Bill C-57 (Historical)
An Act to amend certain Acts in relation to financial institutions
This bill was last introduced in the 38th Parliament, 1st Session, which ended in November 2005.
Ralph Goodale Liberal
This bill has received Royal Assent and is now law.
November 23rd, 2005 / 5:15 p.m.
Yvan Loubier Saint-Hyacinthe—Bagot, QC
Madam Speaker, I will speak briefly to Bill C-57.
We had some reservations when this bill was first introduced, but after it went through committee and witnesses suggested avenues for improving it, especially after hearing actuaries and their concerns, we decided to support it.
We still have a few unanswered questions regarding the confidentiality of information on bank operations. However, on the whole, I think this bill is worth passing. It is an improvement on the current situation. It is an extension of Bill S-11, which was introduced last year. We will therefore support it.
As a next step, I think it would be worthwhile to look at the issue of confidentiality of the operations of banks and their boards of directors. But for now, we are supporting the bill. More improvements can be made to it later.
In a nutshell, I am announcing to the House that we will be supporting this bill.
November 23rd, 2005 / 5:10 p.m.
Charlie Penson Peace River, AB
Madam Speaker, it is a pleasure to rise today to speak to Bill C-57. The Conservative Party will be supporting this bill. We believe in strong corporate governance and rules around that sector. We believe they are essential to ensuring that shareholders' rights are protected, that consumers are served properly, and that Canada's financial sector is able to be strong and vibrant.
The Conservative Party will continue to look out for the best interests of consumers and shareholders while ensuring that the regulatory environment contributes to a strong financial sector.
This bill would bring the financial sector under the same rules as other business corporations that are currently under the Canada Business Corporations Act which took effect in 2001.
However, this Liberal government should walk the talk. While it is busy bringing in Bill C-57 on corporate governance, cleaning it up and making it transparent, what do we see from the government itself? Canadians have been subjected to another year of false projection, junk accounting and misleading government spin. The Liberals continue to hide behind phoney numbers and false forecasts.
The Liberal budget of 2005 projection of $3 billion was a lowball figure, as we now know. The government would have presented a budget surplus of $6 billion if it had not been engaged in unbudgeted spending and junk accounting which served to reduce the surplus numbers close to what the budget projection then was.
Parliament's numbers, the work done by the four forecasters hired by the finance committee to check on what the projections were from the finance department and, more important, the finance minister, revealed early on that the Liberals were sitting on billions of dollars more than the budget 2005 projections that were claimed.
In April Parliament's numbers projected a surplus of $6.1 billion and most recently, in July, a surplus of $.64 billion. Now those same fiscal forecasters are continuing on and we hope to get a budget for them to continue their work.
This points out the Liberal government's questionable budgetary practices that underscore the need for a parliamentary budget office, as was presented in the new Conservative federal accountability act. Canadians deserve honest and independent forecast projections, so that Parliament can engage in a debate as to how surplus money should be allocated and in fact, whether those kinds of surpluses should be allowed to build up. In any event, maybe we need to lower tax rates, so we do not run those massive surpluses. We see sometimes that the government gets carried away just before elections and all kinds of crazy spending is coming out most recently.
We are in agreement with this. It would help several sectors. It would help The Co-operators, I know, which is a big cooperative financial institution. We have some concerns for other sectors, like the chartered accountants. We are willing to explore those further. I think it is important to get the financial sector under the same rules that other corporations are under in this country and that shareholders have the transparency they need to make investments in the sectors that are involved under this legislation.
November 23rd, 2005 / 5:05 p.m.
Roy Cullen Parliamentary Secretary to the Minister of Public Safety and Emergency Preparedness
Madam Speaker, I am thankful for the opportunity to speak to Bill C-57 at third reading.
In budget 2005 the government committed to introduce the proposals in this bill, which now fulfill our government's commitment to bring the governance standards for financial institutions up to the levels adopted in 2001 for other federally incorporated companies. Bill C-57 also proposes to update certain governance standards that are unique to financial institutions.
