Montréal - The Autorité des marchés financiers (the AMF) has published its 2015 Annual Report on Financial Institutions, which draws a portrait of the financial sector, discusses the context and the issues facing financial institutions under the AMF's jurisdiction, and points out the actions taken by the AMF to adequately respond to them.
This new edition of the report, which incorporates financial information and statistics about all financial institutions carrying on business in Québec, excluding banks, gives an overview of this key sector of the economy and highlights its evolution, said Louis Morisset, President and Chief Executive Officer of the AMF. As an integrated regulator that provides a global vision of the financial sector and the trends affecting it, the AMF is developing and applying a framework based on best practices from around the world, he concluded.
Highlights and issues
Financial institutions continued to grow significantly in an economic context and technological environment that are forcing them to deal with several important issues.
- The financial sector, including banks, represents 6.4% of Québec's GDP. This sector grew by 4.2% in 2015, more than the average annual growth for the past five years, which stands at 2.6%.
- Persistent low interest rates is an issue the AMF is monitoring closely due to its potential impact on financial institutions. Low rates facilitate access to mortgage credit that could lead to an increase in household debt, thereby posing a risk for deposit institutions. The persistence of low interest rates also affects the return on investment of insurers of persons and is prompting some of them to rethink their investment strategy.
- After the Desjardins Group was designated a domestic systemically important financial institution in 2013, the AMF continued strengthening its framework and its oversight approach with respect to this cooperative group. In 2015 the AMF updated its capital adequacy and prudential framework.
- Climate change and its growing impact are a major issue for damage insurers, which are seeing a larger number of claims related to water damage and flooding. The AMF is following this issue closely and assisting industry players in finding solutions to better inform consumers and give them adequate protection.
- Digital technology applied to finance, commonly called fintech, is up-ending many traditional business models. Although it can sharpen market competitiveness, this technology could change or amplify the risks inherent in financial products and services being offered. Through a self-assessment survey conducted in 2015, the AMF determined the level of preparedness of financial institutions in terms of managing cyber-risk. The AMF ensures that its frameworks and oversight activities are adapted to new market realities in order to maintain adequate consumer protection.
- Lastly, by actively participating in various national and international forums, the AMF has been able to benchmark its practices and approaches against what is being done elsewhere and, in some cases, to influence the development of standards, thereby ensuring that the regulatory framework set up in Québec meets the highest standards.
The 2015 Annual Report on Financial Institutions is available on the AMF's website.
The Autorité des marchés financiers (the AMF) is the regulatory and oversight body for Québec's financial sector.
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