New protections for small banks and mortgage insurers |

Office of the Superintendent of Financial Institutions (OSFI)

Canada’s baking regulator, OSFI, has issued a letter requiring smaller banks (for example Citizen’s Bank), to perform a stress test to assess risk.

The big six banks (Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, and Toronto-Dominion Bank) and HSBC are already required to perform a similar stress testing process.

OSFI’s mandate is to supervise federally regulated banks (not credit unions) and determine if they are in sound financial condition. OSFI recently tightened supervisory expectations for mortgage underwriting and is in the process of updating capital requirements for residential mortgages.

Financial Institutions Commission (FICOM)

BC credit unions are supervised by FICOM, which has also asked credit unions to perform stress tests. In a letter FICOM states it’s “monitoring risks faced by BC credit unions.” FICOM advises credit unions to “take into account high levels of household debt and low income growth to ensure borrowers do not become overextended and pose undue risk to the credit union.”

FICOM’s Residential Mortgage Underwriting Guideline sets out supervisory expectations for residential underwriting and risk management practices at BC credit unions.


A provincial Crown corporation and Canada’s largest mortgage insurer has reminded mortgage lenders to ensure they carefully assess each mortgage application according to a news release.

Canadian Finance Minister Bill Morneau is setting up a working group of federal, provincial, and municipal representatives on the housing market.