How to Make OSFI Even Better 

From:  Jamie Hubbs and Mawakina Bafale

To:  Canada’s Policymakers 

Date: July 7, 2026  

Re: How to Make OSFI Even Better 

The Office of the Superintendent of Financial Institutions (OSFI), established in 1987, is the federal regulator that oversees the safety and soundness of our banks and insurers. It has helped build a prudential framework that is admired around the world. When the global financial system buckled in 2008, Canada’s stood, with no need of direct financial support for failed institutions. 

Unlike in other countries, however, OSFI concentrates sole responsibility for prudential regulation and supervision in a single person. That’s an arrangement almost no comparable regulator would choose today, and it hasn’t been examined in nearly 30 years. We want to be clear: That’s an observation about design, not a criticism of any superintendent. The case for modernizing OSFI’s governance is, not that the institution has failed, but that the world it was built for no longer exists. 

Consider how far OSFI’s reach now extends. Its mortgage stress test, which gauges whether homebuyers could handle higher rates, shapes how much house Canadians can afford. At the moment, that single rule, with effects felt at kitchen tables across the country, ultimately rests on one person’s judgment. 

Since its establishment, the risks OSFI manages have outgrown the capital-and-credit toolkit of traditional supervision. Its new integrity and security powers address threats like foreign interference. 

Then there are intensifying cyber threats, physical and transition risks of climate change, and the growing call to loosen capital requirements to spur business lending. Each demands trade-offs between stability, competitiveness, resilience and public confidence that no single person, however able, should be left to weigh alone. 

The recommendation from our new C.D. Howe Institute paper is straightforward: Move OSFI from a single-head model to a multi-member structure, such as an independent board of directors, supported by advisory councils with expertise in fast-moving domains like cybersecurity and AI. 

This is not a leap of faith. OSFI’s peers already operate this way. The United Kingdom, Australia and Switzerland all use multi-member governance. Here in Canada in 2019 Ontario created the Financial Services Regulatory Authority (FSRA) around an independent board. With its single superintendent, OSFI is increasingly the outlier. 

The board we propose resembles those already in place at the Ontario Securities Commission and FSRA. Its role would be strategic oversight. It would provide independent advice and oversee the superintendent – approving the budget and policies and challenging whether OSFI is pursuing the right priorities. 

The superintendent, in turn, would remain responsible for running OSFI’s operations and for executing prudential decisions, like setting the domestic stability buffer, which obliges the largest banks to hold a capital cushion against systemic risks. The division is deliberate. The board would govern and the superintendent supervise. 

The superintendent would be accountable to the board, which in turn reports to the minister of finance. As at FSRA, the board chair would be the formal link to government and accountable for OSFI meeting its statutory mandate. But the superintendent would continue to represent OSFI on supervisory matters. The superintendent would decide how the regulator intervened when a financial firm was failing, which means the superintendent is the right person to answer policymakers’ questions about such decisions. 

The reform we propose would add a small number of part-time directors to OSFI’s head count, but only that. The aim is to strengthen oversight of the functions OSFI already performs, not add new ones. Nor should any of OSFI’s current responsibilities be hived off to another agency. Each bears on a financial institution’s ability to function safely, which is precisely OSFI’s mandate. Splitting mandates across agencies would fragment supervision that needs to be integrated. 

The current model has some clear advantages. Accountability under a single head is unambiguous, and decisions can be made quickly. But these are arguments for designing a board with care, not for clinging to the current governance structure. 

Two further changes would round out the reform. OSFI draws its authority from Parliament yet appears before parliamentary committees only occasionally. Having the superintendent appear regularly – as the Bank of Canada does voluntarily, at least twice a year – would strengthen accountability without touching independence. And OSFI’s governance should be reviewed at least once a decade, so its structure never again drifts.  

In 1998, the MacKay Task Force recommended a board for OSFI. Concerns about accountability stalled that proposal then. Thoughtful design of a board can address those concerns. Let’s not wait for a crisis to make the argument for us. 

Jamey Hubbs held various positions at OSFI from 2012 to 2022, retiring as vice-superintendent and a senior fellow at the C.D. Howe Institute where Mawakina Bafale is a research officer. 

To send a comment or leave feedback, email us at blog@cdhowe.org.  

The views expressed here are those of the authors. The C.D. Howe Institute does not take corporate positions on policy matters.  

A version of this Memo first appeared in the Financial Post.