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.

Second Reading

[Ben Lobb, Conservative, Huron—Bruce, ON]

Madam Speaker, I will be sharing my time with the parliamentary secretary, the hon. member for Kamloops—Thompson—Cariboo. I am pleased to have the opportunity to speak in support of Bill S-5, the financial system review act.

I note from the outset that while this is mandatory and routine legislation, it is vital to the continued strength and security of the financial system that Canadians depend on daily.

By way of background, the government reviews all legislation governing federally-regulated financial institutions every five years to ensure the stability of the Canadian financial services sector. Indeed, the last review was completed in 2007.

I should also mention that it is imperative that today's act be renewed by April 20, the legislated sunset date to allow the continued functioning of Canada's financial institutions.

The current five year review began with an open and public consultation, a process that began in September 2010, when the Minister of Finance invited the views of all Canadians on how to improve our financial system. During that consultation, a diverse group of Canadians engaged in the process and provided their thoughts to help further strengthen Canada's financial system.

Much of that feedback is reflected within today's bill. Indeed the financial system review act takes into account the feedback from consumer groups, industry groups and other Canadians to make targeted, many large and technical alterations to strengthen Canada's regulatory framework. Furthermore, I would also note that the bill has already been reviewed by the Senate and, in particular, the Senate Banking Trade and Commerce Committee.

The committee engaged in a detailed and timely review of the act, hearing from groups ranging from the Credit Union Central of Canada, the Canadian Life and Health Insurance Association, the Financial Consumer Agency of Canada, the Office of the Superintendent of Financial Institutions Canada, the Canadian Bankers Association and the Canadian Payments Association. We thank all the witnesses who appeared before the committee and shared their thoughts on the financial systems review act.

The witnesses, while keeping in mind its technical nature, were very supportive of the act overall. For instance, the Canadian Life and Health Insurance Association said, “Bill S-5 represents a welcome fine tuning of the various financial institution statutes”.

I will briefly outline some of the measures taken in the act at this time. Again, while the majority are largely technical, they are necessary to ensure continued stability and security of Canada's financial system. That is why the act will make changes to the following: update legislation to promote financial stability and ensure that Canada's financial institutions continue to operate in a competitive, efficient and stable environment; and fine tune the consumer protection framework, including enhancing the powers of the Financial Consumer Agency of Canada, to protect Canadian consumers and improve efficiency by reducing the red tape and regulatory burden on financial institutions.

Other measures contained in the act include reducing the administrative red tape burden for federally-regulated insurance companies and offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements. We certainly know, with the growth in the insurance industry, especially our Canadian insurance companies, that around the globe these are vitally important. I would also clarify that Canadians, including bank customers, would be able to cash government cheques under $1,500 free of charge at any bank in Canada, which is another key point, It would improve the ability of regulators to share information efficiently with international counterparts, while respecting the privacy of clients. It would also promote competition and innovation by enabling co-operative credit associations to provide technological services to broader markets.

The importance of the legislation and the need to keep Canada's financial system safe and secure has been made very clear with the recent global economic crisis and the demise of some of the world's most well-known banks.

Canadians recognize how fortunate we have been in recent years, due in large part to our sound financial system. Without a doubt, Canada's system has been a model for countries around the world. We did not have to nationalize, bail out or buy equity stakes in banks like the U.S., the U.K. and around the rest of the EU. In fact, for the fourth consecutive year, Canada is ranked number one for having the soundest banks in the world by the World Economic Forum.

The prominent business magazine, Forbes, recently stated, “With no bailouts, [Canada's financial system] is the soundest system in the world, marked by a steady and responsible continuation of lending and profits”.

As recently reported by the Toronto Star, a new report from the United States Congressional Research Service underlined how well Canada's system was regarded. It said:

—Canada’s supervisory system and regulatory structure have proven less susceptible to the bank failures that have loomed in the United States and Europe and may offer insight for U.S. policymakers.

Our safe and secure financial system is envied around the world. As the Consumer's Council of Canada has declared, “we have been identified internationally as having the best banking regulations in the world”. Canadians are no doubt aware of the troubled financial systems that have recently crippled other countries, leaving significant instability in the financial sector, housing market and economic marketplace. Many of the financial sector solutions now being promoted and adopted around the globe are modelled on the Canadian system that serves us so well.

