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.

[Jeremy Rudin, Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance]

After Bill S-5 was passed, in discussions with some representatives of the industry, it was brought to our attention that some members of the industry were of the view that not all of the transactions the government intended to be covered by this provision would necessarily be covered by this provision. They contended that it would depend on how the transaction was structured. The government's position is that this needs to be clear and that this amendment will create that clarity.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Thank you.

I think this is something that only officials can answer.

I understand that the intent of this section on foreign financial institutions is to tighten a perceived gap in the finance minister's authority that was established in Bill S-5. How was this gap in the minister's authority uncovered? How did we discover this gap?

[The Speaker, Conservative, Andrew Scheer]

I have the honour to inform the House that a communication has been received as follows:

Rideau Hall

Ottawa

March 29, 2012

Mr. Speaker:

I have the honour to inform you that the Right Honourable David Johnston, Governor General of Canada, signified royal assent by written declaration to the bills listed in the Schedule to this letter on the 29th day of March, 2012, at 2:06 p.m.

Yours sincerely,

Stephen Wallace,

Secretary to the Governor General

The bills assented to are: Bill C-34, An Act for granting to Her Majesty certain sums of money for the federal public administration for the financial year ending March 31, 2012; Bill C-35, An Act for granting to Her Majesty certain sums of money for the federal public administration for the financial year ending March 31, 2013; and Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters.

Financial System Review Act

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

Mr. Speaker, I am rising today to speak on Bill S-5.

We have had some good debates today. At the finance committee, we had the chance to look at the bill. One of the first things that we realized was that we did not have much time to actually study the bill. As members know, the bill came from the Senate. Members know we are trying to abolish the Senate, but that is not the issue. The issue was the fact that the study was done very quickly. There were approximately 30 emails or briefs sent through the website. That was pretty much it.

We are talking about the bill, and how every five years we have to look at the financial institutions and banks. Within the last five years there was a global financial crisis. We have talked about sub-primes and paper-backed products. There was a crisis in the U.S. and there was a crisis here. There are some arguments about why we survived the crisis. As I mentioned, it was not because of the Conservatives. It was because of the previous government that had sound financial regulations.

My problem is that, within the last five years, we could have looked at what was happening in the U.S. and overseas, and at what is happening here. Instead, we have a small bill that looks at technical issues. However, there are issues that are taken care of, and that is why we will be supporting Bill S-5.

What we are saying is that we missed an opportunity. What we do not like in the bill, and this was raised in committee, is the fact that we are giving all the power for approving the purchase of foreign banks by Canadians banks to the minister. The Minister of State for Finance came to committee and explained the bill. The response was not good enough.

The way the system is working right now, the Office of the Superintendent of Financial Institutions looks at transactions and gives a recommendation on whether or not to approve the merger or acquisition. Now the minister will have the final say. Even in a case where the Office of the Superintendent of Financial Institutions says that it is not good for Canadian institutions, the minister can say, “We do not mind. Just go ahead and move forward with that transaction.”

That is of concern for us, especially knowing that a lot of the ministers, as we see with the Minister of Industry, have conflicts of interest. There may be a problem in terms of judgment. In this case, there may be some problems with the minister being too close to financial institutions. That is a big concern that we raised. Unfortunately the government did not answer it.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I enjoyed the debate on the bill. It is one that I support. Bill S-5 would modernize a number of elements. It could have gone further.

However, I have enjoyed the “me-firstism” of every party. The Conservative Party wants to take credit for the fact our banking system withheld the recession so well. The New Democrats, apparently, feel they are responsible. I would like to add, as leader of the Green Party of Canada, we had absolutely nothing to do with protecting our banking system.

We all owe a thanks to previous Liberal finance minister, Paul Martin.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I will begin by providing some clarity on what is a bit confusing at times, I am sure, for many.

Whether it is members from the Conservative Party proclaiming that we have the best Minister of Finance in the world, implying that is the current Minister of Finance. I hear a member applauding but he might want to hold his applause for a little while on that particular point. Then we have the New Democrats who believe they can rewrite history, not by saying it once or twice but even going beyond that. The other day we heard a New Democrat saying that it was the New Democrats who saved the banking industry in Canada. They may be a little more generous by implying that there might have been some Canadians also involved.

However, I do think it is important to get the record as clear as possible so members can be a little more forthright about what history actually was back in the 1990s. At the time, I was a member of the Manitoba legislature and I recall the debate on deregulations versus having a regulated banking industry. I had met with TD Bank representatives at a special event where there was a discussion on it. Therefore, I am somewhat familiar with the issue and, like many Canadians, have followed it.

It is important to recognize that there was a great deal of pressure being applied around the world by the financial industry which wanted to see deregulation and many countries succumbed to that.

In Canada, Jean Chrétien, the prime minister at the time; the minister of finance, Paul Martin; and the cabinet were able to resist the pressure that many governments caved in to. They recognized the value of having a regulated financial industry with respect to the banking industry specifically.

Because of the efforts and actions of those two individuals in the cabinet at the time, we have what has been classified as one of the greatest and healthiest banking industries in the world. It had nothing to do with the current Minister of Finance or the Prime Minister.

The first major policy announcement from the government related to the banking industry was that we would allow for 40 year mortgages. The current Prime Minister and the current Minister of Finance can take full credit for that. We all know that turned out to be a dud of an idea. Not one Conservative member will now stand in his or her place and say that the Conservatives brought out the 40 year mortgage. The simple reason is that they recognize now that it was a bad idea to do that.

We have a Minister of Finance and a Prime Minister who like to travel the globe and assume credit for the health of the banking industry in Canada. However, I would suggest that the real credit should be going to Jean Chrétien, Paul Martin, the member for Wascana and many other members who made up the cabinet back in the nineties and resisted the world pressure to deregulate.

What role did the New Democrats play in it? Some might argue that they played a bit of a role. I do not know what it is. I never detected any significant role. It was a Liberal majority government throughout that period and I believe there were 13 New Democratic members, although I could be wrong. However, I do not believe they played any role whatsoever in regard to protecting the banking industry, as much as they would like to claim that they did play a role.

Just the other day we heard New Democratic members of Parliament trying to take credit. However, that was the reality of history and I think it is important to accurately reflect why it is we have a relatively healthy banking industry, especially in comparison to other countries throughout the world.

This is not just something the Liberals recognize. Even the Conservatives, the New Democrats and, I would suggest, leaders around the world have recognized the valuable role that Canada has played in terms of demonstrating leadership on our financial industry as a whole. We should all be proud of that. There is no doubt whatsoever that through the process we have been able to generate the regulations because these ideas and needs of average Canadians come through our constituencies.

I would agree with one of the statements my colleague made, which is that Canadians as a whole understand and appreciate the importance of the industry.

In doing a bit of research, it was interesting to find out that it was Michael Quinn, a Canadian member of Parliament back in 1897, who came up with the idea that we needed to do something to protect consumers. Ever since then, and possibly even before then, governments have recognized the valuable role they play when it comes to monetary policy and the financial industry in our country. That particular member of Parliament, who happened to be from the province of Quebec, highlighted the importance of interest rates. He felt at the time that interest rates were too excessive, that individuals were being charged not 100% but close to 1,000% in some situations. He felt that it was unrealistic to put people who were in relatively poor economic situations and exploit them through high interest rates.

There has always been a high level of interest in the House of Commons in terms of protecting the consumer and in terms of the financial market as a whole. I will spend a little bit of time speaking to that because it is an important issue.

We talk about tomorrow, which is our budget day. Members should not kid themselves. Many people within the financial institutions or the hierarchy throughout the world will be watching the government to hear the types of expenditures, the sorts of revenues that will be generated and what the potential is for Canada into the future. Many individuals and stakeholders throughout the country, everyone from the consumer in Labrador to B.C. to Winnipeg and in our territories are very much interested in what sort of budget we will see presented. It will have a very significant impact on our financial institutions.

Here we have a bill that is designed to protect the integrity of that financial system but I will talk about how government has a direct impact. One thing that needs to be talked about is the government's own debt situation. It was not that long ago, almost six years ago, when the Prime Minister took office and he had some $13 billion-plus in surplus.

If we fast-forward six years, we find that the government has now exceeded $150 billion in terms of new debt. When a government takes that sort of action, many vested stakeholders throughout will stand up and take note, and it will have an impact.

On the macro scale, it does have an impact in the overall debt that we have as a nation. It is something of which we have to be aware. However, the government has not really done a good job on this, and the numbers speak for themselves.

There are other things that we look to the government to demonstrate leadership on because they have a direct impact in regard to our financial institutions. I will give a specific example. We talk about the retrofit program. In a retrofit program where government sees the value of getting people to invest in their homes, quite often that means government support goes toward it and also financial institutions will get directly involved in those types of programs. I bring this up because it is important for us to recognize that the role the government plays in our financial institutions is significant.

It is very important that when we have legislation such as this, we provide the opportunity for members of Parliament to have good thorough debate and provide the opportunity for a bill such as this to go to committee. Actually, this is the type of legislation in which we should be encouraging Canadians to directly get involved in because it affects each and every one of us. It affects our pocket. Therefore, Canadians have a vested interest.

We have to look at the process. What has the process been like for the Conservative government on Bill S-5? Members will notice it is called Bill S-5, as opposed to Bill C-5, meaning it had to go through the Senate. This is something the Prime Minister wanted to do. If it were Bill C-5, that would have implied it would come through the House of Commons.

Ever since the Prime Minister has been given a majority government, he feels he has the authority and mandate to ride roughshod over anything that happens inside the House. He has acquired, in the very short time since he had a majority government, record high introductions of time allocation to prevent members of Parliament from engaging in debate on legislation. The attitude or disregard for this fine and wonderful institution is amazing.

Through this institution, Canadians are afforded the opportunity to voice their concerns through their elected officials. However, day in and day out the Prime Minister seems to ignore the rights and what is important for members to truly engage on legislation that is brought forward and which we are asked to pass. The Prime Minister, for whatever reasons, and he will have to explain them at some point, chose to go through the Senate.

Then we have the issue of the Prime Minister being fully aware months ago of the need pass the bill by April 20. The Prime Minister, as he has done with other legislation, seems to drag his feet. After all, he believes that, through his majority government, he can push things through. Now we are in a situation in which there are some serious time concerns. As a result of those concerns, we will be unable to have the type of debate that is important.

In principle, the Liberal Party supports the bill and we have been very clear on that. We recognize the value of it, but many Canadians have issues about which they want their members of Parliament to speak. This would have been a wonderful opportunity to hear many of those contributions to debate.

As an example, it is estimated that the average Canadian now spends well over $120 or $130 annually on banking fees. There is a great deal of concern over whether there is anything the government can do to watch the whole ordeal, to have take some kind of action or have a plan to provide assurance to Canadians that it truly cares about that issue, that it wants to move toward more transparency on the whole issue of banking fees. What about issues such as interest rates?

Another important issue in my riding has been that of bank closures. In Winnipeg North, a number of banks have closed over the last number of years. It has had a very significant impact. For seniors who live on McGregor or on Selkirk in Winnipeg's north end and have had banks in their community close down, there is a real impact. Many of our senior population do not have Internet. They are not going to do banking on the Internet. They want to go to their local bank. It is great in many ways where we have had credit unions. Recently, Assiniboine Credit Union opened up, I believe on McGregor, to try to meet the demand that was created because of banks leaving.

These are real issues that affect Canadians. Whether the government is allowing for adequate and proper debate in the House or providing the opportunity in committee, we need to have this type of discussion so we can share some of the details of the issues that face us. We know there are explanations of how banks will try to justify the narrowing of the gap in interest rates between loans and deposits. That is one of the primary reasons why banks will say that they have to rely more on banking fees in order to cover costs. We are very much aware of that issue. However, I am also aware that banking profits are at all-time record highs and Canadians are aware of that fact. The government needs to develop a plan that ultimately will deal with the wide variety of issues within our financial markets.

Direct banking is one of them. We could talk about the financial institutions of our insurance companies. There is a wide spectrum of issues that are of critical importance. If we do not do it properly, then people are right to be concerned. Not long ago we witnessed the crashes that happened in the United States, in particular. A number of people virtually walked away from their homes. This crisis took place because banks closed down in countries throughout the world.

It is of the utmost importance that we have ongoing reviews. That is why the Liberal Party supports the principle of Bill S-5. We recognize the value of monitoring our financial markets and ensuring we have good, sound regulations. However, we also recognize the importance of Canadians and consumers and we want to see a government do more to address these issues. Whether it is credit card interest rates or the amount of banking fees, consumers want us to be talking about it this.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Mr. Speaker, I am pleased to commence debate for the official opposition this afternoon on Bill S-5. Our finance critic will be participating in the debate later on.

At each stage of the bill it we have said that we will be supporting it. We tried to make some amendments at the committee stage. We thought they would make proper adjustments to the various changes that have been made. We thought they would add to the bill and would not in any way detract from it or cause any problems. We wanted to ensure that the scope of the minister's approval was properly reflected to represent the interests not just of the banking industry, but also took into consideration the concerns of the country's economy as a whole. Unfortunately, those amendments were not deemed to be acceptable and they were voted down.

Nonetheless, we recognize that this is an important process in respect of the Canadian financial system. Some would say it represents the strength of the financial system that we have built into the law a periodic review of the Bank Act every five years. The government will take time to go through this process and ensure that the people participating in financial services in the country are being properly represented and also ensure that the agents, the bankers, the operators, the financial institutions, are operating correctly.

There is no question of the strength of the Canadian banking system. Its ability to withstand the economic chaos which the United States, Iceland, Europe, and various countries within the global community experienced in 2008 was because of the fact that historically over generations this country has developed proper and standard regulation.

In the 1990s under the Liberals, there was an attempt to deregulate the financial industry, to open up our financial institutions to foreign control, but Canadians spoke up and said that was not the way they wanted to go forward. I was glad to see that happen.

It causes me some concern when I hear members opposite in the Conservative Party and the Liberal Party take credit for the state of Canada's financial system. They want to take credit for the fact that it is in good shape. I would suggest it is not the Conservatives and the Liberals alone, it is not the people in this House alone who have made the wise decisions. In large part, it is Canadians, the people who send us to this place who let us know how they think their financial system should be regulated, that they want less speculation and more control and more conservative management of the system. That is a good thing. That is something we should acknowledge and respect.

While this review is an important strength of the banking system, we think that this time around in particular, the government missed an opportunity to make some changes that were sorely needed. We have talked about the measures to reinforce demutualization regulation to prevent predatory practices, measures that could enhance the co-operative credit movement as financial institutions that prioritize serving their communities, as opposed to short-sighted speculation and exorbitant executive bonuses, and more comprehensive consumer protection measures.

For example, we look at the problems that are facing consumers as a result of exorbitant ATM fees and hidden fees in a whole myriad of banking services. We would like to see full and complete disclosure of fees that are charged to Canadians who use the banks and other financial institutions in this country. Unfortunately, the government decided not to do that. When members opposite get to their feet and speak to this legislation, it is too bad that all they want to do is boast and take credit for the strength of the financial system. All Canadians should be proud of Canada's financial system.

We have to pay close attention to ensure we do not go down the wrong road, that we do not miss things, that we do not disrupt the rules and regulations that are in place in order to provide protection and sound governance.