I am told by my colleague, the Parliamentary Secretary to the Minister of Finance, that the members on the House of Commons Standing Committee on Finance worked very constructively and collaboratively on this initiative. We want to thank them for doing that.
There is little doubt of the important role that financial institutions play in the lives of Canadians. They provide services above and beyond what we most often think of as banking services, services such as chequing and savings accounts, and mortgages.
Financial institutions, though, are much more than that. For example, they provide the capital necessary for new or existing businesses. They sell insurance and can administer estates, trusts and agency contracts. In addition, they play a key role in helping governments and corporations to raise capital, as well as offering individuals an opportunity to invest in stocks, bonds and other securities.
The financial services sector is more than a provider of services. It is a critical part of the infrastructure of our economy, employing over 600,000 Canadians with a yearly payroll of over $35 billion. I can say that where I come from in Toronto, the financial services sector is a hugely critical employer in the business activity in the area. Let us not forget also that the financial services sector contributes approximately $13 billion in taxes to all orders of government.
I think everyone would agree that for Canada to continue its economic success, we must think beyond our borders. The same is true of Canadian businesses such as financial institutions. Let us face it, the reality is that we are operating in a global context and in global capital markets, but in order to compete in such an increasingly competitive global marketplace, the financial services sector needs to have a modern and up to date regulatory framework.
It is in this spirit that the government has taken action in recent years to ensure that financial institutions have the up to date regulatory framework they need to compete in today's global economy. In fact, this framework is reviewed every five years. Bill C-57 builds on those initiatives. It equips financial institutions with the modern governance tools that they need to compete in a global economy.
I would like now to quickly outline the five main elements contained in this bill. First, the financial institutions statutes recognize the importance of an effective board of directors. Bill C-57 contains proposals to clarify the role of directors in carrying out their important functions, for example, by explicitly allowing for a due diligence defence and clarifying the conflict of interest rules. I am particularly proud to see that. My first private member's bill called for the defence of due diligence for directors of corporations in Canada incorporated under the Canada Business Corporations Act.
Second, shareholders have certain rights, such as the right to participate in the major decisions of a financial institution in which they have an interest. The proposed legislation enhances those rights. For example, once this bill is passed, shareholders would be permitted electronic participation in meetings using technology such as video conferencing.
Third, Bill C-57 recognizes the importance of good governance in the well-being of a financial institution. As such, the government's framework needs to be kept up to date with best practices in this area.
Fourth, the legislation proposes to strengthen a number of governance elements in the regulatory framework, including improving the flow of information to the regulator. It also harmonizes various governance standards within and across the financial institution statutes.
The fifth element relates to changes in the policy holder governance framework for insurance companies. These changes would work to increase disclosure in respect of participating in adjustable life insurance policies.
We do not have time to go into any more detail on this particular piece of legislation, but it is an important piece of legislation that would affirm the importance of our financial institutions in Canada and would give them the tools necessary to compete in this global economy.
November 23rd, 2005 / 5:05 p.m.
Business of the House
November 23rd, 2005 / 4:50 p.m.
Some hon. members
(Motion agreed to)
(Bill C-71. On the Order: Government Orders)
November 22, 2005--The Minister of Indian Affairs and Northern Development--Consideration at report stage and second reading of Bill C-71, An Act respecting the regulation of commercial and industrial undertakings on reserve lands, as reported by the Standing Committee on Aboriginal Affairs and Northern Development without amendment.
(Bill concurred in at report stage and read the second time)
(Bill C-57. On the Order: Government Orders:)
November 18, 2005--The Minister of Finance--Consideration at report stage of Bill C-57, An Act to amend certain Acts in relation to financial institutions, as reported by the Standing Committee on Finance with amendments.
(Bill concurred in at report stage)
Business of the House
November 23rd, 2005 / 4:45 p.m.
