A C.D. Howe Institute study says OSFI's single-head governance model hasn't been reviewed in nearly 30 years
The body that sets the rules governing how Canadians borrow, save, and qualify for mortgages is operating under a governance structure that hasn't been meaningfully examined since the late 1990s.
That is the central finding of a new report from the C.D. Howe Institute, published Wednesday, which calls on policymakers to modernise the Office of the Superintendent of Financial Institutions (OSFI) before the complexity of today's financial risks outpaces its institutional design.
In the report "Fit for Purpose: Modernizing OSFI's Governance," former OSFI vice superintendent Jamey Hubbs and C.D. Howe research officer Mawakina Bafale argue that OSFI's single-head governance model, though appropriate at the time of the regulator's founding in 1987, has not undergone a major review in nearly three decades.
For mortgage brokers and their clients, that structural inertia carries practical consequences. The institution whose guidelines shape everything from mortgage stress tests to loan-to-income caps is, by the authors' account, governed in a way that does not reflect how the financial system has evolved.
A regulator out of step
The report notes that OSFI's governance model is out of step with comparable regulators domestically and internationally.
Authorities in the United Kingdom and Australia, along with newer Canadian regulators such as Ontario's Financial Services Regulatory Authority and the Ontario Securities Commission, operate under board-led structures.
The Organisation for Economic Co-operation and Development (OECD) has highlighted several advantages to this approach, including reduced vulnerability to regulatory capture, stronger judgment in complex principles-based environments, and more effective strategic oversight.
The authors are not arguing that OSFI has performed poorly. Rather, they contend that distributed authority provides a structural safeguard that does not depend on any one person — a distinction that matters as the regulator's remit continues to widen.
That remit has grown considerably. Since the 2008 global financial crisis, OSFI's mandate has expanded well beyond its original prudential remit.
It now oversees Canada Mortgage and Housing Corporation (CMHC)'s commercial activities, introduced the mortgage stress test in 2016, and gained new authority following the passage of Bill C-47 in 2023 to assess whether federally regulated financial institutions have adequate policies on integrity and security.
Each expansion has added complexity to a regulator still governed by a structure designed for a simpler era.
For brokers, OSFI's decisions are rarely abstract. In early 2026, OSFI rolled out fresh guidance on liquidity while opening lengthy consultations on credit risk management and board-level accountability, while confirming the mortgage stress test would remain unchanged at 5.25% or two percentage points above a borrower's contract rate, whichever is higher.
Each of those decisions flows from a single-head governance structure that the C.D. Howe report now says should be replaced.
The case for a board
Hubbs and Bafale propose replacing the Superintendent-led model with a multi-member structure that includes a board of directors and advisory councils.
The board would approve strategic direction, provide an independent challenge function, periodically review policy effectiveness, including the mortgage stress test and the Domestic Stability Buffer, and be directly accountable to Parliament.
It would not, however, interfere with institution-specific supervisory decisions, preserving the confidentiality requirements at the core of OSFI's work.
The recommendation draws support from international experience. Switzerland's Financial Market Supervisory Authority (FINMA) is widely considered best practice by the OECD.
Its independent board draws seven to nine expert members from academia and industry, with no FINMA employees or ministry officials among them. That separation between strategic oversight and day-to-day operational management is precisely the model Hubbs and Bafale believe Canada should study.
Domestically, the parallel is closer than many might expect. The Canada Deposit Insurance Corporation, which handles institution-specific supervisory data of comparable sensitivity to OSFI's and whose mandate is functionally interdependent with OSFI's prudential role, has long operated successfully under a board structure.
The OSFI Superintendent already sits on CDIC's board as an ex officio member — meaning OSFI's leadership is already a participant in board-level governance under the same confidentiality constraints the report's critics might cite as obstacles.
The emerging risk environment strengthens the case further. Canada's financial sector faces a convergence of geopolitical instability, increasingly sophisticated cyber threats, and climate-related shocks, each of which places demands on the regulator that go well beyond post-financial-crisis concerns about capital adequacy.
OSFI's 2026–2027 Annual Risk Outlook identified non-bank financial institutions as the second-highest threat to the country's financial system, alongside ongoing concerns about real estate secured lending and mortgage risks.
What this means for the mortgage industry
Hubbs and Bafale argue that as OSFI's activities expand into cybersecurity, geopolitical risk, and foreign interference, the organisation requires broader expertise and stronger oversight mechanisms.
Moreover, regular appearances before Parliament and a multi-member governance structure would enhance accountability, strengthen legitimacy, and equip OSFI to respond more proactively to emerging risks.
The authors also call for a formal review of OSFI's institutional framework at least once every decade, noting the MacKay Task Force of nearly 30 years ago remains the only comprehensive assessment the regulator has ever undergone.
"Canadians have been well served by OSFI's prudential oversight for decades, but the financial system and the risks surrounding it have evolved significantly," Hubbs said.
"The question is whether OSFI's governance framework remains fit for purpose in an increasingly complex financial environment."
Bafale was equally direct. "Greater transparency and a diverse governing body with specialised expertise would help ensure OSFI remains proactive, accountable, and capable of maintaining Canadians' trust in the stability of the financial system," she said.
"Good governance leads to good decisions."
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