In that regard, the member who spoke earlier suggested that there was wide consultation with Canadians across the country. That could not be further from the truth. There were requests for participation and consultation. It was by invitation only. I believe that 32 submissions were made and that was it. Even all of those were not made public. As I said in debate at report stage, members talk about this being a technical bill and that we need to recognize it is too detailed for Canadians. That shows a level of disrespect for Canadians which they do not deserve. In Dartmouth—Cole Harbour, for example, there are a lot of constituents whom I have talked with about the need for consumer protection and for greater protection against demutualization. Constituents of mine and Canadians in general know a great deal about these issues. These issues are not too technical for them.

This bill and any review of financial institutions, of the Bank Act, would benefit greatly from a comprehensive, exhaustive consultation with ordinary Canadians. Maybe then members opposite would have a greater appreciation for the challenges and concerns Canadians are facing, and not just the executives of banks and financial institutions. Banks are making tens of billions of dollars in profits every year, and executives are making millions of dollars in annual salaries and bonuses, while consumers whenever they have contact with a financial institution, are being nickel-and-dimed at every opportunity. That causes some concern.

I think that if we had an open process that provided Canadians with the opportunity to share their opinions, knowledge, and experience with the members opposite, it would be of considerable value.

It was in that regard that I raised a couple of questions with the member who spoke before me, and have talked about this before. I am concerned about the Ombudsman for Banking Services and Investments, a voluntary organization established in 2002 as a result of discussions among government, industry and consumer groups to improve consumer protection and financial services. It was established as a result of section 455 of the Bank Act, which provides all sorts of opportunities to establish dispute resolution processes.

However, these processes are in the complete control of the financial institutions. The whole idea of the Ombudsman for Banking Services and Investments was to have a voluntary organization that was independent. It was set up as an independent service for conflict resolution, with the condition that all banks participate. It was set up to establish procedures for dealing with complaints made by persons who had requested or received products or services in Canada from a bank.

Through the Bank Act each institution has the opportunity to have that kind of service. While that is all good, what the banks, government and consumer groups have recognized is that it is not good enough. That is why the service I referred to was set up. Again, it is not mandatory but voluntary and, unfortunately, two of Canada's largest banks, RBC and TD, left that service.

When I raised questions with the banking association representative at committee, he told me that it was okay because each bank had its own service and own individuals responsible for dealing with complaints. I am not suggesting for a second that he was engaging in any kind of misrepresentation. It was just the situation, and I appreciate the fact that that it is what he said and what the banks are doing. Good for them. Unfortunately, it was determined back in the early 2000s that it was not good enough: Consumers and government recognized that there had to be something more, that there had to be an independent body.

I also raised this question at committee with the parliamentary secretary. I was told that the minister intended to bring forward and set up some other kind of independent service. The government has been saying that now for upwards of a year. Even the banks are wondering what the government will do in this regard.

It is all about independence, consumer representation, fairness, and ensuring that consumers have appropriate representation when dealing with the banks.

As I said, the financial institutions in this country operate within a regulatory framework that provides them with a great deal of protection against competition and their services being challenged and so on. Unfortunately, this approach does not provide consumers with the same level of support, frankly, that my colleagues and I on this side would like to see.

I recognize that the government has gone some distance in fulfilling its responsibility to conduct this review, but the way it did so was to wait until this fall. The government knew that the review was coming forward but waited until the fall to bring forward Bill S-5. It did not introduce it here in the elected chamber for debate and discussion, but in the Senate. That is not to say that senators have not provided some valuable input, but this is the elected chamber. This is where legislation should at least begin. We have been imbued with the concerns, the wishes and the advice of our constituents, and we bring that to bear in debate. We did not have the opportunity to do so.

In short, the bill was discussed, debated and went through some process within the Senate. We did not see it until, I believe, early this year. We have not had much time to deal with it. We know that it has to pass here by April 20 in accordance with the regulations.

If there had been matters that were particularly egregious and we had put up a stink or had wanted to engaged in lengthy debate on them, we would have been accused of putting the whole process in jeopardy as the deadline would be missed. The pressure would have been on.

As a result of the way it was introduced and the timelines used, we did not have the opportunity to have a fulsome discussion with Canadians and in the House on the amendments that we wanted to introduce. That is unfortunate. I believe that very much underlines the way the government tends to view this chamber and the democratic process. We see that here and we see it in committee, as the government is in a hurry. While it was only elected by 39% of the population, it feels that every Canadian out there believes, accepts and agrees with everything it says. The government will not tolerate any conflict, any discussion or opposition. That is unfortunate.

As we know, 60% of Canadians did not vote for the Conservatives. In much of what they told Canadians in the election, Conservatives assured Canadians, for example, that they would not attack their pensions, and yet they are now doing that. The government made commitments not to attack public services, but has been doing that since. The budget is coming down tomorrow and Canadians are going to see firsthand that what the government said to them to get elected was completely to the contrary of what it would do.

That is another slap in the face of democracy and the kind of issue we have been dealing with.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Mr. Speaker, we have raised this issue before in debate on Bill S-5. The matter came up recently this week in the media regarding the Ombudsman for Banking Services and Investment, which is a voluntary dispute resolution organization that was set up back in 2002. Two of the big major banks have withdrawn from that organization and no longer participate in it. The ombudsman has said that has effectively made the organization almost useless.

Could the hon. member explain what the government will do to ensure there is the kind of independent analysis and dispute resolution for these matters that was normally provided by that organization?

[Ted Opitz, Conservative, Etobicoke Centre, ON]

No, absolutely not.

However, that is why we have our system. In fact, it is a long-standing tradition in Canada to conduct mandatory five-year reviews of Canada's financial sector legislation. I should point out that this most recent review process was officially launched in September 2010, when our Conservative government launched the public consultation process open to all Canadians.

I am sure most members of the House are familiar with the World Economic Forum, which has ranked Canada as having the soundest banks in the world for four years running. What is more, Canada's safe and secure financial system is the envy of the world.

I will quote from the United States Congressional Research Service report which explains how Canadian banks offer a model to the United States and other countries on how to avoid a future financial market crisis. It states:

Canada’s financial system, in particular, garnered attention, because it seemed to be more resistant to the failures and bailouts that have marked banks in the United States and Europe...

As my hon. colleagues are no doubt aware, Canada's credit unions offer important and valuable services as part of our banking sector. Indeed, more than five million Canadians and business owners are the grassroot shareholders of co-operative financial services in Canada and one in three Canadians is a member of a credit union or caisse populaire.

In recent years, our Conservative government has demonstrated its commitment to credit unions by supporting a federal credit union charter to accommodate growth and expansion of the Canadian credit union system. These actions will ensure that those credit unions, which choose to pursue business ventures out of the province, will not be constrained by outdated rules on provincial incorporation. Furthermore, this will also give credit unions a means of diversifying sources of funding and spreading their geographic risk exposure. Similarly, in order to provide federal credit unions with a greater leverage of the Canadian Payments Association, today's legislation would amend the Canadian Payments Act so that credit unions would be classified under the co-operative class in the act instead of the bank class.

At the same time, credit unions will still employ the long-standing, well-understood and robust governance, liquidity, clearing and settlement frameworks in use today. While this may sound like nothing more than a technical change, it is nevertheless fundamentally important. This change would continue to promote a level playing field within the financial sector which would foster competition among players and would ensure a stronger, more stable overall system.

This is what the Credit Union Central of Canada, the national association for credit unions of Canada, had to say about this modification. It said:

—we want to note our support for the proposed amendments...Placing the federal credit union in the cooperatives class will preserve and strengthen the credit union system representation at the CPA. It will ensure that a federal credit union will be represented by a director, who speaks for the interests of cooperative financial institutions in CPA matters. A strong advocate at the CPA is important for the credit union system's ability to advocate on behalf of credit unions and to continue to operate payments facility efficiently and cost effectively, which has a direct impact on overall credit union system competitiveness.

I will remind everybody that CPA is the Canadian Payments Act.

I am certain all members of the House would be in agreement that a stronger credit union system can benefit all Canadians.

Finally, as I mentioned at the outset of my remarks, I would like to speak to a piece of the financial system review act that would make improvements to Canada's payments system, something Canadians deal with almost each and every day. Indeed, every year, Canadians make 24 billion payments, which in total are worth more than $44 trillion. These payments allow us to run our businesses, sustain our households and allow governments to fund essential programs.

Canadians use various payments instruments to purchase goods and services to make financial investments and to transfer funds from one person to another. These instruments include cash, cheques, debit and credit cards. With the exception of cash, payment instruments have typically necessitated a claim on a financial institution such as a bank, credit union or caisse populaire. Therefore, banks and credit unions must make arrangements to transfer funds among themselves, either on their own or on their customer's behalf.

A payments system is set on instruments, procedures and rules used to transfer these funds. In Canada our national systems for clearing and settlement of payments are run by the Canadian Payments Association, or the CPA, a not-for-profit organization of federally regulated financial institutions.

Our government knows that no modern economy can reliably function without a payments system that is sophisticated and secure. However, the payments landscape is changing. For example, experience in Canada and abroad since the 1990s demonstrates that clearing and settlement systems do not always include banks as direct participants. That is why Bill S-5 seeks to amend the Payment Clearing and Settlement Act to remove the requirement that there must be at least one bank involved in a payments transaction. These new rules will allow more flexibility in establishing systems to clear complex financial instruments like over the counter derivatives, or OTCs. This adjustment will permit the Bank of Canada to monitor payments that could pose systemic risks to the financial system.

Canada's leadership in reforming the global financial system through membership and international organizations, such as the G20, is well-known and a source of pride for Canadians. What Canadians may not know is that one important commitment we have made to our G20 partners is that all our OTCs will be cleared through central counter parties by 2012. This is an important step for the resilience and stability of our financial system.

To meet our G20 commitments, it is critical that Canadian prudential and market conduct regulators have the necessary authority, tools and information to regulate the Canadian OTC derivatives market on an ongoing basis. This means coordinating activities across current federal and provincial jurisdictions as well as with foreign regulators.

This is the kind of evolutionary change that demonstrates the importance of regular reviews in our legislative framework to maintain Canada's leadership in financial services. For these reasons, I urge the members to support passage of this largely technical but immensely important bill, which would help to ensure the continued functioning of Canada's payments system.

[Ted Opitz, Conservative, Etobicoke Centre, ON]

Mr. Speaker, I am thankful to speak to the third reading stage of Bill S-5, financial system review act.

I thank the hon. Parliamentary Secretary to the Minister of Health for his comments, especially those on financial literacy. They are a cornerstone for all Canadians to understand their institutions. This would help the jobs and economy of our country to continue to grow.

The bill is significant legislation because, although it is purely technical, it would guarantee the long-standing strength and security of Canada's financial institutions. Our government will make a series of changes to various legislation that govern Canada's financial system, including the Canadian Payments Act, about which I will speak in greater detail in just a few moments.

First, I want to emphasize for members of the House, and Canadians watching at home, that the Financial System Review Act is a mandatory and routine legislation. Canada's financial system is the safest and most secure in the world, and that is a direct result of mandatory five-year reviews. That kind of vigilance has been absolutely critical to maintaining our economic strength in our financial institutions. As the hon. member before me pointed out, much of the world has lauded that, understands that and has given Canada credit for it. Thanks to the greatest finance minister on the planet, the hon.—

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, I enjoyed the member's speech on Bill S-5. The concern we have had on this side of the House is how improvised the Bill S-5 process has been.

This is something the government knew about years in advance, the revisions of the Bank Act. It did not make it public and did not call for real, sincere public input into Bill S-5. It was brought forward by the Senate first. It was brought into the House of Commons at a late date and the government did not allow the finance committee to do a thorough vetting.

Of course, consumer groups are very concerned because no issues were able to be raised in any fulsome manner with these revisions to the Bank Act. Now we are pressing for a deadline. We have to get this bill through in the next few days.

My question to the member is simply this: Why did the government botch this process? Why did it improvise all the way along, so we are now moving to rush the bill through Parliament to meet a deadline that the government knew about years in advance?

[Colin Carrie, Conservative, Oshawa, ON]

Mr. Speaker, I welcome this opportunity to speak to Bill S-5, the financial system review act at third reading. This bill would reinforce stability in Canada's financial sector, fine-tune the consumer protection framework and adjust the regulatory framework to new developments.

Since the onset of the global financial crisis of 2008, our government has remained committed to strengthening the framework overseeing the financial sector. Our focus has been to provide the best consumer protection environment possible, one in which there is competition, information is disclosed and consumers are able to make informed choices. Bill S-5 does just that.

Bill S-5 proposes to improve the consumer protection framework by enhancing the supervisory powers of the Financial Consumer Agency of Canada, FCAC. FCAC is mandated with ensuring that federally regulated financial institutions adhere to the consumer provisions of the legislation set out to govern them. In addition, FCAC is the government's lead agency on financial education and literacy. It has moved forward with an array of excellent initiatives in recent years. FCAC has developed innovative tools to help Canadian consumers, such as a mortgage calculator that quickly determines mortgage payments and the potential savings resulting from early payments.

FCAC has also been instrumental in leveraging and coordinating private sector and voluntary sector initiatives on financial literacy already under way across Canada. Financial literacy among Canadians will pay dividends for future generations. That is why, in budget 2009, we established the task force on financial literacy, to make recommendations on a cohesive national strategy to improve financial literacy in Canada.

The task force had 13 members drawn from the business and education sectors, community organizations and academia. The task force delivered its final report, “Canadians and Their Money: Building a brighter financial future”, on February 9, 2011. It outlined 30 recommendations to improve the financial literacy of Canadians. I am pleased to note that the proposed financial literacy leader legislation before Parliament now responds to a key task force recommendation for the need for dedicated leadership. That legislation, as the name suggests, would provide the framework for the appointment of a financial literacy leader. This financial literacy leader would be mandated to work with stakeholders to support financial literacy initiatives and would continue the progress achieved by the Financial Consumer Agency of Canada.

Informed consumers are the very foundation of a solid financial system. Indeed, a country's prosperity is ultimately the sum of the financial successes and related decisions of all its households. However, we have done more.

In 2009, our government acted to protect Canadians who use credit cards. We want to ensure that Canadians understand their obligations in advance of signing up for and using these purchasing instruments. To that end, the measures we introduced, which are in effect today, mandated clear and simple information on credit card application forms and contracts, and clear and timely advance notice of changes in rates and fees. This initiative provides Canadian consumers with precisely the kind of improved financial information that leads to better decision making.

Also, to protect consumers, in August 2010, we put into effect the code of conduct for the credit and debit card industry. The code was developed in consultation with small business. Under the code, merchants will be provided with clear information regarding fees and rates, given advance notice of any new fees and fee increases, able to cancel contracts without penalty should fees rise or new fees be introduced, and given new tools to promote competition and in particular the freedom to accept credit payments from a particular network without the obligation to accept debit payments and vice versa.

This code has been widely applauded, especially among small business. I will quote at length what the Canadian Federation of Independent Business had to say. It stated:

The Code of Conduct's biggest achievement has been to protect Canada's low-cost flat-fee debit system.... the Code's other big accomplishment is providing merchants with some power in their relationship with credit card companies, banks and card processing companies.

Merchants have new powers under the Code that have helped them achieve tangible results in their dealings with the industry. This simply wouldn't have happened without the Code.

I encourage all members to take the time to review the code and discover how it will contribute to a better system for both merchants and consumers. Before I conclude, let me very quickly highlight some of the other measures in today's legislation which, I believe, other speakers will address in greater detail.

