OSFI considers user-pay system to cut costs

Companies who fail to put proper financial controls in place could be paying the price, says John Doran, assistant superintendent, supervision sector, of the Office of the Superintendent of Financial Institutions (OSFI). In a speech to the Canadian Insurance Accountants Association recently, Doran said that the government regulator needs to look at ways to control its costs, and user-pay systems might be one option.

“The cost of regulation has definitely risen over the last few years,” Doran says. At the same time, the complexity of financial services has grown. OSFI is “always a step behind” in trying to supervise the financial soundness of companies who “look very different from one another”. Companies want this kind of supervision, want to know that their competitors are working within the same guidelines and know that their own ability to raise capital globally depends on proper regulation.

One solution could be user pay, which might take the form of companies paying for regulatory oversight on mergers and acquisitions, or companies paying for not having proper auditing and financial controls in place. “There’s no reason the good institutions should pay for those who don’t have the controls,” Doran contends.