- with Finance and Tax Executives
- with readers working within the Accounting & Consultancy and Banking & Credit industries
The Office of the Superintendent of Financial Institutions (OSFI) issued its quarterly release of regulatory changes on November 20, 2025, covering the launch of a consultation regarding proposed revisions to the Capital Adequacy Requirements (CAR) Guideline (2027) ("CAR Guideline"), publication of the Minimum Capital Test (MCT) Guideline (2026) ("MCT Guideline"), and a handful of other updates on OSFI regulatory requirements.
Capital Adequacy Requirements Guideline Consultation (Banks, Trust & Loan Companies)
OSFI has launched a 90-day public consultation on several proposed revisions relating to the capital requirements for credit risk set out in the CAR Guideline. As stated in the release, OSFI's objective is to "unlock capacity for institutions to compete effectively and contribute to economic growth", during a time of "profound uncertainty – from geopolitical instability and cyber threats to climate change and domestic economic shifts."
In an effort to increase lending capacity for housing, changes relating to the treatment of land acquisition, development and construction (ADC) exposures under the Standardized Approach (SA) for credit risk include:
- lowering the base risk weight for low-rise residential real estate from 150% to 130%;
- introducing a 90% risk weight for residential ADC (both high and low-rise) where the level of pre-sales is equal to or greater than 75%; and
- allowing institutions to consider ADC projects with Loan-to-Value ratios (LTVs) lower than 80% as mostly complete and apply the income producing commercial real estate treatment if a certificate of occupancy has been issued.
Other changes aim to boost business investment and economic growth. The draft changes to the CAR Guideline also propose lowering the risk weighting applied to Corporate Small and Medium Size Enterprise exposures and lowering the risk weighting for unrated non-investment-grade corporate exposures. Other revisions relate to credit spreads and maturity assignments for cash equity positions in market risk capital, and updates to ongoing monitoring and approval requirements.
Final MCT Guideline (P&C Insurance Companies)
OSFI also issued the final MCT Guideline, with the updates intended to (i) support the financial resilience and stability of federally regulated property and casualty (P&C) insurers, including Canadian branches of foreign P&C insurers, and (ii) reduce the compliance burden by simplifying and clarifying requirements. The overarching goal of the changes is to make capital requirements for insurers clearer, more consistent, and easier to apply.
As stated by OSFI, the 2026 MCT Guideline:
- simplifies the unexpired coverage formula for insurance risk to ensure a consistent interpretation of the capital requirements;
- clarifies how insurers hold capital for their foreign branches;
- updates capital confirmation requirements for user fees; and
- makes minor adjustments and clarifications to apply the capital framework accurately.
Other Updates
Other updates covered in this quarterly release include the following:
- OSFI is rescinding or removing 32 additional documents from its guidance library by December 31, 2025, with the majority being Guideline Impact Analysis Statements. A list of rescinded guidance documents is available here.
- A report evaluating OSFI's new Supervisory Framework has been published, and outlines how the framework is working in practice, gathers feedback from stakeholders and identifies areas for improvement. In particular, the updated Framework supports clearer supervisory letters, the new Overall Risk Rating (ORR) and earlier OSFI intervention.
- In 2025, Canada's six systemically important banks and four internationally active insurance groups filed OSFI's Climate Risk Returns to collect climate-related financial data. OSFI has published a lessons learned report outlining insights from this first round of reporting and outlining future amendments.
Looking Forward
The consultation on the proposed revisions to the CAR Guideline will be open until February 18, 2026. The updated MCT Guideline comes into effect on January 1, 2026.
OSFI will hold an Industry Day on December 4, 2025, to give stakeholders further insight on the items included in the quarterly release and the opportunity to ask related questions. Interested stakeholders may register here in advance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
