Canada's banking regulator has proposed changes that would allow it to review new board members or top executives of banks and other federally regulated financial institutions.
The Office of the Superintendent of Financial Institutions (OSFI) said Monday that it is seeking comment on a proposal that would require institutions to give it 30 days advance notice of any changes to their directors or executives.
OSFI said the proposal would formalize current practice that involves banks notifying the regulator of changes in senior management.
The regulator wants to know about new candidates 30 days before an official appointment and has asked for details such as a curriculum vitae and the rationale for the candidate’s selection.
OSFI said it plans to do background checks on candidates and could provide comment if it finds anomalies. The final decision would be up to the financial institution.
"They have the potential now to take someone out of a position after they’ve already been hired, now what they want to do is backdate this so they can make a decision prior to it becoming public," said Bill Vlaad, president of Vlaad and Company, a headhunter for financial services companies.
In an interview with CBC's The Lang & O'Leary Exchange, Vlaad said he was surprised that OSFI wanted to take on the tsunami of paperwork that could be involved in reviewing candidates.
"It's redundant in many people’s eyes," he said, adding that banks already do due diligence on candidates, because that is just good business practice.
He speculated that OSFI might be eyeing the debate over how few women there are on Canadian boards in creating the new rules.
After the new director or executive is appointed, the regulator also may request an introductory meeting so it can remind them of their duties under Canadian banking regulations.
Deputy superintendent Mark Zelmer said in a letter that the proposal is part of its efforts since the global financial crisis to "enhance corporate governance domestically to meet new international expectations."
The European Banking Authority brought in tighter rules on appointing bank executives and board members last year, including an international database with details of candidates’ assessments.
The register is part of a wider effort by the EBA to standardise the way countries across the EU 28 decide which bankers are fit and proper for the job.
Media personality and mutual fund company owner Kevin O'Leary said the letter released today is a trial balloon.
“You can float a public balloon like this and see what happens,” O'Leary said.
“What I would prefer as an investor...and there must be continuous motion in this direction, is a national regulator with more teeth to streamline the process to help the public markets work more efficiently and be more competitive in Canada.”