Through today's bill, Canada's financial system would continue to be a fundamental source of strength for our economy and would remain secure for Canadians who rely on it daily. Today's legislation is also significant because it would support one of the most important drivers of our economy and jobs, the financial services sector.

Our financial sector plays a vital role in financial stability, safeguarding savings and fuelling the growth that is essential to the success of our Canadian economy, representing about 7% of Canada's GDP. Even more, this sector employs over 750,000 Canadians in good, well-paying jobs. Our financial sector provides stability to the housing market and other markets requiring significant borrowing. In that respect, the financial services sector also plays a significant part in the daily lives of Canadians.

The measures in the financial systems review act would provide for a framework that would benefit all participants in the financial services sector, financial institutions, as well as Canadians. The long-standing practice of assuring regular reviews of the regulatory framework for financial institutions is a distinctive practice that sets Canada apart from almost any other country in the world, a positive practice that is vital to the stability of this sector.

All Canadians should recognize the importance of regularly considering how we can better ensure the safety and soundness of our financial system. Today's legislation does just that. I encourage all members to support this important legislation and see that it progresses to the finance committee in a timely manner.

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

Madam Speaker, Bill S-5 contains new elements that nobody is talking about. The government talks about stabilizing the financial system. Bill S-5 fails to address a number of new products such as commercial paper, derivatives, aggressive tax planning and offshore accounts—an invitation to tax evasion. What does that mean for stability? What about the holds on cheques and the credit card interest rates that consumers are concerned about? My question is for my distinguished colleague, the member for Brossard—La Prairie. Should these issues not be thoroughly debated?

The House resumed from February 3 consideration of the motion that Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters, be read the second time and referred to a committee.

Bill S-5—Time Allocation Motion

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, I have been a house leader. I have gone through majority and minority governments. I have dealt with government House leaders, both Conservative and New Democrat. I can honestly say that I have never yet experienced a government trying to incorporate time allocation as a standard procedure. That is actually what the government is doing.

It does not matter how long a bill has been debated for, it is standard procedure. That is what I see this government House leader moving toward, if he is not already there. Canadians need to be aware that it is not democratic. The government needs to sit down and start working with opposition House leaders in order to negotiate matters.

In the past, numerous government House leaders provided all the bills that they wanted to talk about. They worked with the opposition as to when they would like to see which bills go through. Some are dated, like Bill S-5, which is relatively non-controversial and should be able to pass through relatively quickly. For other bills, such as the Canadian Wheat Board or the pooled pension plan, time allocation should be put off until well after the opposition has been afforded the opportunity to legitimately debate the issue.

I ask the government House leader with all sincerity if he does not see the merit of working with opposition House leaders to have better, more functional House proceedings that would allow for adequate debate on those bills that are important to Canadians.

As I say, we do not have a problem with Bill S-5 going through. Where we have a problem is that this particular government House leader is so focused on making time allocation standard procedure. This is not healthy for the House of Commons.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Madam Speaker, I am just amazed that the House leader of the Conservative party thinks I have that kind of control or sway over my caucus. The reality is I have a number of members of our caucus who want to speak on this bill. Madam Speaker, you have the list in front of you today. They want to address this bill. Part of the reality is, we have a large new caucus here. Maybe the Conservatives could have asked us why we have that large new caucus, rather than spending $16,000 on it. Caucus members want to communicate to their ridings what their positions are on any number of bills, including S-5.

I want to go back to the point that my colleague from the Liberals raised. This really is about the incompetence of the government House leader. The government knew the April 20 deadline was there since Parliament came back. It is there. It is the reality. By moving the bill at a much earlier stage, the government House leader could have accomplished what he needed to accomplish in order to meet that deadline. Therefore, why do we see this bill at the last minute, forcing us to be confronted with a time allocation motion? That is not the way to be the general manager in the House. The fact that we are faced with this is his responsibility, not that of the opposition. Not at all.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Mr. Speaker, the past few weeks have given us an opportunity to see exactly what the strategy of the official opposition is. It is one of seeking to simply run up the score by compelling the government to resort to time allocation in order to advance any proposition.