Bill S-5would update financial institution legislation to promote financial stability and ensure Canada's financial institutions continue to operate in a competitive, efficient and stable environment. It would improve the ability of regulators to share information officially with international counterparts. It would change the priority status of segregated fund policies in insolvency situations that would facilitate timely transfer, consistent with life and health insurance policies. It would clarify that Canadians are able to cash government cheques under $1,500 free of charge at any bank in Canada. It would promote competition and innovation by enabling co-operative credit associations to provide technology services to a broader market. It would amend the Payment Clearing and Settlement Act to remove the requirement that there must be at least one bank involved.

In all, the measures proposed by the bill would further strengthen our system by reinforcing stability in the financial sector, fine-tuning the consumer protection framework and adjusting the regulatory framework to adapt to new developments.

Canadians should be justifiably proud of our financial services sector. It employs over 750,000 in good, well-paying jobs. It represents about 7% of Canada's GDP. It is a world leader in the use of information technology.

Over the past four years, the World Economic Forum has ranked our banking system as the soundest in the world. Forbes magazine has ranked Canada number one in its annual review of the best countries to do business. Five Canadian financial institutions were named to Bloomberg's most recent list of the world's strongest banks, more than any other country.

Recently, a Financial Stability Board peer review praised the government's response to the global financial crisis. It highlighted the resilience of Canada's financial system, calling it a model for other countries. The FSB review said that “the strength of Canada's economy and its financial system meant that no Canadian financial institution failed or required government support in the form of a capital injection or debt guarantees during the global financial crisis.”

By updating the financial legislation framework, we would continue to ensure that Canada's financial institutions operate in a competitive, efficient and stable environment that would help Canada maintain its well-earned reputation as a global leader in financial services.

Mr. Speaker, thank you for the time I was given to participate in today's debate and to recommend the timely passage of Bill S-5.

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

moved that Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters, be read the third time and passed.

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I am pleased to rise in the House today to speak to Bill S-5. I have been listening to the debate this afternoon and the comments of my colleagues. Although the NDP has been supporting the bill, we find that it has a very limited form and it misses a big opportunity to address a whole array of consumer issues and consumer protection for Canadians, which is unfortunate. However, that, unfortunately, is what we have come to know of the government.

It is rather surprising to know that the bill originated in the Senate. We would be interested to know why it started in the other place that is unelected. As members of the House of Commons are directly elected, it seems to us that it would only be legitimate that a bill would begin in the House of Commons, go to committee and follow the usual process. It is very concerning that the bill began in the Senate. We would have thought the government would have given respect to the House of Commons and given the bill first reading and second reading here.

The bill is being portrayed as a very technical bill and would change the Bank Act and 12 other acts, which is all the more reason to go through it carefully because often the devil is in the details. When we look at amending a large number of acts, some significant changes can take place. I have noted that when the bill went to committee, the committee only had three sessions, which was a very limited time review and very few witnesses were called.

I would put this in the context of a larger pattern that is emerging with the government, which is that if bills are introduced here on the floor of the House of Commons they are rushed through. We have seen time allocations, gag orders and closure to limit debate. Now we are seeing bills being introduced and debated in the Senate as opposed to the House of Commons and then dealt with in a very perfunctory and rapid manner at committee.

I would say that is not a good sign, especially for a bill of this nature. It reminds me of a budget bill where, because of the enormous amount of technical details, it is easy for important details to be overlooked.

The NDP has paid an enormous amount of attention to consumer protection. Jack Layton, our former leader, pressed this, and our consumer affairs critic, the member for Sudbury, has done an enormous amount of work in bringing forward in the House of Commons the issue of consumer protection and how people are being gouged and ripped off by financial institutions.

For example, last year the bank profits were a whopping $25.5 billion, which is astounding. The financial sector industry is not only healthy but incredibly profitable while, at the same time, many people are getting laid off.

This afternoon my colleague from Nanaimo—Cowichan did a brilliant job of pointing out how fewer and fewer people now qualify for employment insurance. I think she said that only 39% qualify. While the need for EI goes up and the qualification period goes down, the length of the waiting time is also going up to about four months.

I wanted to say that because it is part of the growing income inequality that we are seeing in our country. We are seeing more and more people working in part-time jobs, minimum wage jobs or getting laid off. They cannot qualify for EI because of the government's incredibly onerous limitations and restrictions. On the other side of the coin, so to speak, we see major financial institutions making an exorbitant amount of money. It does create a society where there is a widening gap between wealth and poverty. There is a growing gap in income inequality.

When we put into that picture the corporate tax cuts that have been granted, the billions of dollars that we have lost in public revenue that could be providing for public services, when we look at the budget that we know is coming on Thursday and our fears about that budget and its impact on ordinary people and their ability to access needed government services, it is a picture that is very disturbing. We look at Bill S-5 in that context.

I am very proud that we in the NDP stand on a principle and priority of protecting people, of protecting consumers and people's jobs, in saying that we do have to have an economic plan, a jobs plan, a financial plan, and fair and progressive taxation. This bill, which presents itself as a technical bill and brings forward some changes that I think are useful, is a massive lost opportunity overall to provide much better protection for consumers.

I know that most consumers feel completely powerless when it comes to dealing with financial institutions. I speak to people who have made complaints. They come to my riding office and we write letters to the banks on their behalf. We often will write to the ombudsperson of a bank or the banking system overall and put forward a person's complaint that in the overall scope of things is not massive, but for that individual the fact that they feel they have been ripped off or gouged or not listened to by the banking institution is something that I think really plays into the feeling of cynicism they have about the people who run financial institutions and make very powerful decisions.

I am very proud that we in the NDP have always made it a priority to stand up for consumer rights and protections. We do know that Canadians get gouged by service charges, user fees and abusive credit card rates. Again, this is something that the hon. member for Sudbury has raised so many times in this House.

The idea that there are voluntary systems in place is almost laughable. We have seen that with the drug shortages that we have been debating in this House. We had an emergency debate on those shortages two weeks ago. It is the same thing. When we have a very serious systemic problem, whether it is drug shortages because the marketplace is controlling what is going on or now when we see people being gouged by financial institutions, the response by the government has been to let the parties get together and to see what they will do on a voluntary level. That is just not good enough. Therefore, as a piecemeal approach, I do feel that the bill falls far short of what we actually need to do with consumer protection in this country.

This worries me. Just from reading the background on the bill, it is very clear that there was very little consultation done. I think there were about 30 submissions and they were mostly from associations or from a technical point of view. We have to ask why there was very little consultation done on this bill. Is it because the government knew that if it actually did engage in an adequate public consultation, it would be opening up a Pandora's box and getting a whole mass of feelings and complaints and frustrations from Canadians in response? It is very unfortunate there was not proper consultation done for this bill.

In wrapping up I would say that we support this bill for the limited progress it makes, but it is very disappointing that yet again the government has missed the mark and failed to take into account adequate protections for consumers in this case.

People will still be out there, left out in the marketplace, feeling like they do not have a voice. I hope they know that they do have a voice in the NDP and that we will continue raising these issues in Parliament to ensure there is proper regulation and protection and that the rights of consumers will be upheld.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, we are at this point today because we have to be, since the legislation requires a review every five years. That last time the financial system was reviewed was in 2007, so it is very appropriate that the members of the House are looking at this issue now.

Like most of my colleagues, the NDP will support this bill at second reading, partly because we would like the Standing Committee on Finance to examine the bill in detail, and partly because we do not have much choice. Indeed, we have very little time, because the bill must pass in April.

That said, this does not mean that we do not have some serious concerns about this bill. One concern is the government's haste to pass this bill so quickly. We believe that the process has been rushed. There was less than a month's notice and consultation was very quick. About 30 submissions were received, most of which were not even signed. Thus, public consultation was very limited.

It is too bad, because this bill, although a necessary part of the review of the financial system, also affects the wallets of Quebeckers and Canadians. We truly regret the government's haste. This is a serious process that should have been taken seriously. As far as we can tell, that has not been the case.

Another one of our concerns is the fact that this bill comes from the Senate. Why? Consultations and consideration could just as easily have begun here in the House of Commons, with a much more in-depth process. We would have had more time, instead of ending up in a situation where the bill is coming from the Senate and was studied there. This House is practically being asked to ratify a decision that was made in the Senate.

There is a big difference between the other place and here. We are elected parliamentarians with a mandate from the people, the same people whose wallets are affected by the proposed changes in this bill. Nonetheless, we, the elected parliamentarians, simply have to comment on a more thorough study that was initiated in the Senate.

This bill is important and it is really sad to see that the process has been taken so lightly.

A third concern is the government's right to veto substantial foreign acquisitions. Some of my colleagues raised this matter. There are two conditions: first, the acquiring bank must have equity of $2 billion or more; second, the value of the foreign entity’s consolidated assets, in combination with the value of the consolidated assets of the bank’s other foreign control acquisitions in the past 12 months, must exceed 10% of the value of the bank’s consolidated assets.

This process is officially a ministerial guarantee that Canada's banking and financial system will continue to be stable, even though some banks and institutions have a strong desire to expand their activities abroad. The rationale is that this requirement will prevent the purchase of an entity that does not have the same aversion to risk and that could jeopardize the stability of the system in the event of another crisis.

Some uncharitable souls might say that this government is trying to take credit for Canada's strong performance. What concerns me more is the provision whereby the government has 30 days to review a foreign acquisition and, if the time expires, the transaction is deemed to have been approved by the minister.

At the Standing Committee on Finance hearing on Bill S-5, my NDP colleagues tried to get answers about this provision, and the minister of state did not provide any reassurance. When asked by my colleague for Brossard—La Prairie, as well as the Liberal member for Kings—Hants, if the application would automatically be approved if the Office of the Superintendent of Financial Institutions indicated that the proposed transaction was not to Canada's benefit and the 30 days elapsed, the deputy minister replied that that was correct.

Therein lies the loophole. If the minister wants to take credit for Canada's sound financial position, he must also guarantee that significant transactions abroad will benefit our country.

As my time is limited, I will now turn to what is missing from the bill. It is unfortunate, because we would have had the time to study the bill if the consultation process and the review here in the House had not been rushed. We would have liked to have seen some important items, which are not in the bill.

When this bill was announced the Minister of State for Finance said:

The most important thing to us is making sure that we protect ordinary Canadians, that their savings are protected, that there's credit available to them, that we have strong and stable banks. When Canadians need to borrow money, we have to have strong institutions for them. It is overall oversight, the final oversight, that is in the right place in the hands of the finance minister.

The problem is that the government is engaging in doublespeak. On one hand, it is doing a very good thing by expanding and enhancing the powers of the Financial Consumer Agency of Canada. However, on the other hand, the government does not seem to understand the importance of proper regulation to ensure that financial institutions take their share of responsibility for debt and financial literacy.

Credit must be given where credit is due: this government is doing a good thing for consumers by extending the definition of consumer protection provisions. A wider range of organizations will thus be subject to these provisions, including banking representatives and intermediaries.

However, the government is completely missing the mark when it comes to the more specific provisions on consumer rights. How can the government advocate for greater financial literacy—a task force, a motion and a bill—and then turn around and say something like this about personal and household debt:

I'm not the first one to make this statement and I won't be the last: interest rates have only one way to go, and that's up. Canadians need to recognize that whatever debt you take on now, please plan on the cost of carrying that debt increasing at some point. It may stay low for a long time; we don't know that. But the downside is much less than the upside possibilities.

It is important to understand that banking and financial regulation must serve two purposes: the expansion and development of the system and public protection. That is why rules must be implemented by a neutral and impartial third party.

In my opinion, there is a very good example of this problem, and that is the fact that the big banks are not required to participate in the system of the Ombudsman for Banking Services and Investments, the OBSI.

Only last year, the Toronto Dominion and Royal banks pulled out of OBSI system and chose to go with their own ombudsman system. Terry Campbell, president of the Canadian Bankers Association, stated on behalf of the association that this was a change in provider.

While revising the legislation, could the government not have taken advantage of the opportunity to develop a better system and require large federally regulated financial institutions to be governed by that system?

That question is worth asking. Instead of doing that, the minister told the committee that there will soon be regulations governing internal and external dispute resolution mechanisms.

The OBSI's 2011 annual report was released last week and received significant media coverage because of those two pullouts.

The report said that the move by TD Bank and Royal Bank to opt out of the process and instead hire their own independent firms to handle customer complaints lacks credibility:

The dispute-resolution process that consumers access needs to be credible, independent, and impartial—not beholden to any one stakeholder group.... Allowing banks to choose a dispute resolution provider gives all the power to the financial institution and none to the consumer.

This bill fails to address some crucial issues. I think that consumer rights is one of those issues, and this bill would have provided a perfect way to resolve consumer rights issues and remedy the excesses that were in large part responsible for the crisis in 2007, 2008 and 2009.

But that is not in this bill because the process was not taken seriously and was bungled. The process began in the other place, but it should have started here. Parliamentarians have been given very little time for discussion because the deadline to pass this bill and renew the Bank Act provisions is April 20.

We will therefore be supporting this bill on second reading, simply because we have no choice. We are living in a time of economic uncertainty, but that does not relieve the government of its responsibilities. The government should have used this process, which comes around every five years, to do a thorough review of financial legislation in order to protect consumers but also to protect the future of the economy. Unfortunately, there are many things missing.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, as the member of Parliament for the riding of Renfrew—Nipissing—Pembroke and the beautiful upper Ottawa valley, it is my pleasure to have this opportunity to highlight some of the very important measures in the legislation before us today, Bill S-5, the financial system review act.

We are fortunate in Canada to live in a country with a stable democracy governed by a political party and a Prime Minister who have created a climate in which Canadian businesses can thrive, generating profits and jobs. We respect average Canadians who pay their taxes, work hard and play by the rules, something they expect leaders in public office to do. We are not afraid to stand up against big business or big labour when they break the rules or the laws. We take the time to communicate regularly and honestly with the people of Canada. We have a realistic and uplifting vision of the future of this country, one that respects those who present opposing positions, while at the same time ensuring that individual human beings are treated with dignity.

It is important to keep what we have, that which makes Canada the best place to live in the world today. That includes the public institutions which govern our society. We are fortunate in Canada to have a strong and safe banking system, a system that has been declared the safest banking system in the world for the past four years in a row by the World Economic Forum. The international Forbes magazine has ranked Canada number one in its annual review of best countries with which to do business. Five Canadian financial institutions were named in Bloomberg's most recent list of the world's strongest banks, more than any other country.

The measures in today's legislation would further ensure that our financial system remains a Canadian competitive advantage and that consumers receive the highest possible standard of service. Bill S-5 includes measures that would: improve efficiency by reducing the administrative burden on financial institutions and adding regulatory flexibility; expand the consumer protection framework, including enhancing the supervisory powers of the Financial Consumer Agency of Canada, or FCAC; and update financial institutions' legislation to promote financial stability and ensure Canada's financial institutions continue to operate in a competitive, efficient and stable environment.

The act would facilitate: clarifying that Canadians are able to cash government cheques under $1,500 free of charge at any bank in Canada; improving the ability of regulators to share information efficiently with international counterparts; reducing the administrative burden for federally regulated insurance companies offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements; and promoting competition and innovation by enabling co-operative credit associations to provide technology services to a broader market.

As the member of Parliament for Renfrew—Nipissing—Pembroke, a geographically large rural riding in eastern Ontario, one of the issues I deal with on a regular basis is the lack of service in rural areas. Several years ago I found it necessary to contact FCAC regarding the closure of a rural bank. The branch was in the community of Whitney, South Algonquin township, which is east of Algonquin Park.

