The Office of the Superintendent of Financial Institutions (OSFI) has issued its final version of the Corporate Governance Guideline (CGG). The CGG sets out OSFI’s expectations for boards of directors of federally regulated financial institutions (FRFIs).
The CGG applies to all FRFIs other than the Canadian branch operations of foreign banks and insurance companies.
The key changes made to the CGG are as follows:
- Providing boards with greater discretion over how they meet the principles of the CGG, taking into account their institutions’ size, complexity and risk profile.
- Clarifying the delineation between board and senior management responsibilities.
- Drawing attention to specific areas of corporate governance that are especially important for financial institutions (e.g. risk governance), given their unique nature and circumstances.
- Consolidating and rationalizing all OSFI requirements for boards in one guideline.
As the CGG contains principles that replace OSFI’s board of directors expectations contained in risk management and capital guidelines and advisories, OSFI is reissuing these other guidance documents with their respective board of directors requirements removed. OSFI has also rescinded the Advisory – Changes to the Membership of the Board and Senior Management, and revised its Assessment Criteria to align with the CGG. The revised guidelines and advisories have been posted to OSFI’s website.
The revisions to the CGG were considered after OSFI held a public consultation in 2017. This is the second time the CGG has been revised since it was first issued in 2003, previously being revised in 2013. OSFI will be conducting information seminars based on the revised CGG for FRFI directors and corporate secretaries in fall 2018.