We had to resort to time allocation with respect to the pooled registered pension plan bill. That bill is broadly supported by every province and generally is seen as non-controversial. However, it was impossible to get any agreement from the official opposition on the length of time for debate.

We saw it with the copyright bill. The identical bill in the previous Parliament went to committee after seven hours of debate. After 75 speeches here in the House, the official opposition simply had not shown any willingness to come to any agreement on the number of speakers it would require before sending the bill to committee where the detailed study could actually occur and it could advance. That is an important bill for the economy, the high tech sector and for job creation. Again, it was impossible to get that bill to advance without resorting to time allocation.

We see the same thing with Bill S-5. A highly technical bill comes along every five years. The last two times it has come along all the parties have agreed to send it to committee after one day of debate. We could not get any agreement out of the NDP. Those members would not ever provide us with a single list of the number of speakers they had, the number of days they wanted for debate. The Liberals, in fairness, did. They were in agreement with approaches to move this matter forward. The only way to move this legislation forward is to resort to time allocation again because the NDP simply will not co-operate.

[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.

Bill S-5--Notice of Time Allocation Motion

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

Mr. Speaker, Bill S-5, the financial system review act, is a very important and generally uncontroversial bill.

The NDP member for Dartmouth—Cole Harbour has even said that his party would be supporting it at second reading, probably even at third reading. The hon. member for Wascana has described it as routine.

It is very important that the bill pass by April 20, so that Canada's financial system can continue to operate and be the world's soundest banking system.

To accommodate sufficient time for committee study, which members in debate so far have said is their most important priority, I have attempted to seek an agreement with the other parties, including two offers made right here in the House. Unfortunately, it appears that the New Democratic Party is simply looking to run up the score and force as many time allocation motions as possible, even on routine bills it says it will support.

For that reason, I am compelled to advise that agreement could not be reached under the provisions of Standing Order 78(1) or 78(2) with respect to the second reading stage of Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters.

Under the provisions of Standing Order 78(3), I give notice that a minister of the Crown will propose at the next sitting a motion to allot a specific number of days or hours for the consideration and disposal of proceedings at the said stage.

Criminal Code

[Peter Van Loan, Conservative, York—Simcoe, ON]

Mr. Speaker, as you know, the House has before it Bill S-5 that deals with the banking system. It has in it a sunset clause which is coming up later this spring, so we need to get the bill through in a timely basis. I noticed that all parties seem to be in support of it.

The member for Wascana says, “the legislation is rather routine”.

The member for Brossard—La Prairie says, “We would definitely like to examine this bill more closely when it is sent to the Standing Committee on Finance”.

Everybody seems to want to support it and get it to committee for as much study as possible and as quickly as possibly so we can respect our obligations. I have been trying to get an answer from the official opposition on what we could do.

In that spirit, again I offer the following motion about which we have had discussion. I hope this time we will have unanimous consent for this motion. I move: That, notwithstanding any Standing Order or usual practice of the House, Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters, shall be disposed of as follows: not more than one further sitting day shall be allotted to the second reading stage of the bill and at the end of government orders on the day allotted, the bill shall be deemed read the second time and referred to the Standing Committee on Finance, and if the bill has not been reported back to the House by Wednesday, March 28, 2012, during routine proceedings, it shall be deemed reported back without amendment; when the order for consideration of the report stage of the bill is called, the bill shall be deemed concurred in at report stage without amendment, and a motion for third reading may be made immediately, and not more than one sitting day shall be allotted to the third reading stage of the bill provided that the motion for third reading shall not be subject to amendment, and at the end of government orders on that day or when no further member rises to speak, the bill shall be deemed read a third time and passed.

I hope this time we will see favour for that motion.

Business of the House

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

Mr. Speaker, I would like to begin by re-extending my invitation to the opposition House leader to actually move forward on some of the most non-controversial bills before the House. For example, Bill C-28, the Financial Literacy Leader Act, will help to promote and enhance the financial literacy of Canadians. I know this is an issue that the NDP has often raised in the past, especially the member for Sudbury. I look forward to hearing a proposal from the NDP on how much debate it would like to see on that non-controversial bill before moving it to committee.