The closing of the only financial branch in the area represented extreme hardship, particularly for residents without vehicles. Those with vehicles faced a 70 kilometre trip in all kinds of weather to Bancroft, where their accounts were to be transferred. Access to basic financial services is something that most Canadians take for granted. By working together in the community, we were able to come up with an acceptable alternative. A credit union set up a satellite branch in a local grocery store, a location that has better hours and a more accessible location than was previously the case. That arrangement is still working today.

I mention this as an example because the legislation before us today expands the supervisory powers of the Financial Consumer Agency of Canada. In my experience, I appreciated the ability to turn to the agency. I support that capacity and the continuing need to protect financial consumers in Canada.

The determination to continually strengthen our financial system has served this country well. It helps explain why our nation's economy has remained solid and sustainable under recent global stress. However, Canadian banks must also understand that they operate in a highly competitive environment and must be prepared to respond to the specific needs of Canadian consumers.

Our government is committed to ensuring that consumers are protected in their dealings with financial institutions. With the growing array of financial services offered to and used by consumers, making sure that Canadians have the tools and knowledge necessary to be confident in their financial decisions is a priority that we take seriously.

Earlier this month, for example, the Minister of State (Finance) announced that the government is moving forward with several measures to protect Canadian consumers and help them achieve greater control over their own finances. These measures, part of budget 2011, include a proposed ban on unsolicited credit card cheques and a new shorter cheque hold period, taking effect on August 1, 2012 and giving Canadians more timely access to their own money.

The fact is that credit card cheques are considered to be cash advances, which generally incur higher interest rates and fees and do not offer an interest-free grace period. The proposed legislation, the regulations banning the distribution of unsolicited credit card cheques, would amend the credit business practices regulation to require federal financial institutions to receive the express consent of borrowers before distributing credit card cheques. This would help to ensure that Canadians understand fully the terms and conditions of using these credit instruments and the obligations and implications entailed from both a payments and household budget perspective.

At the same time, a new code of conduct on mortgage prepayment information was also announced. The Financial Consumer Agency of Canada, or FCAC, has come out in support of these proposed changes, saying it welcomes the changes the government is proposing to the FCAC act. The changes are technical amendments or clarifications to existing provisions. FCAC would monitor adherence to the code and participating institutions would provide a link on their website to the agency. Lenders would make available a toll-free number so that borrowers could speak to staff members who are knowledgeable about mortgage pre-payments.

This improved disclosure would give Canadians important new details to help them make well informed financial decisions. Mortgage lenders would provide details on any obligations or penalties home buyers might incur when paying down their mortgages. That would include prepayment privileges, an explanation of the charges, a description of factors that could alter charges over time and customized information about the borrower's own mortgage. Most importantly, the code requires this information when consumers are making key decisions, such as at renewal and in annual statements. After all, if people do not understand the information provided to them by financial institutions, we can never accomplish our goal of empowering financial consumers. These regulations would not sit and gather dust on a shelf; instead, they would be overseen by the FCAC

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Mr. Speaker, I congratulate the member on her speech in which she talked about several very important planks that are contained in Bill S-5.

I would like her to expand on some of the consumer protections. We have done some work on expanding the transparency for consumers when they apply for and receive their credit cards, and several other measures to protect consumers. I wonder if she could expand on those aspects.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Mr. Speaker, I am pleased to speak to Bill S-5.

Today we have discussed many of the important features of Bill S-5, which will strengthen Canada's financial sector advantage. As many speakers before me have noted, this is a mandatory, routine bill. Moreover, it includes many technical or administrative amendments that can be somewhat classified as housekeeping. However, there are a few more substantive measures that address current, global and domestic trends that I would like to highlight today.

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

In response to lessons learned, today's legislation proposes to reinstate an existing ministerial approval for select foreign acquisitions of financial institutions.

While Canada's sound financial system is a model for countries around the world, and we want to ensure that it remains secure, the global banking crisis nevertheless highlighted additional risk factors that supported more oversight of large foreign acquisitions.

To provide historical background, prior to 1992, banks were prohibited from owning a foreign subsidiary. In 1992 the government of the day amended the legislation to allow federally-regulated financial institutions to own a foreign subsidiary or hold a substantial investment in a foreign institution with the approval of the minister.

In 2001 that requirement for ministerial approval and review by the Department of Finance was repealed and oversight was limited to the Office of the Superintendent of Financial Institutions.

However, since 2001, the global banking crisis has highlighted additional risk factors that support the need for greater oversight to keep our financial system secure. As such, we are reinstating in today's bill some of those historical oversight provisions that were repealed in early 2001.

This bill would simply add ministerial approval if a federally-regulated financial institution acquired a major foreign entity which increased its assets by more than 10%. The criteria that the minister could consider are hard-wired in the legislation, those being the stability and best interests of the financial sector. The timeline for approval is also hard-wired. The legislation would require the minister's consideration in 30 days or it would be deemed approved. This would likely only apply rarely. In fact, since 2004, there have only been a small number of cases where this proposed legislation would have applied.

The reactions from academics, bankers and the Superintendent of Financial Institutions have been quite supportive of the provision. I would like to share some of their reactions with the House.

Michael King, finance professor of the Ivy School of Business stated:

This kind of a rule is actually one of the reasons why Canadian banks weathered the crisis so well over the years...Canadian banks have done well. And it’s helped the Canadian economy to have such stable banks.

Terry Campbell, president of the Canadian Bankers Association stated:

That power was given to OSFI, and now it is back with the Finance Minister to, in our view, give him a full suite of tools as part of his oversight of the financial system in Canada.

Julie Dickson, the Superintendent of Financial Institutions, stated:

—we fully support that decision. It makes sense for the Minister of Finance to ultimately have the ability to approve. It’s just going back to the way it used to be.

Today's bill would help ensure that Canadians would continue to have a strong and secure financial system on which they could rely. Canadians are proud that, unlike Europe or the U.S., we did not have to nationalize or bailout banks with taxpayer money. Canada has shown the value of ensuring a well-regulated financial system. That is something that has been recognized around the world.

Canada was ranked as having the soundest banks in the world by the World Economic Forum.

The influential magazine The Economist has also 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.

Canadians use financial services every day, be it by using their credit card, cashing a cheque, going to the bank, or signing a mortgage. I think members would agree that Canadians deserve to be treated fairly when using these products and to be provided with clear information before agreeing to use them.

Indeed, since being elected in 2006, our government has taken important steps to address consumer concerns and make financial services products more consumer friendly. Those measures have included: protecting consumers with new credit card rules, such as requiring consent for credit limit increases, a minimum 21-day grace period on new purchases, full disclosure for consumers, and limiting other anti-consumer business practices; bringing in a code of conduct for the credit and debit card industry to help small businesses dealing with unfair practices, as the code would help ensure fairness, encourage real choice and competition, and protect businesses from rising costs; and banning negative option billing for financial products. There is much more.

Our government agrees that making financial services products more consumer friendly is an important goal.

In this legislation, we are making a few important changes to federal financial institution statutes, including confirming that Canadians, including bank customers, are able to cash government cheques in amounts of less than $1,500 free of charge at any bank in Canada, and improving consumer protection by increasing the maximum administrative penalty that the Financial Consumer Agency of Canada, FCAC, could levy from $200,000 to $500,000. This would also bring FCAC penalties in line with other financial regulatory authorities, like the Office of the Superintendent of Financial Institutions and the Financial Transactions and Reports Analysis Centre of Canada.

This is in addition to consumer-friendly measures we announced in budget 2011, such as banning unsolicited credit card cheques, moving to protect consumers of prepaid cards, beginning to implement the task force on financial literacy's recommendations, starting with the creation of a financial literacy leader in the government. In fact, it was only last month that we introduced the financial literacy leader act to move forward on the financial literacy front.

I could go on to outline other very important components of the bill, but I will close by encouraging all members of the House to support this very important mandatory and routine legislation so as to ensure it is passed without delay so that we can continue to enjoy a strong, stable financial sector.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Mr. Speaker, my colleague is absolutely correct. I have always been interesting in participating, especially for youth in my riding, in financial literacy. He points out some of the factors, like having an ombudsman, which is ideal in this case. There are so many instruments out there and so many ways to invest from our basement, or our living room or in front of our laptop that it now becomes overly cumbersome to know all the rules and regulations about this.

The debate to bring some of the elements of consumer protection into this are absolutely necessary. I do not know if this is where we go with this. Bill S-5 is to update the financial regulations in our country so they are in tune with other things.

I would agree with the member that we should have a larger debate on this. In my opinion, it should be focused on the protection of the consumer in light of the increasingly larger institutions out there.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Mr. Speaker, I am thankful for this opportunity, albeit brief, here today.

I had a chance to go through the legislative summary for Bill S-5, and I must say that I am always very impressed by the lot over at the Library of Parliament. I want to thank them for their research and mention, for the record, Mark Mahabir and Adriane Yong who are both from the International Affairs, Trade and Finance Division, Parliamentary Information and Research Service. We do not always give them the credit they are due, and I hope this goes in just a small way toward acknowledging the work they do for us here in the House of Commons and the Senate as well.

The committee reported Bill S-5, an act to amend the law governing financial institutions and to provide for related and consequential matters from the Senate on December 15, 2011. There were no major amendments made in the Senate, but certainly it came with, as described here, observations.

The bill amends four primary statutes under which federally regulated financial institutions are governed. They would be the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act and the Trust and Loan Companies Act. There are also major amendments to other provisions regarding the financial institutions of our country.

Bill S-5 contains various measures to update the law governing financial institutions, as I have mentioned. The shares of a Canadian financial institution being held by foreign financial institutions controlled by foreign governments is one of those and it is certainly a timely matter given the world of finance we are in. We experienced this several years ago when we slid into a recession initially sparked by some financial tools in the United States in many cases. Of course, that wreaked havoc around the globe for all financial institutions such as in Asia and the European Union, which is now suffering through this, and austerity measures have followed suit as a result of that.

This illustrates to us and the entire country that we are certainly intertwined with the rest of the world as far as financial institutions are concerned. When something causes headaches for people in one part of the world, those headaches will reverberate around every corner of the world, given the financial institutions and the technology we use to trade currently. It gives us an idea of how important this is when it comes to international institutions.

On the acquisition of foreign entities by Canadian financial institutions, as a matter of fact, we are now seeing financial institutions in this country, banks, for example, with bigger investments around the globe. We certainly see it in the United States currently with institutions such as Toronto Dominion and others, as well as in Europe and Asia. In a country the size of ours, it gives us an idea of how good we are and how large our financial institutions are, as we are able to be a major player around the globe.

On the widely held ownership threshold for banks, it was always a contentious issue. It certainly was contentious when I first came here in 2004-05 and it continues to be.

The authority of the Superintendent of Financial Institutions over certain types of transactions, the administration of unclaimed insurance deposit accounts by the CDIC and the Bank of Canada, the insolvency of financial institutions and the liability of the CDIC when acting as a receiver during receivership of insolvent financial institutions are also very important at this point. There is also the restructuring of insurance companies and the liability of officials and employees of the Office of the Superintendent of Financial Institutions and the Financial Consumer Agency of Canada.

When we look back, this bill really got its roots from Bill C-37, which was back in June 2006. There was a paper entitled “Financial Institutions Legislation Review: Proposals for an Effective and Efficient Financial Services Framework”. The legislative changes included greater disclosure for consumers in relation to investment products, very important, and complaint procedures, the introduction of electronic cheque imaging and clearing, and an increase in the widely held threshold for large banks from $5 billion to $8 billion in equity.

This reminds me of the legislation we dealt with not too long ago when we talked about copyright. We are seeing the proliferation of technology right now that allows us to transact around the world instantaneously. As a result, the legislation has to keep up with the changing technologies around the world in, as I mentioned, copyright, banking and financial institutions. It shows not only the speed and brevity by which financial transactions are able to go around the world, but it also gives us an idea that the scope has become much larger, as well as the depth of the banking institutions. Therefore, we have to look at this and update legislation, as we did with the copyright bill. It is somewhat of a new concept when we have to review it after four or five years. Nonetheless, it is a concept that is certainly necessary.

We are seeing that now with the sunset provision. The Bank Act, the Cooperative Credit Associations Act, the insurance companies and trust and loan companies contain a statutory sunset date set out some time ago. The legislative changes will include greater disclosure for consumers in relation to investment products and complaint procedures. We went through the updating measures that were contained in Bill C-37, which was introduced in the House on November 27, 2006. In order to have sufficient time, we went through this review, which went from the October 24, 2006 to April 24, 2007, to accommodate that.

That puts us in the place we are now as we go through the review once again, as it was introduced in the Senate as Bill S-5. It went through the three readings and the committee procedure and came back with some of those observations.

Clauses 53(2) and 53(3) require a Canadian bank to obtain approval from the Minister of Finance prior to acquiring control of a foreign entity, and this is important, if the bank has equity of $2 billion or more and the value of the foreign entity's consolidated assets in combination with the value of the consolidated assets of the bank's other foreign control acquisitions in the past 12 months exceed 10% of the value of the bank's consolidated assets prior to the preceding 12-month period. I hope everyone got that because there will be a test at the end of the speech, though probably not, as I excite the masses talking about financial institutions.

The minister, in contemplating the acquisition, can take into account all matters considered relevant in the circumstances, including the stability and best interests of Canada's financial system. We go back to Canada's financial system and the emphasis that we put on this to ensure it is suited for Canadians. We know that in the past we have faced this primarily from breakdowns in financial institutions around the globe. If one finds trouble or turbulent waters, that ripples throughout the global system. Therefore, we have to ensure our system is able to withstand some of the shocks that occur around the globe. The sunset clause is to renew the acts, as I mentioned earlier.

Let us take a look at Bill S-5. It does not represent a significant change in policy, per se. It is crucial that the existing sunset clauses are extended so Canada's statutes for financial institutions do not expire, which is around April 20. Bill S-5 is not what I would call an ambitious bill. It does not significantly change Canada's banking policy or address Canada's record levels of household debt. However, Canada's banking laws are set to expire.

There is one thing I can point out about the government. The Conservatives called on the previous Liberals to follow the U.S. example and deregulate the Canadian banking sector. I remember at the time there was quite a debate and there were certain stands that all members of the House took in 2003 to 2005. I am sure they wish they had them back in light of what has happened around the globe when financial institution measures such as these become critical and very important for us to consider.

Liberals will support Bill S-5 at report stage and third reading because of this. Again, I revert to what I said earlier. Given the intertwine nature of the financial institutions around the globe, it certainly falls upon us in the House to have this debate so we can ensure the regulations are updated in light of certain troubles around the world and certainly with the advent and proliferation of technology that allows us to pass our money around the world and invest.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Mr. Speaker, I want to thank the hon. member for his speech today, which outlined several very important technical parts of Bill S-5.

The hon. member spoke about the bridge bank protection, which is provided by CDIC to financial institutions in trouble. He also spoke about the plank that allows ministers to approve any foreign company that wants to come in and take over a domestic financial institution.

I would like to ask the hon. member to comment specifically about something he spoke about in regard to consumer protection and the clearness, openness and transparency that is going to be required of credit card companies. I think that is a very important part of the bill, which protects consumers across Canada.

[Rod Bruinooge, Conservative, Winnipeg South, MB]

Mr. Speaker, I appreciate the opportunity to speak to this important bill.

