OSFI monitoring international regulators’ dialogue on appointing board directors, chief risk officers

Canada’s solvency regulator is monitoring the dialogue among international supervisors about how much of a role regulators should play in deciding who can be the director and chief risk officer of a financial institution.

Speaking to the International Institute of Finance in Madrid, Spain on May 21, 2012, Julie Dickson, superintendent of the Office of the Superintendent of Financial Institutions (OSFI), briefly references two areas in which international regulators have a divergence of opinion. One is on the degree of control regulators should have at the outset in determining who sits on the board of financial institutions.

One “area of disagreement is supervisory involvement in areas such as deciding who can be a director of a financial institution, and who can be the Chief Risk Officer,” Dickson says in notes to her speech, posted online. “Supervisors have taken divergent paths in this regard, as many do not explicitly pre-approve these positions.”

Under the longstanding Basel Core Principles for Effective Banking Supervision, all supervisors are supposed to have the power to remove directors and officers, she says.

“But the question is,” she adds, “should supervisors decide, especially in the case of G-SIFIs [Global Systemically Important Financial Institutions], who assumes these roles from the get-go, or should we wait for evidence as to how well individuals perform in their roles?

“This is a relatively new development that we are all watching.”

The text of the entire speech is available at:

http://www.osfi-bsif.gc.ca/app/DocRepository/1/eng/speeches/2012_05_21_e.pdf