Bill S-5 (Historical)

Financial System Review Act

An Act to amend the law governing financial institutions and to provide for related and consequential matters

This enactment amends a number of Acts governing financial institutions. It also amends legislation related to the regulation of financial institutions. Notable among the amendments are the following:
(a) amendments to the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act and the Trust and Loan Companies Act aimed at reinforcing stability and fine-tuning the consumer-protection framework; and
(b) technical amendments to the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, the Trust and Loan Companies Act, the Bank of Canada Act, the Canada Deposit Insurance Corporation Act, the Canadian Payments Act, the Winding-up and Restructuring Act, the Office of the Superintendent of Financial Institutions Act, the Payment Clearing and Settlement Act and the Financial Consumer Agency of Canada Act.

Financial System Review Act

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I would like to continue along the same lines.

When it comes to studying such an important bill—the upper chamber studied it for three weeks—they missed an important opportunity to examine the fundamentals of the banking system and financial institutions. Several aspects were studied, particularly technical aspects, but much more could have been done to protect consumers, as my colleague mentioned. Why were further steps not taken to protect consumers?

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Madam Speaker, I thank my colleague for the question.

This bill has a rather specific mandate: to examine measures related to financial products. However, some financial products are not regulated by this bill. Therefore, they are not part of this bill's core mandate.

[Kellie Leitch, Conservative, Parliamentary Secretary to the Minister of Human Resources and Skills Development and to the Minister of Labour]

Madam Speaker, as we know, the financial institutions in our country have been the rock bed ensuring that Canada has a sound, stable economy, especially through these tough economic times.

Could my colleague from Etobicoke—Lakeshore expand on his previous comments on the need for this bill to be brought forward at this point in time, both its mandatory component and its timing implications?

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Madam Speaker, it is really important right now that we have a very stable financial system to ensure there is liquidity. Many companies are in precarious situations when it comes to growing their businesses and plans. Also, consumers need to have financial institutions they can rely on when it comes to their mortgages.

We have not had the problem that the United States and other places have had, and we can thank the leadership of this government for making sure of that.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Madam Speaker, I would like to inform you that I will be sharing my speaking time with the member for Brossard—La Prairie.

Mr. Hollande, who is the Socialist Party candidate in the next French election, said that his enemy was faceless; that enemy would never be a candidate, was not a member of a political party and had no political platform, but nevertheless was in control. He was talking about the financial sector.

At present, this bill certainly reflects his words. Here we have a bill that is remarkable not for what it says, but for what it does not say and what it does not do. It should be protecting the Canadian economy; it should be protecting Canadians; it should be protecting the economic aspirations of the Canadian public; but it does not do that. It is utterly and completely silent on that.

There is probably good reason why this bill was introduced in the Senate. The bill was introduced to do nothing. It was introduced in haste. It contains only technical points and items that are hardly essential to the growth of the Canadian economy.

It does not talk about supporting industrial capital and investment in job creation, which our financial sector could be ordered to do. No, that is not what it talks about; it speaks only about purely technical items. We will see, later, that these technical items are essentially going to allow the financial sector to do more of the same: more money and more bonuses, but certainly no more services for the Canadian economy.

We have been talking about service charges and use of the banking sector for a long time, and this relates directly to the Bank Act. Those charges are excessive. They mean that consumers are not just the people who supply the banks with the money so they can lend it out again, but also the customers who have to pay truly excessive charges to use their own money. They have enabled the banking system to increase its profits to the $25 billion point, an impressive number indeed.

At the same time, the financial sector’s budget for bonuses has climbed to $9 billion. That was the fastest-growing item in the financial sector. As in the United States, France and England, the financial sector is motivated by bonuses, and in that sector the board members have little to gain by defending the interests of the shareholders, their customers and the economy of their country. They are motivated solely by bonuses. In this regard, just like all the other laws in the other countries, the government of Canada is modelling its approach directly on the worst elements of the banking laws of the other countries. We could talk about excessive credit card interest rates. That is something that is directly connected with too many bankruptcies experienced by Canadians. They are not talking about that. They do not want to talk about it. There are a lot more things missing as well.