Today is a very opportune time to be actively pursuing the passage of Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters.

Our government undertook a review of our financial sector and the legislation that governs it with the understanding that we live in an ever-changing world of evolving technology and financial sector innovation. The technical measures contained in this bill would ensure that Canada's financial sector regulatory framework stays ahead of the curve and accommodates these developments by mitigating risks, creating new opportunities and helping Canada's financial sector maintain its international reputation as a world leader in terms of its strengths and stability.

I am pleased to report to the House that this legislation was undertaken after a lengthy period of time of open consultation with Canadians from coast to coast to coast to ensure that Canada remains a global leader in financial services and maintains its sector advantage. This financial sector advantage is fundamental to Canada's remarkable economic performance throughout the global financial crisis of 2008. In our world-leading recovery from that episode in terms of jobs and growth, our advantage underpins this overall health that is found in our economy. That is why, in the wake of the financial crisis, our Conservative government took action to modernize the authorities of the Bank of Canada to support the stability of our financial system. This would allow the Bank of Canada to redistribute wealth and liquidity to financial institutions, buttressing them against the immediate aftershocks of the crisis and maintaining the vital flow of credit to Canadians and businesses during the so-called credit crunch.

While many foreign banks had difficulty raising capital on global financial markets during the crisis, Canada's financial system remains stable, well capitalized and underpinned by one of the most effective regulatory frameworks in the world.

Then, to further safeguard our financial system moving forward, we introduced measures in budget 2009 to strengthen the authorities of the Canada Deposit Insurance Corporation. This enhancement would contribute to the financial stability and protect insured deposits by giving CDIC a great variety of tools to manage the resolution of a troubled financial institution. An important element of this change is that it would allow CDIC to establish a bridge institution, known in the trade as a bridge bank, to preserve the critical functions of a financial institution facing trouble and to help maintain overall financial stability.

Among other things, Bill S-5 is important because it includes a number of technical refinements to ensure the effective implementation of this bridge bank tool and it includes other measures that would contribute to financial stability.

We have seen all too clearly in recent years how heavily interconnected the structure of global finance has become, and this can pose unintended risks here at home, which is to say that bad or risky decisions can have repercussions that can travel right around the world and land back on our doorstep with a lot of unpleasant financial consequence in tow, and not just for the banks but for the people and businesses who depend on them. All governments have an obligation to weigh these risks. This is particularly important as Canadian banks expand into foreign markets and foreign players similarly enter the Canadian market. With Bill S-5, the Canadian government would have another tool at its disposal to take action when it considers these risks to be unacceptable.

In short, the bill would reinstate the requirement for significant foreign acquisitions of financial institutions to be approved by the Minister of Finance. Since 2004, there have only been four instances when this provision would have been applied. While this role would rarely be used, there is no doubt that this kind of oversight should be brought back.

Michael King, finance professor at the Richard Ivey School of Business, says:

This kind of a rule is actually one of the reasons why Canadian banks weathered the crisis so well over the years. ... Canadian banks have done well. And it’s helped the Canadian economy to have such stable banks.

Alec Bruce, noted Times-Transcript columnist, has reported that the finance minister has a point. “When our banks top up their foreign holdings in this environment they do, in fact...”, in essence, import many of the efforts they've made overseas and reject all of the contagion that comes overseas as well.

This also builds on recent stabilizing measures we have introduced to secure the financial sector. Budget 2011, for example, announced the government's intention to establish a legislative framework for covered bonds, which are debt instruments secured by high-quality assets such as residential mortgages. This will make it easier for Canadian financial institutions to access this low-cost source of funding and help create a robust market for covered bonds in Canada.

Consumer protection is another area where we have taken decisive action to strengthen Canada's financial sector. In 2009, for example, our Canadian government acted to protect Canadian credit card users. The measures we introduced mandated that the inclusion of clear and simple information on credit card application forms and contracts would be required, and also required clear and timely advance notice of changes in rates and fees from card providers.

We have also limited credit business practices that do not benefit consumers. For example, we require credit card insurers to provide consumers with a minimum 21-day interest-free grace period on all new purchases when consumers pay their balance in full by the due date. We also require a minimum 21-day grace period on the billing period as well if the consumer has an outstanding balance that needs to be carried forward.

We have moved key information such as interest rates, grace periods and fees out of the fine print buried in credit card applications and contracts into a prominent summary box, so that consumers signing an application know exactly what kind of financial arrangement they are agreeing to. This measure also provides a clear picture of their debt load as they pay it off.

These initiatives are in effect today and are providing Canadian consumers with precisely the kind of financial information that leads to better decision making. These measures, like those in Bill S-5, reflect the understanding that every part of Canada's financial system must be resilient and strong for the benefit of individual consumers, businesses looking to raise capital, or the banks and other financial institutions that can help them realize their goals.

That is why Bill S-5 is focused on those areas that must be fine-tuned so Canadians can continue to rely on one of the world's best financial systems for years to come.

I would therefore encourage the hon. members of this House to support the timely passage of this bill and to join our government in its ongoing efforts to build and maintain Canada's financial sector advantage.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Mr. Speaker, it is always a pleasure to rise in the House to speak about Bill S-5, the Financial System Review Act, on behalf of all the people of LaSalle—Émard.

One can no longer look at a newspaper without coming across a headline about household debt in Canada. If the storm unleashed by the 2008 laissez-faire financial crisis did not hit Canada as hard as the United States, it is because of the way our financial sector is regulated.

There is an urgent need to maintain and reform the regulation of our financial institutions. In order to do so, the House must firmly commit to getting Canadians involved in the review process and thus help to protect the public, ensure the transparency of our financial institutions and promote the independent review of acquisitions. Finally, we must engage in public consultation to allow various stakeholders—more than just 30 or so— to express their opinions on the impact of the changes proposed by this bill.

I therefore address my remarks to the people of LaSalle—Émard to explain my position on the bill to amend the legislation governing financial institutions.

This Senate bill amends not only the Bank Act, but also 12 other acts. My colleagues in the official opposition have already described several technical aspects of the changes to regulations in the financial sector. I would simply like to go over some of the main points.

Under Bill S-5, large foreign acquisitions will require ministerial approval. The bill will raise the widely held ownership threshold for banks from $8 billion today to $12 billion.

Henceforth, banks controlled by foreign governments will be able to hold a minority interest in Canadian banks and financial institutions.

The bill enhances and expands the supervisory and enforcement powers of the Financial Consumer Agency of Canada.

Lastly, the bill tightens measures to prevent tax evasion in the case of Canadians who do business with subsidiaries of foreign banks.

That said, this bill raises a number of concerns. First of all, why did the government give the Senate, which is full of defeated Conservative candidates, the task of introducing a bill on an issue as important as the review of legislation governing our financial institutions?

Second, will the government give the members of the House the time needed to carefully examine this bill?

To deliver a bill that shows that it truly cares about protecting Canadian consumers, the government must consider adopting measures that are not currently in this bill. Here are some examples: approving large foreign acquisitions of financial institutions cannot fall solely to the minister, as set out in this bill. Such important decisions should be made by the Office of the Superintendent of Financial Institutions without any political interference.

We need to introduce regulatory mechanisms for the banking and financial sectors that are transparent in practice, and not simply in principle. This means we should examine the possibility of regulating all hidden costs and making their disclosure mandatory.

It is also crucial that the committee responsible for reviewing the legislation governing our financial institutions hear from witnesses who are experts on risky mortgage loans, which are of concern to the Governor of the Bank of Canada.

As elected representatives, we have a duty to protect consumers and our constituents. When Canadian financial institutions announced profits of $25 billion last year, debt had become a ball and chain for Canadian households. And if the debt being carried by Canadian households is the ball, middle-class wage stagnation, usurious interest rates, high service charges and incomprehensible loan agreements are what keep Canadians chained to those debts.

Unfortunately, too many people in my riding are among the ever-growing number of Canadians who are burdened by debt. The Association coopérative d'économie familiale du Sud-Ouest de Montréal, with which I met last fall, is on the front line and works with residents of southwest Montreal to find ways of improving their consumer practices and their spending. When people’s wages are stagnant, when their incomes are declining and their debts are piling up, things get more and more difficult.

That organization and the members who work there have heard every story. The people who come to see them are living in dread of the bailiffs who call them at all hours of the day trying to collect. They can no longer sleep at night and they shut themselves away during the day. Some of them have no choice but to consider declaring bankruptcy. The distress is real, and protecting our fellow Canadians must be our first concern.

The most important recommendation I have to make is that the government should use the review of our financial institution legislation to ask what Canadians think and find out what they are concerned about and what issues are of concern to them. In that regard, the government would do well to learn from the best practices developed by the NDP. For example, the NDP has just completed public consultations throughout Canada to find out what Canadians’ concerns are when it comes to the cuts the government is planning to make to the old age security program.

We organized local forums from coast to coast so the people who elected us could talk to us about the impact those cuts would have on them and their family members. For example, very recently, in Ville-Émard, we organized a public forum on reform of our pension system. We had a full house, and we met with 100 of our constituents who were worried about the government’s consistently vague allusions to the cuts it is planning to make to old age security. Our constituents spoke out and we listened to them. The NDP invites dialogue, and the government should do the same when it examines the legislation related to the regulation of financial institutions.

With that in mind, I would have preferred that this bill be drafted after a broader public consultation had been held. In spite of the concerns I have raised, I am going to support the bill, which still represents an adequate review of the financial system. I hope that committee members will have an opportunity to make the amendments that are needed so that the bill will be even more acceptable to Canadians.

[Susan Truppe, Conservative, Parliamentary Secretary for Status of Women]

Mr. Speaker, I appreciate the opportunity to finish this important speech.

This government has also made improvements to Canada's financial system by introducing effective consumer protection provisions for the consumers of financial products.

Unlike the NDP, this government understands the needs of Canadian consumers and has a proven track record of standing up for them. That is why since 2006 this government has protected consumers with new credit card rules that require consent for credit limit increases; a minimum 21-day grace period on new purchases; full disclosure for consumers and limits on other anti-consumer business practices. It has also introduced a code of conduct for the credit card and debit card industry to help small businesses deal with unfair practices, and has banned negative option billing for financial products.

More recently, as part of budget 2010, the government took action by introducing new measures to empower consumers of financial products. These included implementing a new code of conduct on mortgage prepayment information; beginning to implement the recommendations of the task force on financial literacy, starting with the creation of a financial literacy leader in the government; and banning the distribution of unsolicited credit card cheques. That last initiative has been warmly welcomed by consumer groups.

Indeed, at the finance committee, a consumer group stated:

[The government]...touched on the credit card cheques, and the reduced period of access to your money. That's a very good step forward for Canadian consumers, of course. The amount of money that Canadian consumers can access is also a good step forward.

As a result of these actions, Canadians can be confident that they will be provided with clear and relevant information when faced with important financial decisions that impact not only themselves but also their families.

Bill S-5 builds on the government's proven record of improving consumer protection by making important changes to federal financial institution statutes. In particular, this bill increases the maximum administrative penalty that the Financial Consumer Agency of Canada can levy, from $200,000 to half a million dollars; and it confirms that Canadians, including bank customers, are able to cash government cheques of amounts of less than $1,500 free of charge at any bank in Canada.

Again, this is only a continuation of this government's long and proven record in standing up for Canadian consumers.

We all recognize there is always work to be done to ensure the continuing stability of the Canadian financial system and that ongoing vigilance is vital. Indeed, that is why we are pushing for the timely passage of the financial system review act. The renewal of Canadian financial institution legislation on a regular basis has resulted in a robust and effective financial system that is aligned and more responsive to developments in the financial markets and the broader economy.

Moreover, passage of this legislation would maintain the long-standing practice of ensuring regular reviews of the regulatory framework for the financial institutions, a unique practice that sets Canada apart from almost every other country in the world, and one that is supported by those in the industry.

Commenting on Canada's unique practice of having mandatory reviews, the Canadian Bankers Association stated:

We believe strongly in the importance of ensuring that the legislative and regulatory framework is reviewed regularly and for that reason, we were pleased to see that the Bill proposes retaining the sunset clause for financial services legislation at five years.

The Canadian Life and Health Insurance Association stated:

The industry is very supportive of this Bill and urges that it be passed in a timely manner.

Clearly, today's bill provides a framework that will benefit all participants in the financial services sector, both financial institutions and everyday Canadians. As I noted, renewing Canadian financial institution legislation on a regular basis has resulted in a robust and effective financial system that is aligned with and responsive to developments in financial markets and the broader global economy.

In summary, I would encourage all members to join in our efforts to ensure the strength and stability of Canada's financial system and support the financial system review act.

The House resumed consideration of Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters, as reported without amendment from the committee, and of Motion No. 1.

Motion in Amendment

[Susan Truppe, Conservative, Parliamentary Secretary for Status of Women]

Mr. Speaker, I truly appreciate the opportunity to lend my voice to today's debate in favour of the timely passage of Bill S-5, also known as the financial system review act.

While very technical, this is very important legislation. Today's bill is not only the right thing for Canadians but the right thing for Canada's economy. More broadly, Bill S-5 builds upon and complements a range of initiatives that our Conservative government has introduced.

I will discuss some of those initiatives. The housing sector warrants particular attention in light of its role in the 2008 financial crisis and the ongoing pressures arising from the U.S. housing bubble that are still being felt by the American financial system and which have slowed that country's economic recovery.

In order to protect its housing market from the worst excesses seen abroad, our Conservative government has acted repeatedly and decisively to ensure its stability, especially with regard to the mortgage financing. Mortgage financing plays a key role in providing a reliable source of funds to prospective Canadian homeowners. Prudent mortgage lending standards and mandatory mortgage insurance for high ratio loans allowed Canada to avoid the housing crisis that occurred in other countries, especially in the United States.

Since 2008, our Conservative government has taken prudent and measured steps to ensure that this system remains stable over the long term. while maintaining economic growth. In 2008, 2010 and again in 2011, our government took proactive steps to protect and strengthen the Canadian housing market, which included reducing the maximum amortization period for new government backed insured mortgages to 30 years, requiring a 5% minimum down payment and a 20% down payment on non-owner occupied properties, lowering the maximum amount lenders can provide when refinancing insured mortgages to 85% of the value of the property, requiring buyers to meet a five year fixed rate mortgage standard and withdrawing government insurance backing on home equity lines of credit.

Those measures underline our government's continued action to protect the stability of the economy by ensuring lenders' practices are sustainable and the investments of Canadian families in their homes are secure. This would decrease the interest payments of Canadian families by tens of thousands of dollars over the life of a mortgage, helping to improve the financial well-being of Canadian households.

It is important to note that, because of measures like those, Canadians do not face mass foreclosures on their homes and our banks did not require taxpayer bailouts. That is why it is no surprise that Scotiabank chief economist, Warren Justen, said, “...when you look at what exists in Canada, this is still the best country in the world to be in”.

The measures in today's legislation would ensure that Canada's economy remains strong in this time of global economic uncertainty and would give it the flexibility to adapt quickly and easily.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, it is a pleasure to rise here today on Bill S-5 and the amendments that the NDP has put forward with regard to creating more transparency and accountability in this bill.

We do support the bill. However, we see this as a missed opportunity because there are so many issues relating to the banking industry right now that affect Canadian consumers, and also Canadian companies. I was at committee today and so I do not know if this has been discussed a great deal here, but small and medium size businesses have been hurt exponentially by the banking system in recent years. I will get into more detail on that later, but it is important to put that as part of the equation as we talk about this missed opportunity here.

