OSFI proposes late filing penalty regulation

In response to the high number of late filings from federally-regulated financial services companies, including insurers, the Office of the Superintendent of Financial Services (OSFI) has put out proposed regulations for its “late and erroneous filings” penalties framework.The proposed regulation, which will be subject to comments for the next 30 days, is needed because “the frequency of late and erroneous filings is high for the [financial services] industry overall”. The OSFI proposal says that more than one third of all quarterly financial returns filed in the first three quarters of 1999 were late. “These late and erroneous filings place a significant operational burden on OSFI and efforts to date to minimize their frequency have had only limited success.”The plan was first announced in 1998, and in the spring of this year was put into effect in a theoretical fashion. However, OSFI is now planning to begin assessing penalties as of April 1, 2002. Financial institutions have voiced concerns over the proposal throughout the process, saying that the penalties place undue burdens on companies and raise the profile of regulatory reporting to “an unjustifiably high level”, OSFI admits. It adds, “in addition, the usefulness of some of the information required by OSFI has been questioned”.OSFI notes that the project has been phased in over the course of the year in order to give companies an opportunity to adjust to the new system. As well, it plans to review its reporting requirements. “As a result of this process, some requirements may be eliminated, but others may be identified.”The penalties are tiered, from $100 to $500 per day, based on the size of the institution by total assets. Some exceptions may be made at the discretion of OSFI, which gives the example of a systems crash delaying filing. A dispute resolution system is also part of the proposal.