Regulators cite their ‘North Star’ during turbulent times

Global risks may be changing rapidly, almost daily, but Ontario’s insurance regulator says its principles-based regulatory approach remains the best way to navigate through the chaos.

“So, clearly, we’re going through a profound period of change. There’s uncertainty and technology change and shifting consumer expectations as well,” Frank Lofranco, deputy commissioner of supervision and enforcement at the Financial Consumer Agency of Canada, said during a panel discussion at the Financial Services Regulatory Authority of Ontario (FSRA) Exchange 2026.

“From our perspective, I think it’s important to recognize that this is not necessarily unique to our time. Moments of profound change have implicated the financial marketplace in the past, from economic stress and financial crisis, right through to the introduction of e-payments, the rise of the internet, and online banking. And throughout it all, profound change is something that we’re becoming more accustomed to dealing with, and clearly it requires an understanding of what’s in play, what those expectations and risks ought to be…

“For us, the North Star is really outcome-oriented. It’s about financial consumers benefiting from the consumer protections they are to be afforded. And they are afforded those protections for the purposes of achieving positive financial outcomes, and that does not happen without compliance.”

Regulators during uncertain times are looking to be very proactive and are engaging to get ahead of issues by understanding risks — and more specifically, what they mean for consumers, Lofranco said. This is done by way of consultation with the regulated entities themselves, as well as discussions between regulators.

“We have become very action-oriented in the last few years and plan to continue with that posture,” Lofranco said. “That could take the form of guidance where we want expectations to be exceptionally clear, so that institutions and entities can implement compliance measures quickly and confidently, but it also takes the form of supervisory interventions where we engage earlier and risks can emerge, to get ahead of them becoming widespread or systemic,” he said.

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Keeping the ‘North Star’ of managing positive consumer outcomes keeps the regulatory mandate simple, even if the risks are constantly changing, said Mate Glavota, executive director of applied research, data, and analytics at the Office of the Superintendent of Financial Institutions (OSFI).

“We’re here to protect depositors, we’re here to protect policyholders, pensioners, and creditors,” he said. “Having a straightforward mandate like that keeps our work relatively…I won’t say simple, but it makes it easy to focus when we have to — especially in an environment where you have a ton of change going on.

“You’ve got the world being reshaped, regions changing, and alliances shifting under your feet. So, what we try to do is ruthlessly prioritize what our top risks are.”

Glavota added regulators will communicate these priorities to business on a semi-annual basis, if not an annual basis.

“We make sure that we communicate with industry in our annual letters and circulars, but that annual risk outlook is driven by a process that we have where we do try to make sure that we understand what our top three or four risks are…and then we prioritize those in a very quantitative way,” he said.

“We do a lot of stress testing, we do a lot of analysis…but we always bring it back — no matter what’s going on, including things in the Gulf of Hormuz, things in South America, wherever things are happening — eventually we have to bring it back to, ‘How does that impact the institutions that we supervise?’”

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FSRA CEO Dexter John said it’s important for the regulators to be clear with the businesses they regulate about the consumer outcomes they expect to see.

“Being consistent is a key, right?” John said. “Under principle-based outcomes focus, you know what the outcomes are. Maybe we have to do a better job of making sure the sectors you regulate understand what those outcomes are…

“But the key really here is for us to be consistent throughout what the expectations are, very clear in our communication to the sectors that we regulate for them to understand that, and to work alongside us to ensure that the outcomes [will] work and the behaviors we’re hoping to achieve are achievable.”

David Gambrill

David has twice served as Canadian Underwriter’s senior editor, both from 2005 to 2012, and again from 2017 to the present.