First, as my colleague from the Liberal Party noted, the bill comes from the Senate. That is a concern for us. Why would the government table a bill in the Senate and then have it come to the House of Commons? A Conservative called the Senate equally capable. That is an interesting description for the Senate coming from the Alliance/Reform Party base out there when senators are unelected, unaccountable individuals.

While there are some very good people in the Senate who do some good work, at the same time they are not elected and not accountable to the Canadian people. Therefore, I do not think the Senate is equal to the House in any sense whatsoever. I am shocked that a Conservative/Reform/Alliance person would call the Senate that, because senators are political patronage appointments made by the Prime Minister, whether that be Joe Clark at the time, Pierre Trudeau, Jean Chrétien, Paul Martin or now our current Prime Minister.

Senators do not have to go to the electorate and earn their seat. Once again, there are some very good people there whom I have worked with on a lot of good issues and I respect them a great deal, but there is a big difference between them and having to go to the person checking out groceries and selling cars. They are our bosses. They are the ones who decide whether we get to this place or not.

Having said that, I am a little concerned that the bill is from the Senate. I say this because in the past I worked on Bill C-393, a bill on providing generic drugs to developing countries for tuberculosis, AIDS and malaria. The House of Commons passed it, but it actually died in the Senate. Thus the elected body here passed a bill, sent it to the Senate, but it never made it through, even though it should be Canadian law right now so that we could provide medicines to those who are suffering from tuberculosis, malaria and AIDS in developing countries. There was also the bill from Jack Layton, the climate change bill, that was passed in this House of Commons, but, again, did not make it out the door of the Senate.

Now we have the reverse coming back here and what we see is a very scoped bill on the banking industry. However, I am glad that the Conservatives are dealing with this. The government is actually addressing some component of it, but let us take a step back in history, which I think is very important.

It is interesting that representatives of the banking industry came into my office a year ago and said that I should be thanking them for the work they had done and the fact they had propped up the Canadian financial system because of the way banks were structured and had done business. At that point, I asked if they wanted me to go to my computer or to my filing system and pull out all of the presentation decks and summaries they had previously provided me saying that they had to become like the American banks.

It was the New Democrat members in the House of Commons who fought against that. I will admit there were some Liberals who did so too, because I have been corrected in the past on this, and quite sincerely, by some of my Liberal friends. However, it was John Manley under Paul Martin who was trying to move our banks towards the American model. We voted against that and stopped it and it did not pass the House of Common, as there were some others who supported that notion to keep our banks the way they were. However, it was certainly the Conservatives, the right wing members, who got up day after day to complain about how Canadian banks would be swallowed up by U.S. institutions if we did not act at that particular time. That took on—

[Robert Goguen, Conservative, Moncton—Riverview—Dieppe, NB]

Mr. Speaker, the House has a very busy agenda and has very capable members, as does the other house, the Senate, which is equally capable of coming up with a very well crafted bill such as Bill S-5. In its field of competency, it has come through with what we feel is a very good piece of legislation.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, why did the government choose to bring in Bill S-5 through the Senate as opposed to the House of Commons?

It seems that the government's attitude, as has been demonstrated on other pieces of legislation that have come before the House, is to minimize the contributions of members of Parliament on legislation.

We all acknowledge that this is very important legislation and it will pass. Why is it that the government continues to look at ways in which to minimize input and debate in the House of Commons where that debate should be taking place on all legislation as much as possible? Why bring it in through the Senate as opposed to the House of Commons?

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, we are debating Bill S-5. However, we are also debating part of the amendment that was tabled.

Let us be very clear. The amendment talks about the fact that the immunity resulting from this provision could negatively impact the office's transparency and accountability to the Canadian public with respect to Bill S-5. That is why we have tabled it, to talk about transparency and accountability, which it is obvious the government is not willing to support.

This bill was pushed through the Senate. It is such an important and crucial bill when it comes to the well-being of finances, not only of the banks but of Canadians as a whole. Why is it that the government will not support an amendment that would assure transparency and accountability, and would also prevent the time lost as a result of frivolous civil lawsuits?

[Robert Goguen, Conservative, Parliamentary Secretary to the Minister of Justice]

Mr. Speaker, my hon. colleagues have discussed many of the important features of Bill S-5 which would strengthen Canada's financial sector to its advantage. I particularly appreciate my hon. colleagues' characterization of the financial system as being only as strong as its weakest link and for outlining some of the key areas where the government has acted, both within Bill S-5 and elsewhere, to strengthen those links that needed the most attention.

The banking sector has expressed its strong support for this mandatory legislation. For example, Terry Campbell, president of the Canadian Bankers Association has explained, “In Bill S-5, the government has stepped up to the plate and is proposing what we think are very needed clarifications”.

I also agree with my colleagues' emphasis on the importance of considering the health of the whole financial system as fundamental to the growth and success of the entire economy. With this in mind, I would like to dedicate my allotted time to considering one special crucial link in the system which Bill S-5 would act to fortify, and that is Canada's payment system.

Our payment system is the set of instruments, procedures and rules used to transfer funds among financial institutions, either on their own behalf or that of their customers. This is not to be confused with the various other payment instruments Canadians use, such as cash, cheques, debit cards and credit cards to purchase goods and services, to make financial investments and to transfer funds from one person to another. The two are not unrelated, however, because these payment instruments, with the exception of cash, normally involve a claim on a financial institution such as a bank, credit union or caisse populaire. Financial institutions therefore need arrangements to transfer funds among themselves, which is why the payment system exists.

In Canada, the national systems for clearing and settlement of payment are run by the Canadian Payments Association, also known as the CPA, a not-for-profit organization of federally regulated financial institutions. This system has served Canadian financial institutions and their customers well. However, in a world of ever-changing demands, technological innovation, increased global integration and competition, no responsible and effective government can afford to let such a system remain static. That is why Bill S-5 takes action to ensure that this system can meet the ongoing demands of an increasingly dynamic, innovative and globalized financial system. I must note that the CPA provided input on these measures through an open public consultation process and has told the House finance committee that it welcomes ”the incorporation of technical and housekeeping amendments to the Canadian Payments Act legislation to provide greater clarity surrounding our membership”.

It is clear that the payments landscape is changing. For example, since 1996 we have seen in Canada and abroad increasing cases where clearing and settlement systems do not include banks as direct participants. To better accommodate this development, Bill S-5 proposes to amend the Payment Clearing and Settlement Act to remove the requirement that there must be at least one bank involved. The new definition would allow more flexibility in establishing systems to clear such complex financial instruments as over the counter derivatives, or OTCs. This change has the added benefit of allowing the Bank of Canada to oversee the transactions of these complex financial instruments to help ensure they pose no systematic risk to the financial system. Not only is this prudent, it is also in keeping with Canada's commitment to our G20 partners that by 2012 our OTCs be cleared through central counterparties.

Bill S-5 also proposes to change the Payment Clearing and Settlement Act to allow the Bank of Canada to disclose information to other regulators of payment clearing and settlement systems and to coordinate activities across current federal and provincial jurisdictions as well as with foreign regulators. This would also help us meet our G20 commitments by ensuring that Canadian prudential and market conduct regulators have the authority, tools and information they need to maintain effective ongoing oversight over the Canadian OTC derivative market. Moreover, the information sharing would help all parties understand the potential risk in these linked systems, building upon lessons learned from the 2008 financial crisis and helping in our efforts with our international partners to prevent such instances in the future. Failing to form such links could actually delay our ability to link to foreign systems and undermine Canada's ability to meet the commitments all G20 nations made. This is a key fact for hon. members to consider when debating the timely passage of Bill S-5.

If that does not convince hon. members to get behind the bill, I will offer another good reason.

As many hon. members appreciate, Canada's credit unions are a valuable source of financial services in communities across the country. In recognition of the important role credit unions play, in budget 2010 our government created a new legislative framework for federal credit unions to accommodate growth and expansion of the Canadian credit union system, putting them on a more level playing field with other financial service providers.

Once implemented through regulation, this would enable those credit unions that choose to do so to extend beyond provincial borders and pursue business strategies that are not limited by provincial incorporation. This change would encourage competition among financial institutions and promote a more level playing field within the financial sector, supporting a stronger and more stable system overall. It would also give credit unions a way to expand their sources of funding and diversify their geographic risk exposure.

Bill S-5 supports these efforts by amending the Canadian Payments Act so that credit unions fall within the co-operatives class in the act rather than the bank class, giving federal credit unions a more effective voice in the CPA. I am pleased to report that this measure has been very positively received by the federal credit unions.

According to Credit Union Central of Canada, the national voice for credit unions across the country, these changes would help credit unions represent their members more effectively at the payments table.

In the words of David Phillips, president and CEO of Credit Union Central:

Placing the federal credit union in the cooperatives class will preserve and strengthen the credit union system's representation at the Canadian Payments Association. It ensures that a federal credit union will be represented by a director who can bring the perspective of cooperative financial institutions to CPA matters.

At the same time, credit unions would still enjoy the long-standing, well-understood and robust governance, liquidity and clearing and settlement frameworks that they use today.

For these reasons, I would encourage hon. members of the House to support the timely passage of Bill S-5. They can do so with the confidence that by making these important improvements to Canada's payment system they will be strengthening key links in Canada's financial system and better connecting it with the world.

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

Mr. Speaker, I am pleased to rise to speak to Bill S-5 to amend our financial system. I am a member of the Standing Committee on Finance, which examined Bill S-5.

A member across the floor mentioned the sunset clause. Indeed, this system should be reviewed every five years, but our problem with the government is that it is improvising on this issue. It passed this bill in the Senate with very little public consultation, then it used the date when this review is supposed to take place as an excuse for not accepting any of our amendments. This proves that the government did not take this bill seriously and did not do its homework.

As we all know, our financial system is very important. I am a notary and lawyer and, before I was elected, my clients included Canadian banks, some of them in Montreal. Our banking system is important to our economy. However, this bill overlooks consumers. People have to assume the cost of the banks' excesses, and this has not been taken into account at all.

Nor does this bill take the global crisis into account. I am not making this up. Many believe that the crisis originated in the financial sector, primarily in banks in the United States, which had an impact the world over. There was an opportunity to do something here, but once again, this government improvised and did not take the steps that should have been taken.

The members across the floor say that we on this side of the House are idealists. That is true, but we are also pragmatic. We proposed real solutions. It is true that this bill has little impact. It contains technical revisions and deals with minor administrative concerns. However, we are worried about one point: the acquisition of foreign banks by Canadian banks.

A system was introduced a few years ago, establishing the Office of the Superintendent of Financial Institutions, which is responsible for assessing these transactions. When a Canadian bank acquires a foreign bank, it affects our economy and our financial system. We want such acquisitions to be truly beneficial for our economy. The Office of the Superintendent of Financial Institutions should have been mandated to study such purchases and make recommendations, perhaps even give its approval. However, Bill S-5 puts this power in the hands of the minister. This poses a problem.

This power used to belong to the minister, but was given to the Office of the Superintendent of Financial Institutions in an effort to depoliticize the process and avoid having a minister be influenced by his connections or lobbyists and make a decision that would defy the financial system and what had been proposed. Now, the Conservatives, who claim our system is working, are in the process of reversing the decision and giving the power back to the minister.

Some of the ministers across the way have very close ties to lobbyists. The Minister of the Environment, to name one, does more to promote lobbyists than he does to protect Canadians in this regard. The concern here is what might happen with the Minister of Finance. Without pointing the finger directly at this Minister of Finance, putting this power back into the hands of a minister makes the decision very political and problematic. What is more, there is no requirement to provide public explanations. The Office of the Superintendent of Financial Institutions could say that a certain transaction is not beneficial to Canadian financial institutions and, without providing any explanation, the minister could ignore that decision and make his own decision.

The process is becoming very political and that is worrisome. What is happening in the United States is a result of the deregulation of the system. The Conservative government is doing the same thing here. That is one of our major concerns. We are being told that all we want to do is make proposals that will only delay matters. Yet the amendment we proposed was quite simple.

We did not have a lot of time to debate it because the government once again decided to move quickly and push things through.

We had asked the minister, when he makes a decision, that he not just look at the criteria that are good for the Canadian financial system—that is important and we would not take that away—but that he also look at the criteria that are good for the Canadian economy. Unfortunately, that amendment was rejected. It is very hard to understand why.

When a Canadian bank takes over a foreign bank, some people think that this must also be good for the Canadian economy. Unfortunately, our amendment was rejected. It is very difficult to understand. I wonder what this means. I have to interpret this myself, because the government was not very clear on this subject. All that matters to this government is the financial system, not the Canadian economy. Yet they cannot be separated. It is important to discuss the financial system, but we must also discuss the impact that it can have on the Canadian economy. In a way, this shows that the government wants to hold on to power and wants to make a decision its own way, once again without explaining why it is moving in this direction. With this bill, the Conservative government is again showing its lack of transparency. It wants to politicize the matter and does not want to explain to Canadians what is happening in this regard. We asked for further information, but unfortunately we did not receive it.

I will now address another matter. We know that this bill had to be introduced. However, the government is once again being criticized for its lack of vision because it had a golden opportunity to reform the banking system. I do not think that this government can pat itself on the back for that. In addition to reviewing the banks and financial institutions, the impact on consumers should have been considered as well.

We now know that the government's job creation strategy is to give tax breaks to big business, including the banks. Does that create jobs? It remains to be seen. We do not believe it does, as indicated by the statistics on job losses and unemployment. Despite this, banks have not lowered their interest rates, even though the prime rate is at an historic low. And that is not all. After receiving tax breaks and making billions of dollars in profit, the banks are now increasing their fees.

Look at what is happening. Consumers have contracts with banks or have bank accounts. They borrow money and proceed as usual. It is a bit like the gas situation. We cannot get out of it. People are a bit dependent on the system, on the bank. The bank can do what it wants. Despite the fact that interest rates are very low, credit rates have not changed at all. Who is reaping the benefits? The banks.

Banks are increasing their fees and it is not consumers who are benefiting. That is what we are telling the government. The members opposite need to be aware of this because they too represent constituents who are consumers. The government must not be so single-minded. It makes for a very unbalanced approach. Once again, this is a problem that we have with the government, that it is too single-minded and is not looking at how what it is doing will affect the entire system, whether we are talking about tax cuts for large corporations or the banking reform that it may or may not implement. This affects consumers. We are asking the government to take a broader view of the situation and to look at what is happening in this respect.

If we were to ask any of the members opposite whether any of their constituents are being negatively affected by this, I think that they would say yes. We do not even need to ask. We simply need to look at the figures. The OECD will tell them, and so will economists. Household debt is a problem. It has reached a record high of 151% in Canada. This means that for every dollar a family earns, it owes $1.51. The record level of household debt is a problem. Yet, unfortunately, the government is not doing anything about it. This would have been a good time to do something, but unfortunately, once again, the government is demonstrating its complete lack of vision. This is a missed opportunity.

This government is bragging and saying that the system is working well and that everything is fine, but I think that the government must be really out of touch if it does not see that people are suffering. This would have been a good opportunity to help consumers and families. Unfortunately, the government did nothing in this respect.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Mr. Speaker, what an interesting debate we are having here, where the NDP are claiming to be Liberals and Liberals NDP. The leader of the NDP was a Liberal and the leader of the Liberals was an NDP. I am confused about it. I am just happy to be a Conservative.

