Ottawa reforms banking rules to boost competition — SkimNews
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- Ottawa introduced legislative changes in the federal budget to add a 'secondary competition objective' to the OSFI’s mandate, which previously focused solely on financial stability.
- OSFI will now operate under a revised mandate that acknowledges competition and innovation, following calls from its superintendent Peter Routledge for greater market balance.
- The federal government set a one-year timeline for approving new bank applications and raised the equity threshold for widely held shares from $12-billion to $25-billion.
- Foreign bank subsidiaries with less than $8-billion in equity will be exempt from public shareholding rules if their parent is widely held and listed on a recognized exchange.
- Credit unions will gain easier access to capital and expanded operational reach under the new budget measures aimed at diversifying the financial sector.
- The deposit insurance limit will increase to $250,000 from $100,000, and limits on registered and tax-free accounts will be removed to modernize consumer protections.
Why it matters: Smaller banks and fintech entrants gain a clearer path to scale in a market long dominated by the Big Six, which control over 90% of assets. The $150,000 insurance hike and faster licensing create immediate incentives for consumer switching and new investment, altering the risk-reward calculus for challengers.
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