What will disappoint Canadians is what we saw this morning when the NDP rejected a responsible work plan based on the views actually expressed by all parties right here in debate last week to pass Bill S-5, the Financial System Review Act, before Canada's banking laws expire in mid-April. Again, the NDP House leader is apparently blocking the will of the members of his own party, who are responsible for the legislation, on how it should be dealt with in the House.

Nevertheless, we will give the NDP another chance. We have asked for a debate on this bill next Tuesday. I hope that we will be able to move forward then and refer the bill to committee.

When we returned to Parliament last month, I laid out our government's plan for a productive, hard-working and orderly House of Commons. We are going to continue in that direction. Unfortunately, we have also seen the NDP lay out its own plans for the House. It wants to force the government to resort to time allocation in every case possible in the hope of running up the score. It wants to be able to quote the number of times the government has been forced to resort to time allocation to get bills advanced in Parliament. For this, it has refused to agree to processing even the most non-controversial bills, or in the case of the copyright bill, one that had only seven hours of debate before we all agreed to send it to committee in the last Parliament. This time, even after 75 speeches on the identical bill, it refuses to let it go to committee for detailed examination.

While the NDP hopes that this statistic, the running up of the score that it is forcing, will somehow help it in the next election, what the number actually stands as proof of is the NDP's commitment to paralyze Parliament, to obstruct and delay to the maximum and to refuse to co-operate on even the simplest, most straightforward and broadly supported legislation.

We demonstrated that yesterday with Bill C-11, An Act to amend the Copyright Act. We had to take action once we realized that a co-operative solution was not viable. Seventy-five speeches later, the end was still not in sight. During the previous session, an identical bill was sent to committee after just seven hours of debate, as I said.

Tomorrow, we will have the eighth and final day of debate on second reading of Bill C-11, An Act to amend the Copyright Act, which would protect high-quality jobs in the digital and creative sectors. This bill is important to Canada's economy. Today, we will complete debate on the New Democrats' opposition day motion.

I am pleased to inform the House that on Monday and Wednesday we will deal with third reading of Bill C-19, Ending the Long-gun Registry Act. Next Wednesday night, we will have a momentous vote to end the wasteful and ineffective long gun registry once and for all.

Finally, Mr. Speaker, I can advise that I will be scheduling Friday, February 17, as the day, pursuant to Standing Order 51, on which the House will hold a day of debate taking note of the Standing Orders and the rules of this House and its committees. I also want to say that Thursday, February 16, will be the third allotted day.

Canada's economic stability and advantage in these uncertain times depends on political stability and strong leadership. That is why we will continue to manage the country's business in a productive, hard-working and orderly fashion.

Railway Noise and Vibration Control Act

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

Mr. Speaker, I have been making considerable efforts to invite other parties to arrive at workable approaches to dealing with bills before the House. In fact, I have asked them on specifically 10 bills to agree to work plans. I am particularly optimistic on one bill and that is Bill S-5, because speakers from all parties have indicated that they are willing to move forward quickly.

Therefore, based on those speeches, we have proposed the following work plan in this motion, for which I hope there will be unanimous consent. I move: That, notwithstanding any Standing Order or usual practice of the House, Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters, shall be disposed of as follows: The bill shall be deemed read the second time and referred to the Standing Committee on Finance; if the bill has not been reported back to the House by Wednesday, March 28, 2012, during routine proceedings, it shall be deemed reported back without amendment and when the order for consideration of report stage of the bill is called, the bill shall be deemed concurred in at report stage without amendment and a motion for third reading may be made immediately and not more than one sitting day shall be allotted to the third reading stage of the bill provided that the motion for third reading shall not be subject to amendment and that at the end of government orders on that day, when no further member rises to speak, the bill shall be deemed read the third time and passed.

This would allow ample time for study at committee.

Financial System Review Act

[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—

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

Mr. Speaker, thank you for the opportunity to contribute at second reading of Bill S-5, the Financial System Review Act.

This bill is important because it seeks to regulate one of the most important sectors in the country: financial services.

Today's act is significant because it regulates one of the most important sectors of the Canadian economy, financial services. In fact, this sector is a key foundation our economy depends on. It is also a cornerstone of the economy of the city I represent in Parliament, Toronto.

