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The beginning of 2026 has seen numerous developments from Canadian financial services regulators aimed at fostering competition and reducing regulatory burden. OSFI's quarterly releaseon January 29, 2026, and its related Industry Day, announced a pilot streamlined bank application process, finalized new liquidity guidance, and launched consultations on credit risk management and on enhanced accountability for senior leaders of federally regulated financial institutions. There have also been updates from the Bank of Canada, FCAC, CDIC, and the Competition Bureau impacting the financial sector.
Streamlined Bank Applications
OSFI is launching a pilot program in June 2026 to expedite its approvals for bank licensing. The pilot program will target provincial institutions looking to continue as federal credit unions, and emerging banking models, such as fintechs and crypto custodians. The proposed timelines are significantly shorter than those seen in recent years, and so this represents a significant opportunity for fintechs and provincial credit unions seeking to establish a bank.
At its Industry Day held on February 12, 2026, OSFI provided a high-level overview of the streamlined process:
- Initial Readiness Assessment (Pre-Application) –
Targets OSFI feedback in 4 weeks
- OSFI meets with the applicant to understand the business model, then provides preliminary observations and clear expectations to support a robust application.
- Formal Application Review – Targets OSFI final
recommendation within 12 months
- OSFI assesses application, with a more risk-based and calibrated approach.
- Applicants must provide a clear and credible exit plan.
- Operational Readiness (Post-Ministerial Approval)
– Targets OCCB within 3 months
- OSFI provides clear path to obtain the Superintendent's Order to Commence and Carry-on Business (OCCB), with conditional restrictions for any residual risks.
OSFI flagged that the targets above, and the overall timeline of 16-18 months, are subject to steps outside of OSFI's control. For example, additional time will still be required for an Applicant to develop certain responses, undergo security reviews and background checks, and receive approval from the Minister of Finance.
To promote transparency, OSFI plans to launch a public dashboard to detail applicants' status. Additional OSFI guidance on the pilot program and related webpage will follow in Spring 2026.
The pilot program is intended to support broader government objectives to enhance competition, as discussed in our recent bulletin Changes to Canada's Bank Regulatory Environment to Promote Efficiency and Competition.
Mortgage Updates and Consultation on New Credit Risk Management Guideline
OSFI plans to consolidate its credit risk expectations into a single, principles-based guideline. As part of its quarterly release, it issued a Consultative document on Credit Risk Management, which details proposed overarching principles and highlights several specific questions, including how the new guideline can support economic growth and promote effective competition in the financial sector.
The new guideline will cover mortgage lending, commercial real estate, and corporate lending. It is intended to reflect updated international standards, including the revised Principles for the Management of Credit Riskpublished by the Basel Committee for Banking Supervision (BCBS) in April 2025, and several reports by the Financial Stability Board (FSB) concerning the financial stability risks arising from non-bank financial intermediaries (NBFIs).
OSFI confirmed that the new guideline will consolidate and rescind several guidelines and advisories, including Guideline B-20: Residential Mortgage Underwriting Practices and Procedures. It recognized that Guideline B-20 underpins the internal mortgage underwriting policies at institutions, and will therefore seek to minimize potential operational impacts.
Likely as a result of this initiative, OSFI announced that it would continue its loan-to-income (LTI) limits pilot on uninsured mortgage portfolios in conjunction with current Guideline B-20 expectations.
The consultation is open for feedback until July 29, 2026. Draft segments of the new guideline will then be issued for further consultation, in a phased approach over 2026 and 2027.
Enhanced Accountability for Boards and Senior Leaders
OSFI also launched a consultationon its expectations for senior leader accountability.
Federally regulated financial institutions will be expected to establish or update their own governance frameworks, approved by their boards and submitted to OSFI annually, containing suitability and accountability criteria for senior leaders with clear monitoring processes. OSFI has requested feedback on whether the scope should extend to board directors, the "C-suite", heads of oversight functions, heads of business platforms, and anyone else reporting directly to the CEO or the board. OSFI confirmed at its related Industry Day that it has no plans to vet or approve proposed senior leaders.
The consultation replaces a full review of the Corporate Governance Guideline. Feedback is requested by October 31, 2026. OSFI will then issue draft guidance for further comment.
Final Liquidity Adequacy Requirements (LAR) Guideline (2026)
OSFI issued its final LAR Guideline (2026), after a 2025 consultation on changes intended to improve consistency in liquidity risk measurement.
The LAR Guideline 2026 clarifies which deposits qualify as retail funding, updates the treatment of funding partnership deposits and structured notes, and simplifies the definition of retail rate-sensitive deposits by limiting it to promotional/time-limited offers.
More Updates
Additional regulatory developments impacting the financial services sector include:
- FCAC advised the FCAC advised the Senate Committee on Banking, Commerce and the Economy (BANC)that it will deliver a report on the structure, level, and transparency of fees charged by Canadian banks in 2026. It announcedon December 1, 2025, that fourteen financial institutions, including the 6 largest banks, have signed on to its voluntary Commitment on Low-Cost and No-Cost Accounts.
- The Competition Bureau formally launched its Market Studyon the state of competition in the financing sector for small and medium-sized enterprises, including consideration of barriers for lenders. The deadline for submissions is February 27, 2026.
- Amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Acthave been proposed as part of Bill C-12, which, if passed, will substantially increase potential penalties for non-compliance with AML/AMF requirements. Bill C-12 is currently at Second Reading and Committee study in the Senate.
- OSFI issued a new Guideto its Administrative Monetary Penalties, as part of its quarterly release on January 29, 2026. OSFI stated that it hopes to help institutions strengthen their governance practices by outlining the factors the Superintendent will consider when assessing penalties.
- Amendments to the Financial Consumer Protection Framework Regulations limiting NSF charges to $10 for individuals will come into effect on March 12, 2026.
- Various reporting forms for banks, insurers and pension plans will be updated later in 2026. OSFI, the Bank of Canada and Canada Deposit Insurance Corporation are working together to enhance data quality and modernize their regulatory data platform, as part of their Data Collection Modernization. More details and training will be provided in advance of implementation.
- Payment Service Providers will need to submit their first Annual Report by March 31, 2026. On February 9, 2026, the Bank of Canada published a comprehensive step-by-step Guideto support the initial filing.
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