first budget since being elected last October. In the Budget Plan, the Government has promised certain measures that will be relevant to banks, insurance companies and other providers of financial services and products. Most of the proposed measures are similar to proposals that were raised by the previous Conservative government. The financial sector measures announced in the Budget Plan are summarized below.
The Canadian government continues to be concerned with the escalation in house prices in Canada, particularly in Toronto and Vancouver. While the government will not say that it considers these markets to be overvalued, clearly, there is concern that the extended period of low interest rates has caused homeowners to be overextended. On December 11
On July 4, 2015, proposed amendments to various regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PC Act) were published in the Canada Gazette.
Some of the key proposed amendments provide for the following:
As reported in our post on April 21st, the federal budget speech released last April either announced or provided updates on a number of important regulatory initiates relating to the federal financial services sector. Given the timing of the federal election this fall, it now appears likely that these initiatives will not be
In 2010, Economical Mutual Insurance Company became the first property and casualty (P&C) company to announce an intention to pursue demutualization. Demutualization is the process through which a mutual company converts to a company with common shares. The Insurance Companies Act (ICA), which is the federal statute that governs most insurance companies in Canada, provides for demutualization, but the regulations necessary to give effect to a conversion of a P&C company were never put in place. As such, Economical and the other mutual P&C companies have been forced to wait while the Government considered an appropriate demutualization regime.
On February 28, 2015, the Government released its proposed P&C demutualization regulations. In many ways, the long delay in releasing these regulations seems curious, particularly because regulations governing the demutualization of life insurance companies have been in place since the late 1990s (which facilitated the demutualization of four of the largest life insurance companies in Canada in the early 2000s). There are, of course, many reasons why the Government may have delayed in creating comparable regulations for the P&C industry. And indeed, a review of the proposed regulations makes clear that the Government has taken a significantly different approach to the demutualization of P&C companies from life insurance companies.
On March 31st, the Office of the Superintendent of Financial Institutions (OSFI) released its plans and priorities for 2015 and 2016. While the release contained many familiar themes, some of the plans and priorities are interesting because they signal a new focus for OSFI or a recommitment that may not have been expected.
2014 was another busy year for regulatory change for the financial services sector, and it appears that this pace is set to continue in 2015. Below is a description of some of the more important changes that are already on the books and coming into effect in 2015. Of course, other changes are likely to arise as well.
On November 13th, the Office of the Superintendent of Financial Institutions (OSFI) issued the final version of Guideline E-13 – Regulatory Compliance Management (RCM Guideline). The RCM Guideline sets out OSFI’s expectations for compliance risk management at all federally regulated financial institutions (including all Canadian banks and most Canadian insurance companies). The Guideline replaces the former Legislative Compliance Management Guideline issued in 2003 (the 2003 Guideline). Since the 2003 Guideline was issued, OSFI has reissued both its Guideline on Corporate Governance and its description of its Supervisory Framework, both of which make reference to aspects of OSFI’s expectations for compliance risk management. In issuing the new RCM Guideline, OSFI stated that one of the primary purposes for reissuing the Guideline was to ensure that it was aligned with the guidance expressed in these more recent documents.
OSFI also maintains that the RCM Guideline does not create any new regulatory requirements. In the broadest sense, this is true, as OSFI’s expectations for the general framework used to manage regulatory risk has not changed. The 2003 Guideline clearly required that institutions adopt the three lines of defence model, with responsibility shared between operational management, an independent compliance function and internal audit. However, the RCM Guideline elaborates considerably on the various aspects of the RCM framework. Institutions will need to assess their current practices to determine whether any gaps exist between their existing RCM frameworks and the newly elaborated expectations.