Smarter Oversight, Not Deregulation, Is Canada’s Path to Better Financial Supervision

A recent report from the C.D. Howe Institute argues that regulatory complexity is pricing smaller investors out of financial advice and suggests a simple fix: cut unnecessary rules and loosen oversight. It’s a compelling idea — but a misguided one.

The real issue isn’t overregulation, but inefficient regulation. The solution isn’t removing the guardrails — it’s redesigning how we enforce them. Supervisory technology (SupTech) offers that path. When implemented correctly, it can lower compliance costs, eliminate redundancies, and strengthen consumer protection. Canada should be moving toward this smarter model — not drifting backward into deregulation.

Why “Less Regulation” Misses the Point

Regulations exist to deter misconduct, close information gaps, and maintain public trust. Remove them, and you give an advantage to firms with size, risk tolerance, or inside information — the very entities that benefit from weak oversight.

The C.D. Howe report treats compliance costs as fixed, assuming they grow in lockstep with firm size. But modern data tools — automation, standardization, and digital reporting — can change that equation. Simplifying rules doesn’t automatically produce better outcomes; oversimplified frameworks can be exploited or leave critical blind spots. The question isn’t how to regulate less, but how to regulate smarter.

Yes, provincial overlap is inefficient. But the cause is fragmented data standards and disconnected enforcement systems — problems that call for integration, not deregulation.

SupTech: Smarter Regulation in Action

SupTech leverages data analytics, machine learning, APIs, and automated workflows to help regulators monitor markets and detect risks more proactively. Global examples show how effective this approach can be:

• The U.S. Consumer Financial Protection Bureau uses complaint data to identify misconduct trends, targeting outliers instead of imposing blanket rules.

• The Bank of Lithuania applies predictive analytics to detect systemic risks, eliminating the need for broad regulatory rollbacks.

• Brazil’s central bank supervises non-bank entities remotely using automated dashboards and dynamic risk scoring, cutting costs and improving visibility into smaller firms.

According to the Cambridge SupTech Lab, 81% of regulators worldwide are engaged in SupTech initiatives, often focused on consumer protection. The Bank for International Settlements and Financial Stability Board both emphasize that SupTech transforms traditional, backward-looking oversight into predictive, real-time supervision.

These jurisdictions aren’t deregulating — they’re regulating smarter.

Canada’s Roadmap

Canada doesn’t need to start over, but it does need transformation:

1. Standardize regulatory data across provinces to create a unified reporting system.

2. Adopt risk-based supervision to focus oversight where it matters most.

3. Foster regtech partnerships to help advisors streamline compliance while aligning with regulatory systems.

4. Invest in regulatory capacity by hiring data scientists and reengineering workflows.

5. Govern the risks — from algorithmic bias to data integrity — with strong governance and transparency.

The Bottom Line

Critics argue SupTech is still experimental. That’s true — but tearing down regulatory safeguards to save costs would be far more reckless. Other nations are proving that financial systems can expand access without sacrificing protection.

Canada doesn’t need fewer rules; it needs better enforcement.
By investing in SupTech, harmonizing data standards, and modernizing supervision, the country can cut inefficiency while reinforcing consumer trust.

That’s not deregulation — it’s progress.