Mr. Speaker, I am pleased to speak today to the House, and to all Canadians, on Bill S-5, the financial system review act. Bill S-5 would make improvements to one of the key components of Canada's economic success, our financial system.

Before I continue, I just want to remind members of the opposition that, unlike in Europe and the United States, not a single Canadian bank collapsed or had to be bailed out by Canadian taxpayers. The reason for this is our strong, stable and flexible financial system. Canada's well regulated financial system is universally recognized as one of the primary reasons for Canada's swift recovery following the global crisis.

Recently, an independent Financial Stability Board peer review validated this claim by praising actions taken by the Conservative government to ensure that Canada's financial system remains strong, enabling Canada to emerge from the global financial crisis in a position of strength.

In its review, the board highlighted the resilience of Canada's financial system, calling it a model for other countries around the world. The board's review said the strength of Canada's economy and its financial system meant that no Canadian financial institution failed or required government support in the form of a capital injection or debt guarantee during the global financial crisis. The report said:

The good performance of the financial system both during and after the crisis provides further evidence of its soundness and resilience.

As the board's report also noted, since 2008, the Conservative government has taken steps to make our financial system more stable, reduce systemic risks and ensure that we have the flexibility to protect the financial institutions when needed. The report went further, citing Canada as an example that other jurisdictions should emulate in developing financial sector policy.

Clearly, these sentiments are felt by jurisdictions around the world. A recent report from the United States congressional research service identified our financial system as a model for others to build on. 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.

British Prime Minister, David Cameron, praised our financial system. He said:

[Canada's] economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.

The praise goes even further. Numerous observers have noticed and paid tribute to Canada's well regulated financial sector. For example, over the past four years the World Economic Forum has ranked our banking system as the soundest in the world. Forbes magazine has ranked Canada number one in its annual review of best countries to do business. Five Canadian financial institutions were named to Bloomberg's most recent list of the world's strongest banks. That is more than any other country.

At the same time that our system is receiving international praise, we cannot be complacent. Bill S-5 would make necessary improvements to Canada's financial system so it would continue to be the envy of the world.

As Canadians, we are justifiably proud of our financial services sector, which employs over 750,000 people in well paying jobs, represents about 7% of Canada's GDP and is a leader in the use of information technology. We are the world leaders in this field. We aim to keep it that way. It is for this reason that the government has the long established practice of reviewing the statutes governing federally regulated financial institutions every five years. This mandatory review helps to maintain the safety and soundness of our sector.

How would this legislation accomplish these goals? Under the proposed legislation, certain larger foreign acquisitions of financial institutions would need the approval of the Minister of Finance. This merely reinstates some of the historical oversight provisions repealed by previous Liberal governments in early 2001. In practice, it would require ministerial approval if a federally regulated financial institution were to acquire a major foreign entity which significantly increased its assets by more than 10%.

This is a move supported, not only by industry stakeholders, but also by Julie Dickson, the Superintendent of Financial Institutions.

The legislation would also reflect the natural growth of the banking sector by increasing the large bank ownership threshold from $8 billion today, to $12 billion. This would have no impact on Canada's five large banks. They would continue to be subject to widely held requirements. This change would merely reflect growth in our financial sector.

Bill S-5 would also build on this government's proven record of improving consumer protection by making important changes to federal financial institution statutes. In particular, the bill would increase the maximum administrative penalty that the Financial Consumer Agency of Canada could levy from $200,000 to $500,000. It would confirm that Canadians, including bank customers, would be able to cash government cheques of amounts less than $1,500 free of charge at any bank in Canada.

The legislation would also demonstrate this government's continuing support for credit unions. Building on the federal credit union charter, Bill S-5 would amend the Canadian Payments Act so credit unions would fall within the co-operatives class in the act rather than the bank class.

Speaking to this change, the Credit Union Central of Canada, which is the national association of credit unions in Canada, had this to say:

Placing the federal credit union in the cooperatives class will preserve and strengthen the credit union system representation at the CPA. It will ensure that a federal credit union will be represented by a director, who speaks for the interests of cooperative financial institutions in CPA matters.

In short, this change would promote a level playing field within the financial sector, which would generate competition in the industry, which would ensure a stronger, more stable system overall. Bill S-5 would also include a number of technical refinements to ensure the effective implementation of what is referred to as a bridge bank tool. This would build on our government's commitment in the 2009 budget to strengthen the authorities of the Canada Deposit Insurance Corporation, to effectively preserve the critical functions of a financial institution in dire straits and to help maintain stability in the financial system.

I would like to finish by saying that it is constant improvements like those included in Bill S-5 that make Canada's financial system the envy of the world. Surely, even the members of the opposition can see that it is the routine fine tuning of Canada's financial institution legislation that would keep our financial system strong, stable and flexible for Canadians. On that note, I urge the members of the opposition to stand and support the swift passage of this very important legislation.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I appreciate the opportunity to address Bill S-5, a very important bill. It has overwhelming support because there is no doubt that all of us recognize the importance of the banking industry.

I will take a couple of different perspectives, one dealing with the consumer's point of view and the other is a macro perspective with regard to borrowing money generally and how important our banking industry is.

First and foremost, from a consumer point of view, one of the things I have known over the years is that consumers of all ages are very dependent on our banking industry. We need to do what we can to protect the interests of consumers, and there is a lot that still can be done in order to address the needs of consumers.

Quite often, government policies have had positive impacts and some have had negative impacts. The biggest negative impact, one for which the government can take full credit, is when it increased the length of a mortgage up to 40 years with no down payment. There was a great deal of concern when the government came up with that bold, some would suggest dumb, initiative because at the end of the day people are concerned about consumer debt and those types of obligations. Forty years is a great deal of time and it is a heck of a way to tie someone to having to make ongoing monthly payments.

When a government sets policies, it needs to be aware of the profound impact they will have at the consumer level. When we look at past consumer debt, we see that it has continued to grow. One of my colleagues mentioned that part of the problem was the type of employment. For many individuals it can be fairly difficult to get the type of full-time employment at the level of pay they were receiving previously and that has put a good number of consumers in very difficult positions. There are many individuals who have fixed incomes and there is a profound impact when banks make decisions that ultimately work against consumers. There are issues concerning credit card charges and banking fee charges at ATMs.

The industry has grown tremendously over the last decade or so and there needs to be more scrutiny on the types of fees that are being levied against consumers. We need to be aware of what is taking place and there should be open debate. I was encouraged when we heard that the Minister of Finance has some interest in terms of consulting with Canadians. However, to what degree he is actually listening to them is another issue. I suggest that we need to connect with average Canadians to get a better sense of the types of hurdles they face when they are in need of money and banking services. Whether they are simple chequing or savings accounts, mortgages, loans or lines of credit, these are all very important issues that affect the day-in and day-out lives of Canadians across our country.

One of the questions I asked the government was with regard to credit unions. I believe that credit unions have picked up a lot of the slack where banks have been falling short. The best example I can give of that is in Winnipeg North and constituencies across this land where bank branch offices are closing and quite often it will be some sort of co-operative or credit union that fills in. Most recently, the Assiniboine Credit Union was established in the traditional north end of Winnipeg.

When bank branch offices close, it has a significant impact on the community because banking is not really optional, especially for individuals who are on fixed incomes, in particular for seniors. Having access to a bank is very important.

When we talk about banking, insurance and the legislation we have now, we should try to highlight the alternatives to mainstream banking, the role they could be playing and what we might be able to do to enhance that role, whether it is further guarantees of deposits or whatever else it might be. The point is that the government needs to demonstrate some leadership on this issue.

I mentioned the macro level in regard to this bill. The actual money we have, the hard currency, coins and bills, is only a small percentage of the entire money supply that Canada has. A vast majority of that money supply goes through our banking and financial institutions, which is why we have a serious responsibility to monitor, regulate and ensure the long-term viability and integrity of our banking industry.

In my short time in the House of Commons, I have found it interesting how both the government and the New Democrats like to assume credit for things that I would suggest is not necessarily theirs to take. It was not long ago when banks around the world were crashing and collapsing. That was because during the 1990s a great deal of pressure was put on the banking industry around the world to lobby governments to deregulate. The argument was that it would provide more opportunities for the banks. Many countries bought into that and it was a heated debate here in Canada. I was at the Manitoba legislature at the time and it was very much a heated debate. I remember meeting with banking representatives who talked about the possibility of amalgamating into larger banks and the benefits of deregulation.

However, fortunately for Canadians, we had Jean Chrétien and Paul Martin, individuals for whom I have a tremendous amount of respect. Most important, it was a very strong majority government with a healthy minister of finance and prime minister at the time who said that we needed to protect the industry and that we needed to ensure those regulations were in place and maintained. That is the reason the banking industry today is the envy of the world.

Speaker after speaker from the Conservative side will acknowledge that Canada is the envy of the world when it comes to the banking industry as a whole. The only part they miss, because they want to assume some of the credit for that, is that it had very little to do with the current Prime Minister. The credit should be going to the former prime minister, Jean Chrétien, the minister of finance at the time, whether it was Mr. Paul Martin or the current deputy leader of the Liberal Party, and those individuals who are still here in the House who participated in that government. There was a great deal of pressure at that time to deregulate. If we a look at the position of the Conservative Party, which was the Alliance Party or Reform Party at that time, it opposed it. It wanted to move toward deregulation. I am glad the Conservatives have had that conversion and now they are very supportive of it.

I thought it was kind of a different type of twist when a New Democratic member of Parliament spoke earlier today trying to assume credit for the banking industry here in Canada, which was a real stretch of the imagination. However, at the end of the day, whether they like it or not, members of the NDP played no role in terms of ensuring what type of a banking industry we have here today.

Hopefully there will be other opportunities to provide comment on that particular issue, if the question does come up. I am more than happy to explain why it is I make that statement.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, I listened with great interest to my colleague's remarks today on Bill S-5.

First, in recent weeks when the Minister of State for Finance appeared before the finance committee, he acknowledged that in fact credit for the prudential strength of the Canadian banking system belongs to more than one government. He acknowledged that the stewardship of the previous Liberal government had contributed to the governance of the Canadian banking system, and I am being modest when I say that.

Would the hon. member agree that in fact the Liberal government of Mr. Chrétien and Mr. Martin was responsible for the decisions at the time in the nineties, which resulted in not following the global trend to deregulation, which led to the challenges and the disasters faced by other countries in their financial services sector and the resultant relative strength here in Canada? Would the hon. member agree it was those decisions during that period of time that helped us today?

[Greg Rickford, Conservative, Parliamentary Secretary to the Minister of Aboriginal Affairs and Northern Development]

Mr. Speaker, I want to take this opportunity to thank the constituents of the great Kenora riding for giving me the opportunity to speak on their behalf with respect to Bill S-5.

This is an obligatory and largely routine piece of legislation, but it is essential for the continued strength and security of Canada's financial system that our constituents rely on every day, be it to cash a cheque, to apply for a mortgage or to buy that first home.

As background for all Canadians, legislation governing federally regulated financial institutions is reviewed every five years by the government to ensure the stability of the Canadian financial system. The last legislative review was completed in 2007 through Bill C-37 in the 39th Parliament. In 2001, a similar review was completed with Bill C-8 in the 37th Parliament.

I should also let the House and our constituents know that it is crucial that today's act be passed by April 20, 2012. This is the legislated sunset date, and passage must be achieved by then to allow the Canadian financial system to function in the manner that it has been doing.

In September 2010, the present five-year review began. This was kicked-off with an open and public consultation process. The Minister of Finance invited all Canadians to give their views on how to improve the financial system. Throughout that consultation, many Canadians gave their ideas and suggestions on how to further reinforce and strengthen our financial system. Indeed, much of that comment is reflected within the financial system review act that we are debating today. To be sure, today's act takes into consideration the feedback from industry groups, consumer groups and other Canadians to make measured, technical adjustments to strengthen Canada's regulatory framework.

I would also draw the attention of Canadians to the fact that today's act has already been reviewed and approved by the Senate banking, trade and commerce committee as well as the House of Commons finance committee and the great work of those members. Both committees undertook a comprehensive and efficient review of this act. It included talking to organizations like the Financial Consumer Agency of Canada, the Credit Union Central of Canada, the Office of the Superintendent of Financial Institutions Canada, the Canadian Life and Health Insurance Association, the Canadian Bankers Association and the Canadian Payments Association. This was an impressive catchment of stakeholders.

I want to thank each of the witnesses who spoke on the financial system review act in front of both committees for providing their important input. I will note that witnesses, while acknowledging the act's technical nature, were very supportive of it overall. For example, the Canadian Life and Health Insurance Association declared, “Bill S-5 represents a welcome fine-tuning of the various financial institution statutes”.

At this time I will quickly review some of the initiatives taken in today's act.

Once more, even though the majority of these initiatives are largely technical, they are indispensable for the security of Canada's financial system. That is why today's act would make the following alterations: modernizing legislation to uphold financial stability and guarantee that Canada's financial institutions continue to operate in a competitive, efficient, effective and stable environment; improving the consumer protection framework, including expanding powers for the Financial Consumer Agency of Canada to better protect consumers; and reducing the red tape and regulatory burden on financial institutions.

Other measures contained in today's act include the following: clarifying that all Canadians, including bank customers, are able to cash government cheques under $1,500 free of charge at any bank in Canada; removing duplicative disclosure requirements for federally regulated insurance companies; offering adjustable policies in foreign jurisdictions, thus cutting their red tape burden; encouraging competition and innovation by allowing co-operative credit associations to provide technology services to a broader market; and improving the capacity of regulators to efficiently share information with international counterparts while respecting the privacy of clients.

There are more, but I want to emphasize that the significance of this act provides for a safe and secure financial system.

It is a system that has endured for Canadians during the recent global economic crisis that saw the failure of some of the best known banks around the world. Indeed, in recent years Canadians have recognized just how important a sound financial banking system really is for our country's economy.

Undeniably our system has been a model for countries around the globe. Canada proudly did not have to bail out, nationalize or buy equity stakes in its banks, in stark contrast to the U.S., the United Kingdom and countries in Europe. In fact the World Economic Forum has ranked Canada's financial system as the soundest in the world for four straight years. Our safe and secure financial system is envied the world over.

It was remarked in the well-known publication Forbes, “With no bailouts, it is the soundest system in the world, marked by steady and responsible continuation of lending and profits”.

Constantine Passaris, a University of New Brunswick economics professor, adds:

The financial tsunami of 2008 swept around the world with devastating economic consequences. Banks proved to be particularly vulnerable to the credit crunch that followed....

There is no denying that our Canadian banks proved significantly resilient....

The Canadian way is to record our national achievements in a low-key and understated manner. There is one economic achievement however, that has made the world stand up and notice. Indeed, in this case, we cannot hide from the international spotlight and we can proudly accept the global applause....

We appreciate these comments. Indeed, many of the financial sector solutions now promoted internationally are modelled on our Canadian system. With today's bill, Canada's financial system will remain secure and serve as a fundamental source of strength for Canada's economy moving forward.

The financial system is one of the most important aspects of Canada's economy and jobs, totalling approximately 7% of Canada's economy. What is more, it provides employment, good, well-paying jobs for more than 750,000 Canadians. Our financial sector also provides financing to the housing markets and other markets that rely on borrowing, and in that respect the financial services sector is a significant presence in the day-to-day lives of all Canadians.

The Financial System Review Act will help support a proven framework that benefits all Canadians who use or are impacted by the financial services sector.

