In a speech, the Office of the Superintendent of Financial Institutions’ Superintendent Peter Routledge previewed a November consultation on a draft Capital Adequacy Requirements (CAR) Guideline, including potential changes to relative risk-weightings and the capital treatment of certain loans to encourage business lending. He also said OSFI will announce further rescissions of guidelines and advisories on 20 November as part of its effort to remove outdated or redundant expectations. The remarks reiterated OSFI’s cautious approach to innovation and cross-border competitiveness, including its earlier deferral of increases in the Basel III output floor to support Canadian banks’ ability to compete without weakening safeguards. For insurers, Routledge pointed to OSFI’s July 2025 reduction in capital requirements for qualifying domestic infrastructure debt and equity held by life insurers, and confirmed the next revision of the Life Insurance Capital Adequacy Test (LICAT) Guideline has been postponed from 2027 to a later date post 2028. On housing-related risk, he described the pilot loan-to-income (LTI) measure introduced in January 2025, running in parallel with the mortgage stress test (MQR) and applied at the institutional level, and noted OSFI has observed gradual increases in mortgage delinquencies, particularly in variable rate fixed payment mortgages. He also framed stablecoins as liabilities that create prudential risks and argued resilience is stronger when such innovations develop inside the regulated perimeter, while OSFI’s responsible AI work is being shaped through industry engagement, including the Financial Industry Forum on Artificial Intelligence (FIFAI) and the EDGE principles of Explainability, Data, Governance and Ethics. Next steps include the planned November launch of the CAR Guideline consultation and OSFI’s 20 November announcement of additional guideline and advisory rescissions. Any broader risk-weighting adjustments were framed as subject to public consultation through CAR 2027, while the LTI pilot is intended to run for a full year and the LICAT update is now expected only after 2028.
Office of the Superintendent of Financial Institutions 2025-10-30
Office of the Superintendent of Financial Institutions signals November consultation on bank capital rules and further guideline rescissions on 20 November
OSFI Superintendent Peter Routledge announced a November consultation on a draft Capital Adequacy Requirements Guideline to boost business lending. OSFI will rescind outdated guidelines on 20 November and postponed the Life Insurance Capital Adequacy Test revision to post-2028. Routledge highlighted the pilot loan-to-income measure, stablecoin prudential risks, and OSFI's responsible AI initiatives.