Summary
The department is responsible for maintaining the legislative framework for all provincially incorporated financial institutions and for supervising provincially regulated financial institutions to determine whether they are in sound financial condition and complying with legislation and supervisory requirements. The department does this through the Financial Institutions Regulatory Branch and the Financial Institutions Policy Branch.
The regulatory branch regulates and supervises the following entities:
- ATB Financial
- Credit Union Central Alberta Limited (AB Central), which is the central bank and liquidity provider for credit unions
- six provincially incorporated trust companies that do not take deposits
The policy branch maintains the legislative framework for provincially incorporated financial institutions including ATB, the Alberta credit union system, and trust companies. The policy branch is also responsible for assessing whether the government is receiving a fair return from ATB.
Objective and Scope
In 2010, we examined whether the department had:
- clearly defined its expectations for ATB and had processes to monitor whether those expectations were met
- effective systems in place to monitor the safety and soundness of ATB, AB Central and the six trust companies
Conclusion
Over the past few years, the department has moved from an informal monitoring program to a risk based supervisory program. There is now active oversight occurring of provincially regulated financial institutions.
When we did our original audit, the department had recently developed its supervisory approach to monitor the safety and soundness of regulated entities. Only informal monitoring procedures were being done. This follow-up audit confirmed that significant components of the implementation plan have been put in place. The department is on schedule; however, it will take a few more years to finish implementing the complete plan.
The department has implemented our four recommendations on having effective systems in place to fulfill its responsibilities to monitor the safety and soundness of provincially regulated financial institutions. The department’s plan for implementing its regulatory framework is a road map for achieving its objective of holding provincially regulated entities to similar regulatory and supervisory standards as other financial institutions.
The department has implemented our recommendation to clearly define its expectations for ATB and has processes to monitor whether expectations are met. The department uses a quantitative performance target to assess fair return, as well as ensuring that certain qualitative objectives are being met, such as ATB maintaining a presence in smaller communities.