The act would also help ensure that Canada's financial system remains strong and secure, a system that has been made a model for countries all over the world in a period of global economic turmoil. In fact, for four consecutive years Canadian banks have been ranked the soundest in the world by the independent World Economic Forum. This has been further acknowledged by other independent observers, both in Canada and internationally.

Here is what a few are saying. Noted Toronto Sun columnist Peter Worthington has said:

Canada's banking system is now widely recognized as arguably the world's best. No Canadians fear for their deposits as many Americans do.

The influential Economist magazine has proclaimed:

CANADA has had an easier time than most during the recent global recession, in part because of a conservative and well-regulated banking system.

Finally, U.K. Prime Minister, David Cameron, has praised our system in this very House:

In the last few years, Canada has got every major decision right. Look at the facts. Not a single Canadian bank fell or faltered during the global banking crisis. Canada got to grips with its deficit and was running surpluses and paying down the debt before the recession, fixing the roof while the sun was still shining. Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.

On a broader scale, the financial services sector plays a significant part in the daily lives of Canadians, from a child making his or her first deposit in a bank account to a young family taking on a mortgage to buy their first house. Businesses in my riding of Etobicoke--Lakeshore rely on the liquidity of Canada's banking system to finance their day to day operations and their expansion plans.

Beyond relying on the financial services industry for everyday products and services, its businesses are an important economic driver. As my colleague mentioned earlier, it employs over 750,000 Canadians in well-paying jobs. Moreover, the sector represents about 7% of Canada's overall GDP.

Finally, Canada's banks are playing an increasingly large role on the world stage via their expansion in the United States, Central and South America, and in other emerging markets.

Accordingly, there is no doubt about the importance of ensuring that the legislative governance of this critical sector is effective and current.

Accordingly, today's act supports the ongoing stability of Canada's financial sector, fine-tunes consumer protection provisions and adjusts the regulatory framework to better reflect new economic developments.

Specifically, today's act includes measures to update legislation to promote financial stability and ensure that Canada's financial institutions continue to operate in a competitive, efficient and stable environment; adjust the consumer protection framework, including enhancing the supervisory powers of the Financial Consumer Agency of Canada; and improve efficiency by reducing the administrative burden on financial institutions and by adding regulatory flexibility.

Furthermore, the act will improve the ability of regulators to share information efficiently with their international counterparts; change the priority status of segregated fund policies in insolvency situations to facilitate timely transfer; clarify that Canadians, including bank customers, are able to cash government cheques under $1,500 free of charge at any bank in Canada; promote competition and innovation by enabling co-operative credit associations to provide technology services to a broader market; and reduce the administrative burden for federally regulated insurance companies offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements.

I will quickly expand on a few of these points.

Effective and competitive financial institutions are essential for creating an environment favouring savings and investments in Canada and for improving our standard of living.

The regular review of the financial sector statutes allows the government to amend the framework as necessary so that financial sector legislation and regulations continue to be effective and efficient. Indeed, today's act is mandatory legislation. The government has a long established practice of reviewing the statutes governing federally regulated financial institutions every five years to maintain the safety and soundness of the sector for Canadians.

For the information of the House, the latest legislative review and subsequent legislation were completed in the 39th Parliament through Bill C-37. The present five-year review began in September 2010 when the finance minister launched an open consultation process with Canadians on how to improve our financial system. The financial system review act addresses a number of key areas that were identified in the review and consultation process to achieve increased legislative and regulatory efficiency.

Currently, financial institution statutes have a built-in sunset clause that causes them to lapse five years after they come into force. The proposed common sense amendments in Bill S-5 modify the statutes to lengthen the automatic extension period of the sunset date, triggered by the dissolution of Parliament, from three months to six months. This will allow greater flexibility and more security for consumers and Canadian institutions.

We all know that consumers have the ability to manage their finances. In properly managing financial affairs, we know that knowledge is critical. That is why the government is moving forward to implement the recommendations of the task force on financial literacy aimed at improving financial literacy for all Canadians.

At the same time, the government is responding to concerns about the terms and conditions associated with network branded pre-paid cards by developing measures to enhance the consumer protection framework.