Let us talk about the waiting time that allows banking institutions to hold a cheque for a certain number of days. People deposit their cheques and cannot withdraw their money immediately. That means that an entire parallel service is created: a new financial sector, the cheque-depositing sector, where the cheque is paid out immediately in return for a charge that may range from 5% to 20%. But that is not a problem. We will not talk about that.

Nor is a compensation fund for victims of fraud being created by players in the financial industry, something that is considerably more serious. People are told to go ahead: the financial sector is safe and is there for them, but if it does not work out, no one will be there to support them anymore.

There will be no one to reimburse them and protect them, but in exchange, they will be allowed easier access to financial literacy. That was very useful to Nortel's shareholders and the people who invested in Norbourg, when those two companies were praised to the skies by the financial world. There were countless articles in the economic press praising the management of those two companies and encouraging Canadians to participate actively in financing them. And yet once again they decide it is not necessary to protect consumers and investors.

Even investors now have to take on the task of managing their own RRSPs. They alone will be responsible for losses in their RRSPs. That is impressive. Obviously, we are going to use the time for examining this bill in the Standing Committee on Finance to give it a few more teeth. In spite of the short time the government is giving us, we will be fighting hard to make this bill better suited to defending the interests of modern Canada.

The bill talks about foreign acquisitions, an important point, particularly in Canada; we have been visited by the Union de banques suisses, the UBS. We could call them “itinerant bankers” or carpetbaggers. These people represent a foreign financial institution— the UBS—and they send people to meet with the wealthiest Canadians and ask them to invest in their discreet, secret, numbered bank accounts and they will not have to pay Canadian income taxes. That is marvellous. And that is what they have done. The problem is that it is not really legal. It is called tax evasion. It is flat out illegal. And yet no lasting changes are being made to Canada’s Bank Act to prevent activities like that.

There should be a power of life or death over a Canadian institution owned by foreign entities, to prohibit it from ever doing anything inside Canada. They could be much more stringent, and yet they are not. They are raising the ceiling on shareholder equity. They already raised it in 2007. At the time, it was $5 billion. Now we are told it has to be $12 billion. This is an opening for what is called leverage. It is going to be much easier to make speculative investments. That is the most obvious opening for speculation in the financial sector.

In other words, this bill is not an instrument to strengthen the regulatory framework that protects Canada, as it did in the last recession. The entire financial sector was unscathed. What we are really looking at is deregulation of all the intervening new economic factors. They are regulating only the old financial sector. The new one can do as it wishes.

On that last point, there is an important item to note: pooled registered pension plans, this government’s most recent invention. These plans will allow financial institutions to take money. All the Canadian workers who contribute to the plans will know exactly how much they will pay every week—$25 or $50 or $60—but they will never know exactly how much they will get when they retire. This is what is called a defined contribution plan. However, people will not know what their benefit rate will be when they reach the age of 65—or 67—depending on the whim of the people opposite. That will be largely determined by the management fees. That is why it is important to talk about this and to regulate this sector.

[Michelle Rempel, Conservative, Parliamentary Secretary to the Minister of the Environment]

Madam Speaker, my colleague opposite started his speech by quoting a socialist, which I thought was very telling. The policy of the party opposite would see us contract our economic growth. Those members want to raise taxes on job-creating companies and raise taxes for families. They want to kill jobs in our energy sector. Moreover, they refuse to support any budgetary measures which would promote jobs and economic growth.

Why is my colleague opposite an advocate for socialist, growth stifling policy when our government is working hard to strengthen our country's world-class banking system through this bill in a time of economic fragility?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Madam Speaker, with all due respect for the member from Calgary Centre-North, she is obviously contradicting herself. She says openly that the last recession was caused by the financial sector, that it was catastrophic in the United States and resulted in major spending to support a financial sector that had not been prudent and honest enough. Now, when we say the global financial sector is an enemy, that it is solely responsible for the last economic recession, we are told we should not talk about it that way. We are not blind; we have memories. What we remember and what we see are the reasons we say that the financial sector has to be regulated and not left to go its own way, as the government seems to prefer.

