Regulators are proposing reforms to corporate governance guidelines for federally regulated financial institutions, designed to reflect the changes to governance practices since the financial crisis.

The Office of the Superintendent of Financial Institutions (OSFI) Tuesday released a draft revised version of its 2004 guideline on Corporate Governance of Federally Regulated Financial Institutions.

OSFI notes that governance practices have evolved significantly in recent years, with regulators, international standard setters, and others, setting out evolving industry best practices.

“As a result, OSFI believes the time has come to update its own guidance in this area to incorporate the changes that have taken place over the last 10 years,” it says, noting that the proposed changes reflect OSFI’s experience and observations as well as developments in international standards.
OSFI says that the main objectives of the revised guideline are to: ensure that financial institutions have prudent corporate governance practices and procedures that contribute to their safety and soundness; promote industry best practices; and, address international standards, among other things.

The proposed reforms include refinements in the areas of board effectiveness, including composition and competencies; risk governance, including risk appetite and the role of the chief risk officer; and the role of the audit committee.

Comments on the proposed changes are due by September 14, and OSFI aims to finalize the guidance by the end of the year.