Changes in today's legislation fine-tune the consumer protection framework and enhances the supervisory power of the Financial Consumer Agency of Canada by confirming that all Canadians are able to cash government cheques in amounts of less than $1,500 free of charge at any bank in Canada; and increasing the maximum penalty for violation of a consumer provision, consistent with penalties for other violations under financial institution statutes. These are all important measures that will protect consumers when dealing with financial institutions.

As members know, the rate of change in the financial services sector has only increased in recent years. Another objective of today's act is to allow financial institutions to respond to change by allowing them to better adapt to new developments in the industry. In other words, financial institutions must be able to effectively respond to developing trends such as globalization, convergence, consolidation and technological innovation.

To summarize, the measures proposed in the financial system review act would reinforce stability in the financial sector, fine-tune the consumer protection framework and adjust the regulatory framework to new developments.

Renewing Canadian financial institution legislation on a regular basis has resulted in a robust and effective financial system that is aligned with and more responsive to developments in the financial markets and the broader economy. Today's act provides framework that would benefit all participants in the financial services sector, financial institutions as well as all Canadians. It maintains the longstanding practice of ensuring regular reviews of the regulatory framework for financial institutions, a unique practice that sets Canada apart from almost every other country in the world.

Therefore, I urge all members to support the proposed financial system review act.

[John Carmichael, Conservative, Don Valley West, ON]

Madam Speaker, I am thankful for the opportunity to speak to Bill S-5, Financial System Review Act. Bill S-5 is important legislation because it provides a framework to regulate financial products and services, helping to ensure the continued safety and security of our financial system that Canadians and their families depend on every day.

Before continuing, by way of background, I would note for the benefit of the House that today's legislation is the result of a mandated review. In Canada financial sector legislation is subject to a full review on a five-year cycle to ensure the stability of the sector, with the latest review completed in 2007.

The current review began with a public and open consultation process in September 2010, when all Canadians were invited to share their views on how to improve and strengthen our financial system. This practice sets Canada apart from almost every other country in the world and ensures that laws and regulations by which our financial systems are governed remain the safest and most secure anywhere.

As a recent Ottawa Citizen editorial proclaimed:

—our banking and financial system is the envy of the world. While the great money edifices of countries such as the U.S., Britain and Switzerland cracked at the beginning of the recession, Canadian banks stood firm.

Listen to what Forbes magazine stated:

—Canada has avoided many of the problems that currently bedevil the U.S.—mountains of public debt, a banking system in crisis...With no bailouts, it is the soundest [financial] system in the world, marked by a steady and responsible continuation of lending and profits.

Indeed, for the fourth year in a row, the World Economic Forum recently rated Canada's banking system the best in the world. Only days ago, an independent global organization, known as the Financial Stability Board, praised Canada's financial system, calling it a model for all countries. The Financial Stability Board stated:

The strength of the economy and of the financial system at the onset of the crisis meant that no Canadian financial institution failed or required government support in the form of a capital injection or debt guarantees.

As the past few years have shown, international praise for our system is well-founded. While the global financial crisis resulted in nearly $2 trillion in losses for banks and insurance companies, Canada's banks stood solid, bolstered by sound risk management and supported by an effective regulatory and supervisory framework. In fact, Canada was the only country in the G7 that did not have to bail out its major banks with taxpayer money in the aftermath of the 2008 financial crisis.

I neglected to announce that I am splitting my time today with the member for Etobicoke—Lakeshore.

This Canadian resilience matters. A strong financial sector plays a fundamental role in supporting a strong economy, and not just in times of crisis. Families, workers, retirees and pensioners count on it for the security and growth of their deposits and investments and to maintain the standard of living that they worked hard to build. Consumers rely on it for competitive financial products to keep their mortgages and other household financing affordable. Businesses, large and small, also depend on it for access to competitive financing to allow them to invest and grow.

The financial crisis highlighted the importance of evaluating the overall size of financial institutions, their global linkages and the impact of these factors on the best interests of Canada's financial system.

The crisis also resulted in extensive changes in the regulatory framework, which continues to ensure that Canada is home to one of the safest and soundest financial sectors anywhere in the world. The financial system review act would build on these reforms and fine-tune the efficiency and effectiveness of this framework. It would improve the ability of regulators to share information efficiently with their international counterparts. This would help to fulfill our G20 commitments at a time when financial institutions increasingly operate on a global scale and would ensure effective supervision and regulation across borders.