Hamilton East—Stoney Creek
Tony Valeri Leader of the Government in the House of Commons
Mr. Speaker, there have been discussions among the parties and I think you would find unanimous consent for the following motion. I move:
That, notwithstanding any standing order or usual practice, Bill C-71 be deemed to have been concurred in at report stage and read a second time in order for consideration at third reading later this day and Bill C-57 be deemed to have been concurred in at report stage in order for consideration at third reading later this day, and that at the third reading stage of each bill, after no more than one speaker from each party has spoken for not more than five minutes, the question shall be deemed put and deemed carried on division.
Committees of the House
November 18th, 2005 / 12:05 p.m.
John McKay Parliamentary Secretary to the Minister of Finance
Mr. Speaker, I have the honour to table, in both official languages, the 18th report of the Standing Committee on Finance on Bill C-57, An Act to amend certain acts in relation to financial institutions and agreed on Thursday, November 18, 2005, to report it with amendments.
Business of the House
November 17th, 2005 / 3:05 p.m.
Hamilton East—Stoney Creek
Tony Valeri Leader of the Government in the House of Commons
Mr. Speaker, we will continue this afternoon with the opposition motion.
On Tuesday, November 22 and Thursday, November 24, we will have allotted days. The opposition House leaders are in fact considering a special House order to expedite Bill C-53, Bill C-54, Bill C-55 and Bill C-66 through all stages with a recorded vote at third reading. I hope we can come to an agreement on that special House order and proceed in that fashion.
If we cannot agree on that special order, then tomorrow we will begin with reference before second reading of Bill C-71, the first nations commercial bill; report stage of Bill S-37, respecting the Hague convention; second reading of Bill S-36, the rough diamonds bill; and reference before second reading of Bill C-72, the bill amending the DNA legislation. We will continue with this business next week, adding the report stage of Bill C-57, the financial governance bill, and other unfinished items.
With respect to the comment about the Chamber of Commerce, it is very clear, and I said this earlier, that Bill C-66 and the ways and means motion are in fact confidence motions. Although I am not sure I should do this, I am taking at the hon. member's word the public statements that in fact those members do support Bill C-66 and the ways and means motion with respect to taxes. Given his comment, I guess I should reconsider and speak to him once again since his party has flip-flopped on a number of occasions.
With respect to prorogation, I have to say that this rumour created by the Conservative Party was merely to keep the NDP in line with its confidence motion that it will put forward in the coming weeks.
October 6th, 2005 / 12:10 p.m.
Paul Szabo Mississauga South, ON
Mr. Speaker, the member has laid out the broad strokes of Bill C-57. It is an important bill. It will update our legislation with regard to financial institutions to bring into line changes that were made to the Canada Business Corporations Act.
I am pleased that all parties seem to have agreed that support will be given at second reading, so that the committee can hear the witnesses as well as to bring to the table some of the important ancillary issues, and the member raised a very important one. I was a member of the finance committee when we went through the last flurry of bank merger discussions. One of the significant debates and concerns that came from Canadians and parliamentarians was the impact on regional banking services and financial services.
I would like to ask the member, does he have any recommendations to give to the committee as it looks at this to ensure that there is a balance across the country and that it takes into account the regional differences throughout Canada?
October 6th, 2005 / 12:05 p.m.
Michael John Savage Dartmouth—Cole Harbour, NS
Mr. Speaker, I appreciate the opportunity to speak to Bill C-57 which introduces a new governance framework for the financial services sector. Other colleagues have spoken quite eloquently about how important this bill is to bring governance standards for the financial institutions up to date. This proposed legislation would give financial institutions and their stakeholders the governance tools that they need to allow them to continue to play a key and leading role in Canada's economy. It addresses concerns that many Canadians have about corporate governance.
The financial services sector not only plays a vital role in the economy but also in the financial lives of Canadians, whether it is banking, insurance, financing, investing or financial planning. Every day across the country consumers, businesses and governments depend on the products and services provided by financial institutions. Community groups, arts and culture groups, amateur sports groups across the country also depend on these institutions. We need look no further than the CIBC run for the cure this past weekend to see how important our financial institutions are. In my own province of Nova Scotia we are proud to be the home of Scotiabank which is a leader in corporate responsibility.
