OSFI dials back some COVID-19 rules
Canada's banking regulator announced Monday that it plans to phase out changes to private pension plans and credit-related payment deferrals that were introduced earlier this year as COVID-19 pandemic safeguards.
The Office of the Superintendent of Financial Institutions said that it planned to end the temporary freeze on portability transfers for private pension plans due to signs that markets have stabilized, subject to certain conditions.
OSFI took action in March amid the early days of the pandemic to help protect private pension plans as volatility in North American markets heightened. At the time, OSFI was concerned that transfers out of pension plans would "impair the solvency" of the funds.
"The changes announced today result from our ongoing effort to ensure that our regulatory measures continue to be appropriate for this unprecedented situation while remaining risk-focused and forward-looking," OSFI superintendent Jeremy Rudin said in a statement on Monday.
In addition to the transfer changes, OSFI also announced new criteria for banks and insurers regarding loan and premium payment deferrals for troubled borrowers impacted by COVID-19.
The new rules detail how long those institutions are subject to special capital treatment, which previously allowed certain borrowers to have their credit treated as "performing loans" despite being deferred due to COVID-19-related issues. Some of the types of credit impacted by the new rules include mortgages and insurance premiums, OSFI said.
Any of the previously announced six-month deferrals granted before the Aug. 31 deadline will remain under the old regulations. However, referrals granted between Aug. 31 and Sept. 30 will be subject to a three-month extension. Any loans with deferrals after Sept. 30 will not be subject to further special treatment, OSFI said.