[Mathieu Ravignat, NDP, Pontiac, QC]

Madam Speaker, I would like to congratulate my esteemed colleague on his very interesting speech. Like him, I condemn the fact that we have forgotten who was really responsible for this situation, that they have not been punished severely enough, and that workers and taxpayers ended up paying the price. What does my esteemed colleague think we can do to minimize that burden?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Madam Speaker, the first thing we have to do is make sure that the financial sector answers to Canada, not the other way around. That is critical. Once we have established that, we will be able to tell the financial sector to stop taking advantage of Canadians with usurious credit card interest rates and freezing people's funds for no reason to apply new administrative charges. Most importantly, we have to ensure that the emerging economic sector is as well regulated as the old one so that people who invest in pooled registered pension plans can count on better protection than Canadians had during the latest economic recession.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I would like to congratulate my colleague on his speech and on his work as a member of the Standing Committee on Finance. He was a tax lawyer before becoming an MP, and I know that he has extensive knowledge and experience. This bill does nothing to prevent speculation. It does not deal with that problem. What does my colleague think should be done about that?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Madam Speaker, Canada's industrial sector has lost 400,000 jobs. When that sector is in need of investments, there are none to be found. Yet right now in Canada, there is $500 billion tied up in the financial sector that is used only for takeovers, speculation and other purely financial purposes, not investment.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I am pleased to rise to speak to Bill S-5, the Financial System Review Act. However, before I begin, I would like to express my displeasure at the fact that this bill was examined by the other place before being studied here. I think it shows a complete lack of respect for this House, especially since the other place studied it for only three weeks. I will come back to all the procedures involved in that.

On the other hand, we do support this bill, the Financial System Review Act. We know that the financial services industry employs many Canadians. This sector is very important to the NDP. However, it is not necessarily straightforward. It is rather complex; it is not an ordinary sector for the economy. Banks and financial institutions have several ways of influencing politicians—this is more obvious if one looks at the other side of the House—and the economy. This very important sector forms part of the foundation of our country and our economy.

We know that the legislation must be reviewed every five years. The last review was in 2007. We find it deplorable that, when the opportunity arises to review such legislation, the review is done so quickly, without giving members the opportunity to closely examine the bill and without consulting the public.

With regard to procedures, we know that the bill was examined by the unelected members of the Senate for three weeks. Moreover, after hearing Senator Boisvenu's comments, we are of the opinion that the Senate's judgment may sometimes leave something to be desired. Why not examine a bill as important as this one here in the House of Commons? Why not discuss it and find real solutions?

On this side of the House, we would like to abolish the Senate. Thus, we do not necessarily agree that this bill should have been examined there. This is an important bill since financial institutions really have an impact. We also find it deplorable that there were only 30 Internet submissions, 27 of which were anonymous. That was the basis for the study. Only three people dared to say where they were from and what their suggestions were. We do not feel as though the study was very thorough. We would definitely like to examine this bill more closely when it is sent to the Standing Committee on Finance. We must take the time to examine it.

No public consultations were held. We do not know what the procedures were and who was able to discuss them. The government did not really look at what consumers and the public had to say. That is why we think that the members opposite are lacking courage when it comes to this bill. They should have looked at how to protect the public and consumers. The banks are making record profits. And what is the government doing? It is giving them tax breaks. The public has to pay increasingly high bank fees. Banks are increasing customer fees. People have to pay more to withdraw their own money. It is completely unacceptable. We think that the members opposite lack courage because they did not consider all the options and did not look at how to protect consumers. It was—

[The Deputy Speaker, NDP, Denise Savoie]

I regret to interrupt the hon. member, but it is 1:30 p.m. He will have about five minutes when the bill returns on the order paper.

It being 1:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

Bill S-5—Time Allocation Motion

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

moved:

That in relation to Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters, not more than one further sitting day shall be allotted to the consideration at second reading stage of the said bill; and

At fifteen minutes before the expiry of the time provided for government business on the day designated for the consideration of the said stage of the said bill, any proceedings before the House shall be interrupted, if required for the purpose of this order, and in turn every question necessary for the disposal of the said stage of the bill shall be put forthwith and successively without further debate or amendment.

[The Speaker, Conservative, Andrew Scheer]

Pursuant to Standing Order 67.1, there will now be a 30 minute question period. I would invite members to keep their questions to one minute and their responses to a similar length of time so that we can accommodate as many members as possible. As we have been doing in the past, preference in the rotation will be given to members of the opposition, although government members will be recognized during the time as well.

The hon. member for Windsor—Tecumseh.