The bill also recognizes the implications of global reform on Canadian banks. Since 2001, Canadian banks and their holdings have grown significantly. The new Basel III capital standards in 2013 will further increase capital levels. Based on projections until 2017, the threshold defining a large bank will be raised to maintain the current policy. Today's bill would increase the large bank ownership threshold from $8 billion to $12 billion.

Bill S-5 would also strengthen consumer protection for the financial sector, most notably by enhancing the supervisory powers of the Financial Consumer Agency of Canada also known as the FCAC. The agency is mandated to ensure that federally regulated financial institutions adhere to the consumer provisions of the legislation governing financial institutions and their public commitments. FCAC is also the government's lead agency on financial education and literacy and has moved forward with an array of excellent initiatives in recent years.

The agency has developed innovative tools to help Canadians plan their financial future, like a mortgage calculator that quickly determines payments as well as the potential savings which can be realized by paying early. It also publishes valuable information online to help consumers choose credit card and banking packages best suited to their own needs.

Bill S-5 also proposes to increase the maximum fine that can be levied by the agency for consumer protection violations to better protect Canadians.

Finally, the financial system review act would build on this government's ongoing actions to cut red tape by proposing to reduce the administrative burden on financial institutions and increase regulatory flexibility. This includes eliminating duplicative disclosure requirements and allowing limited testimonial immunity for federal officials to enhance operational efficiencies. These measures would contribute to a well-functioning financial system that meets the needs of Canadians and supports our future economic prosperity.

Today's legislation is important because it concerns one of the key foundations of the global economy. Canada's financial sector plays a pivotal role in fostering financial stability in safeguarding the savings of Canadians and in fuelling the economic growth that is essential to our standard of living.

We also recognize that Canada's financial sector is a critical component of the Canadian economy, employing over three-quarters of a million Canadians in well-paying jobs. What is more, the sector represents about 7% of Canada's GDP.

As the Canadian Life and Health Insurance Association declared during the Senate's consideration of this important legislation, “prompt passage of the bill will ensure the legislative stability and continuity that are so important to the financial services sector”. Updates to the financial legislative framework will continue to ensure that Canada's financial institutions operate in a competitive, efficient and stable environment and will help Canada maintain its well-earned reputation as a global leader in financial services.

[Ralph Goodale, Liberal, Wascana, SK]

Madam Speaker, the strength of the banking and financial system in Canada is that its legal framework is perpetually sunsetted every five years. It has to be re-enacted or it expires. Some might think this is a source of uncertainty or weakness, but the opposite is really true. By requiring Parliament to re-examine Canada's banking laws every five years, we are forced to pay attention and to keep them strong and up to date.

Bill S-5 is a product of this five-year review process. It certainly has the questions that have just been referred to by my colleague, but hopefully Parliament will be able to address those questions in a satisfactory manner in the time that remains before the bill needs to be passed. It has to be enacted before April 20, 2012, to keep our whole system intact.

In that sense, this proposed legislation is rather routine. It renews and extends Canada's basic financial laws for another five years. That is important, but beyond that, Bill S-5, quite frankly, is not very ambitious.

It does not, for example, address the chronic problem that small businesses have in getting fairness from the big banks on their debit and credit card arrangements. It does not address the problem that will soon arise from another piece of legislation that was before the House this week, and that is the bill creating the new pooled registered pension plans.

Experience in other countries has demonstrated that a key issue will be the management fees and the other charges enacted by big financial institutions to operate these new pension plans.

A report from Australia shows that its PRPP system generated handsome profits for banks and insurance companies, but the average pensioner would actually have been better off simply buying a government bond.

There is nothing in legislation from the government to ensure a level of return on PRPPs equivalent to the extraordinary performance of the Canada pension plan, or to prevent fee gouging by the banks, insurance companies and other companies that run these new plans. Bill S-5 is probably most noteworthy for what it does not do.

The last significant work on the overall framework governing our financial sector was undertaken some 15 years ago by the Task Force on the Future of the Canadian Financial Services Sector. It was chaired for Canada by an eminent Saskatchewanian, Mr. Harold MacKay. His report was a powerful piece of work. He laid out those principles and values that have given this country the strongest financial services sector in the world.