I would like to focus my remarks today on the federal legislation and the initiatives the government has introduced that are designed to make the financial services sector more competitive and to enhance consumer protection. The process of implementing the new policy framework began in 1996 with the establishment of the MacKay task force on the future of the Canadian financial services sector. In September 1998 the task force presented the government with its report which was then reviewed by two parliamentary committees.
The committees in turn conducted extensive public consultations and presented the government with their recommendations. This consultation process eventually led to Bill C-8, which in 2001 introduced legislation to reform the policy framework for Canada's financial services sector. That contained a number of measures that focused on four main areas, one of which was to empower and to protect consumers.
Perhaps the most important initiative for consumers that sprung from this legislation was the establishment of the Financial Consumer Agency of Canada in 2001. This agency was established to consolidate and strengthen oversight of consumer protection measures in the federally regulated financial sector as well as to educate consumers. While some consumer protection activities existed before that, they were dispersed among a large number of federal entities making the complaint process more arduous and less responsive to the needs of Canadians. The FCAC consolidated those services.
Hon. members may also be aware of the ombudsman for banking services and investments, OBSI, which was established in 2002. The OBSI is an independent organization that investigates consumer complaints against financial service providers including banks and other deposit taking organizations, investment dealers, mutual fund dealers, and mutual fund companies. It provides prompt and impartial resolution of complaints that customers have been unable to resolve satisfactorily with their own financial services provider. For the first time in Canada customers of banking and investment services now access comprehensive and effective complaint resolution through a single ombudsman.
The OBSI is independent of the financial services industry. To ensure its independence, the ombudsman reports to a board of directors of which a majority of the directors are independent of the financial services industry. The bottom line is that consumers have benefited from the changes in the financial services sector. With new competitors in the marketplace, increased competition among existing institutions and more innovative products and services, consumers now have more choices in deciding who fulfills their financial needs.
Small and medium sized businesses too in some cases have benefited from increased choice among financial service providers. To ensure that there is better information on the financing needs of small and medium sized enterprises and the availability of financing to meet those needs, the government undertook a comprehensive program.
That program was to assist in the development of effective public policy; to promote greater awareness among small businesses of the sources and types of financing available; and to foster a more complete understanding among financing providers of the financing needs of small and medium sized businesses.
I would not suggest that I am entirely delighted with the way that all financial service institutions have responded. I think, particularly in regions of Canada like Atlantic Canada, that we could do a lot better in terms of decision making as well as presence in those regions, but we have come a long way in a lot of areas.
Although the government has introduced consumer safeguards, we have also been mindful not to place too high a regulatory burden on financial institutions. The government is equally committed to providing a policy environment that is fair and balanced.
It is important to mention that the framework for the Canadian financial services sector enacted by the government is not a static process. Rather, it is dynamic, reacting quickly in this world with the rapid pace of globalization and technological innovation that has become a daily reality for businesses in Canada.
Indeed, the policy framework for the financial services sector should be dynamic, flexible and fair. The framework provides that flexibility in three ways. It maintains, first, the long standing practice of ensuring regular updating of the regulatory framework by including an automatic five year review in the legislation, one being scheduled in 2006. This is a practice that sets Canada apart from virtually every other country in the world.
Second, as has been frequently done in the past, the government is prepared to revisit this legislation prior to the five year review if it proves necessary in order to ensure that the framework keeps pace with the rapidly changing marketplace. Finally, the legislation allows for matters of implementation to be dealt with through regulation.
What we have is a balanced framework, a regulatory approach that is well thought out and efficient, with important consumer protection measures. Both aspects are conducive to the growth and success of Canada's financial institution.
One would ask, how does Bill C-57 fit into the big picture? I believe that government policies will continue to evolve over time, so that we can keep pace with the new economy, new innovations and new technology. Bill C-57 is part of that evolution.
The proposals contained in the bill will update and modernize the framework for the financial services sector. It has broad support among stakeholder groups in the country and I believe among Canadians. I urge and expect all members will support Bill C-57.