The current Prime Minister likes to travel the world bragging about the success of Canadian banks and financial institutions. He did so in his recent alpine speech to the rich and famous in Davos, Switzerland. Before he launched his attack on low and middle income future seniors, he spent some time taking credit for the strength of Canadian banks as well as for the Canada pension plan.

There is more than a little irony here; some would say hypocrisy. In the mid-1990s, when Mr. MacKay was doing his work, there was huge pressure on the Liberal government of the day to go in the opposite direction. The big banks and the political right in Canada, including the predecessors of the Conservative government, were pushing hard for what they called a more American-like system. They wanted weaker prudential standards. They wanted less regulatory oversight. They wanted big banks to merge, so the biggest five or six could become the big two or three, and they could better take on the American competition, like Lehman Brothers, for example. That was their Conservative line back then.

All that right-wing advice turned out to be really bad advice. Lehman Brothers and other U.S. banks have gone the way of the dodo bird, and Canadian banks have turned out to be the most successful and the most respected.

In opposition back in the 1990s, the current Prime Minister and his Reform-Alliance colleagues also gave very bad advice about pensions. They went on the attack against the CPP, the Canada pension plan. They called it a huge boondoggle. They called it a big, European-style socialist welfare scheme. They said it should be scrapped altogether, that Canadians should just fend for themselves with private savings. The rich, of course, would do very well under a scheme like that, and as for all the rest, well, who cares. That was the right-wing line back in the 1990s.

We can hear echoes of that sort of thing today in the current debate about old age security and the old age pension. Never mind that 75% of those who receive the old age pension have incomes below $40,000. Never mind that many are elderly widows living alone. Never mind that without the old age pension, poverty among seniors would rise by as much as one-third. “Never mind all that”, the right-wingers say, “just cut them back and let provincial welfare programs pick up the slack”.

There is only one taxpayer, federal or provincial. Cutting down the OAS would not make the human needs go away. It would just download the burden onto the provinces, like health care downloading and prison cost downloading. It is false economy. That is true today, just as it was 10 or 15 years ago, when the current Prime Minister and his colleagues attacked the CPP.

He went to Davos and bragged about how the CPP is so actuarially sound, which it is, but no thanks to him. It was refurbished for the future despite the Conservatives, not because of them. The CPP has a superlative investment and return record and the plan is assured for at least another 75 years.

Once in government, the incompetence of the party across the way has continued. The Conservatives increased federal spending by three times the rate of inflation. They eliminated contingency reserves and prudence factors from federal budget making and they put Canada back into deficit again, all before there was any recession, not because of the recession, but before it. Then during the recession they dug their deficit hole deeper and deeper, $50 billion or more per year, with no coherent rules or objectives. Millions of dollars were siphoned into useless pork-barrel projects like the G8 and G20 fiasco, with all its fake lakes, ornamental gazebos, and sidewalks to nowhere. The Auditor General called it unprecedented and very wrong.

Now, while earmarking billions to be squandered on bigger jails and wildly expensive fighter jets, the Prime Minister says his government can no longer afford pillars of Canadian life like universal health care and old age pensions for middle- and low-income seniors.

The fiscal pressure on the Conservatives is entirely self-concocted and they are rather happy about that. I can hear them chuckling across the way right now. They want an excuse to pull away from medicare and pensions, and they really could care less who suffers.

It is important to keep Bill S-5 in context. It will be passed before April 20 to maintain Canada's banking success. However, for so many Canadians beyond the big banks the story is not very rosy. Economic growth stalled in October; it turned negative in November. Household debt is at an all-time record high, at 153% of disposable income. Unemployment went up again last month and it worsened again just today, with another 450 jobs lost at the Electro-Motive plant in London.

Strong banks are a must, but they are certainly not all by themselves sufficient to achieve a strong, successful country overall with growing and shared prosperity for all Canadians. It is that last element that the government seems to care very little about. It does not care if growth is sustainable. It certainly does not care if it is shared.

We will continue to battle the Conservatives on that fundamental principle: prosperity. We have proven we know the formula for making the economy grow. We did that through 12 very successful years of economic prosperity in this country. We also must work together on the sharing and the sustainability of that prosperity.