The long established practice of regularly reviewing the financial institution regulatory framework is also a distinctive and positive practice that sets Canada apart from the world. Indeed, it has been vital to ensuring the stability of the sector. All Canadians would acknowledge the significance of frequently examining how we can better ensure our financial system's safety and soundness for the benefit of all Canadians. Today's bill accomplishes just that.

I encourage members to support today's bill and ensure it passes in a timely manner. I appreciate having the occasion to support this important piece of legislation.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mr. Speaker, I am pleased to speak to Bill S-5, the financial system review act, at third reading.

As members are aware, the recent financial crisis tested the skills of many: policy-makers, regulators, bankers and investors. However, it also served to demonstrate the overall soundness of our financial system.

It was no accident that Canada escaped the worst of the global financial crisis with no bank failures or forced bailouts by taxpayers. Our legislative framework was built to withstand such shocks with high prudential standards, excellent regulation supervision, a flexible monetary system and good mechanisms to ensure financial stability.

However, when faced with such unprecedented market volatility in 2008-09, our government went further by acting quickly to improve this excellent framework, boost financial stability and ensure access to credit during a liquidity crunch.

Bill S-5 will build on the existing strengths of Canada's financial system and fine-tune a framework that has proven to be both efficient and effective. In the words of Canadian Life and Health Insurance Association Inc., Bill S-5 represents a welcome fine-tuning of the various financial institution statutes.

How will Bill S-5 achieve this? The bill will improve the ability of regulators to share information efficiently with their international counterparts. This will help fulfill our G8 commitments at a time when financial institutions increasingly operate on a global scale. It will ensure effective supervision and regulation across the borders.

Bill S-5 also proposes to improve the consumer protection framework, including enhancing the supervisory powers of the Financial Consumer Agency of Canada, FCAC, and increasing the maximum fine that would be levelled by the FCAC for the violation of a consumer provision of its act to make it consistent with administrative monetary penalties levied by other regulatory agencies.

The FCAC is mandated with ensuring that the federally regulated financial institutions adhere to the consumer provisions of the legislation governing financial institutions and their public commitments.

The FCAC is also the government's lead agency on financial education and literacy, and has moved forward with an array of excellent incentives in recent years. The agency has developed innovative tools to help Canadians, such as a mortgage calculator that quickly determines mortgage payments and the potential savings resulting from early payments. It has also created innovative online information to help consumers shop for the most suitable credit card and banking packages for their needs.

Our government believes Canadian consumers deserve accessible and effective financial services that meet the needs of consumers and operate in the public interest. That is why in budget 2010 we announced we would take action to prohibit negative option billing and require timelier access to funds.

The regulations will come into force this August and will require federally regulated financial institutions to obtain consumers' express consent before providing a new optional product or service. This will allow Canadians to receive all required information on the optional product or service to help them make the financial decisions that are best for their circumstances.

The regulations will also reduce the maximum cheque hold period for retail depositors and small and medium size businesses, and will provide retail depositors faster access to the first $100 deposited by cheque. Shorter cheque hold periods and faster access to funds will benefit Canadians by enabling them to manage their personal finances more effectively. After all, well-served and confident consumers contribute to the well-functioning financial markets and the economy.

Indeed, in the words of a recent Globe and Mail editorial:

Of the many things that frustrate the retail customers of Canada's federally regulated banks, one of the most egregious has been the practice of putting a hold of as many as seven days on deposited cheques. Now, thanks to new measures recently...announced...that upsetting practice and others are coming to an end.

[T]he government has shown a commitment to its promise to improve banking regulations in Canadians' favour. This is welcome news.

Similarly, in 2009, as part of the measures to improve access to financing, the government announced that it would bring forward measures to help consumers of financial products, including launching a task force on financial literacy.

The task force on financial literacy was mandated to provide advice and recommendations to the Minister of Finance on a national strategy to strengthen the financial literacy of Canadians. In support of the recommendations of the task force on financial literacy and delivering on a commitment from budget 2011, the government introduced Bill C-28, the financial literacy leader act. Bill C-28, a piece of legislation which I urge all members of the House to support, would provide for the appointment of a financial literacy leader who would collaborate and coordinate with stakeholders to strengthen the financial literacy of Canadians.

Canada's national strategy on financial literacy will support the excellent efforts under way throughout the country and empower Canadians to act knowledgeably and with confidence in managing their personal financial affairs.

I would be remiss if I closed without quickly reviewing other important initiatives in Bill S-5. They include: updating financial institutions legislation to promote financial stability and ensure Canada's financial institutions continue to operate in a competitive, effective and stable environment; improving efficiency by reducing the administrative burden on financial institutions and adding regulatory flexibility; promoting competition and innovation by enabling co-operative credit associations to provide technology service to a broader market; and reducing the administrative burden for federally regulated insurance companies offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements.

In summary, the financial system review act provides for a framework that will benefit all participants in the financial sector, financial institutions as well as all Canadians. It maintains the long-standing 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.

In fact, U.K. Prime Minister David Cameron said it best:

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.

He went on to say that our economic leadership has helped the Canadian economy to weather the global storms far better than many of our international competitors.

Clearly, this government recognizes that it must continually consider what regulatory changes are needed to ensure that the fundamentals of the Canadian economy remain sound, that consumers are well protected, and that Canada continues to be an attractive place to do business in today's competitive global economy. This is precisely what the government has done with this bill.

On that note, I urge members of the opposition to stand up and support the swift passage of Bill S-5. To vote against the bill would not just be a vote against the Canadian economy, but a vote against the Canadian consumer.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Madam Speaker, I want to be clear. This is report stage of the bill and not third reading as has been suggested by some members on the government side. We are now dealing with an amendment to the bill. It is a very wise and reasonable amendment introduced by my colleague, the member for Burnaby—New Westminster, and I thank him for that.

The amendment to Bill S-5 would delete clause 212 with respect to paragraph 39.1. This clause would give statutory immunity to the Office of the Superintendent of Financial Institutions in respect to any civil proceedings. This is an important amendment to which we need to pay attention. The immunity resulting from the deletion of this clause would negatively impact the office of transparency and accountability to the Canadian public. We should all be concerned about that. Time lost as a result of frivolous claims, as the government has suggested, does not justify such a radical measure.

In the process of trying to remain transparent, open, reasonable and independent, we need to allow that there will be the odd complaint and submission that may not end up to see the light of day or may not have basis. However, every Canadian who deals with the banking system or any government supervised and regulated system or bureaucracy should have the opportunity to bring their concerns forward. It is not up to us to decide what complaint is illegitimate until we have the opportunity to give those concerns a thoughtful review through reasonable process. My concern is the government is applying immunity to this office and to the officer simply because there are not enough complaints to warrant the attention.

Finally, this immunity, as suggested, would at best amount to an abdication of the superintendent's responsibility and, at worse, to covering up serious errors that could have been avoided.

The point of the amendment is to deal with the question of transparency and accountability. I urge all members opposite to consider the value of ensuring we do not dismiss out of hand any concerns that may be brought forward by Canadians in relation to the Office of the Superintendent of Financial Institutions.

My colleague, the member for Burnaby—New Westminster and finance critic for the opposition, sponsored this amendment. He also indicated early on, as we did at second reading debate, that the opposition would support Bill S-5. We have given it some serious consideration, we have examined it and there is nothing particularly untoward, although we think the amendment is needed to address a flaw that needs to be corrected.

We also introduced amendments at committee that we thought would add to the bill. My colleagues and I have spoken at second reading and at committee about the missed opportunity.

The law provided that we needed to have this review conducted by April 20 to comply with the Bank Act. We suggested on numerous occasions that this provided an opportunity for the government, if it were serious about important issues like consumer protection, to speak with Canadians about their concerns as they related to the Bank Act and to make changes that were necessary.

We brought up a number of things. Whether it is outrageously high interest rates charged on credit cards, or banking charges that continue to go up, or the various ways that within the system consumers are being nickel and dimed out of tens of thousands of dollars every year, there are ways for us in the House, through this review, to properly protect those consumers and ensure the financial institutions covered by the act are acting properly. Unfortunately, we missed that opportunity. I indicated to constituents who brought it to my attention that I was sorry the government missed this opportunity.

Also, I am disappointed that once again the government has not engaged in as fulsome a process of consultation as it could have. Frankly, the consultation was truncated. It was not transparent. The government did not hold public hearings. It was by invitation only. We heard the government had 30 representations. Some of those were not even made public, not even shared with us on the website. Some organizations voluntarily agreed that their submissions should be public and made them so, but the government held consultations that were kept private. That is unfortunate.

I do not think that is necessary. We can be much more forthcoming and trusting of Canadians. We can recognize that Canadians have a great deal to offer to discussions like this. We think to ourselves that the whole issue of financial institutions and the regulation of the banking system is technical and above the average Canadian's head.

If it had not been for Canadians understanding the consequences of the deregulation and of allowing foreign takeovers of the banking industry that was being proposed by the Martin government, if it were not for the outcry of Canadians, whom we in the NDP caucus and others try to represent in debate, we would have gone down a perilous track that would have seen us follow far too closely the problems we saw in 2008, and beyond, in the U.S., Iceland and in far too many European countries. There the banking systems have been deregulated. We have seen the kind of turmoil that has been created as a result of the lack of adequate oversight.

It is because I have that kind of confidence and faith in my constituents and Canadians to understand the value and technical nature of issues like this that I get perturbed by the government members or members of the third party who were once in government. They want to take credit for the nature of the banking system that has developed over the years. However, it was because of experience and the wishes of Canadians and their representatives in the House that it be strongly regulated and protected from the vagaries of global competition and foreign ownership and that it was in much more stable shape in 2008 and able to considerably weather the storm. Although let us not forget that the Government of Canada did spend $75 billion to buy mortgages that were threatened by Canada Mortgage and Housing.

We need to give Canadians more credit for their knowledge on issues as important as the Bank Act.

[Jay Aspin, Conservative, Nipissing—Timiskaming, ON]

Madam Speaker, I am pleased to speak to the third and final reading of the financial system review act, Bill S-5.

I will begin by saying that Bill S-5 is important to the strength of Canada's financial system and I will briefly describe how it came about.

Every five years, the government conducts a review of the policy framework governing federally regulated financial institutions. The previous legislation review was completed in 2007. The present five year review was launched in September 2010 when the finance minister invited Canadians to share their views on improving our financial system by way of an open consultation process. This five year review process helps guarantee Canada keeps its status as a global leader in financial services and it maintains the soundness of the sector.

A key priority for our Conservative government is ensuring Canadians keep on having a strong and secure financial system and one that serves as a model for countries around the globe. Today's bill would ensure that continues to be the case. In fact, the World Economic Forum recently ranked Canada as having the soundest banks in the world for the fourth year in a row. Both in Canada and internationally, this strength has been widely recognized by independent observers.

Peter Worthington, noted Toronto Sun columnist, declared:

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

An Ottawa Citizen editorial reads:

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.

However, as I mentioned earlier, this recognition stretches well beyond Canada's shores, as it is repeated around the globe.

David Cameron, Britain's prime minister, has heralded our system by saying:

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. ... Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.

The Irish Times has applauded it by saying:

Canada’s policy of fiscal discipline and strict banking supervision was a reason why it was one of the world’s strongest performers during the recession.

The Economist, the renowned magazine, has recently asserted that “Canada has had an easier time than most during the recently global recession, in part, because of a conservative and well-regulated banking system”.

The financial ratings agency Fitch, when reviewing Canada's top tier AAA credit rating, focused its assessment on the fact that “Canada's banks proved more resilient than many peers thanks to a conservative regulation and supervision environment.

I share and welcome that high praise.

Furthermore, the financial services sector has a significant role in the health of the Canadian economy. Not only does it represent 7% of Canada's GDP, it is also responsible for over 750,000 good, well-paying jobs. It also plays a distinctive, indispensable function in fuelling the growth, nurturing financial stability and safeguarding savings, all of which are necessary for the success of Canada's economy.

Today's bill would contribute to the continued strength of Canada's financial system. Indeed, the mandatory five year review that shaped today's bill is key to helping set apart Canada from almost all other countries. This practice makes certain that the laws governing our financial system are reviewed and updated on a regular basis, ensuring they are responsive to an ever-changing global marketplace.

In a similar vein, the global financial crisis of the past few years has underlined why a stable and well-functioning housing market is necessary for the financial system and overall economy.

While Canada's financial system remains sound, well-capitalized and less leveraged than its international counterparts, our government proactively acted to bolster the stability in our housing market by adjusting our mortgage insurance guarantee framework. This included reducing the maximum amortization period for government-backed insured mortgages with loan-to-value ratios greater than 80% from 35 years to 30 years.

As well, we withdrew government insurance from home equity lines of credit and lowered reduced borrowing limits in refinancing.

Independent observers and economists have roundly applauded such adjustments. For instance, a recent Waterloo Region Record editorial said, “The federal government has done the right thing in tightening up the rules for mortgages in this country”. A Calgary Herald editorial added, “...the right direction...it is good to see the government continue to be vigilant on this file”.

Without a doubt, our Conservative government is working hard renewing many key fundamentals of our financial system and strengthening it with new tools.

Through the financial system review act, we are modernizing, fine-tuning and harmonizing the existing framework to ensure it keeps the high level of performance. Canadians know and understand that the present framework that has made our financial system the soundest in the world functions well.

That is why the financial system review act seeks to build on, not rebuild, that solid foundation with a proposed legislative package that includes measures to: better focus financial institutions legislation to support financial stability and guarantee Canada's financial institutions keep operating in a competitive, effective and stable environment; fine-tune the consumer protection framework, including further improving the Financial Consumer Agency of Canada's powers; and reduce the administrative red tape on financial institutions to enhance efficiency and add regulatory flexibility.

Other measures contained in today's bill include: increasing the capability of regulators to effectively share information in a timely manner with international counterparts while respecting privacy laws; guaranteeing the right to cash government cheques under $1,500 free of charge at any bank in Canada to all Canadians; enabling co-operative credit associations to provide technology services to a broader market to promote competition and innovation; and much more.

I am happy to note that many public interest groups have given their strong endorsement of today's bill. For instance, the Canadian Life and Health Insurance Association declared:

It is important that legislation be periodically reviewed so that it keeps up with the changing environment.

The industry welcomes a number of measures outlined in...[the financial services review act].

Today's bill would strengthen stability in the financial sector, improve the consumer protection framework and modify the regulatory framework to new developments. It provides for a renewed structure that will benefit all Canadians.

We recognize that, to remain a global model of stability and ensure the soundness of the financial sector for all Canadians, routinely reviewing what regulatory changes are necessary to foster competitiveness is essential.

The financial system review act upholds the long-standing tradition of ensuring standard reviews of the regulatory framework for financial institutions to keep a stable and secure financial sector. For that reason, I urge all members to support for all Canadians today's bill and the continued safety and security of our shared financial system.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Madam Speaker, I want to remind the House that it was this Minister of Finance who, when pressed about imposing taxes on all financial transactions around the world, led the charge in telling governments around the world that would not be a good idea in financially difficult times. Therefore, we certainly trust this Minister of Finance to do the right thing, not only in the interests of this country but also around the world.

I am grateful to have this opportunity to lend my voice to today's debate on Bill S-5, the financial system review act.

In many ways, today's act can be seen as fine-tuning an already mature, stable and sophisticated financial system. As members are aware, our financial sector has been the envy of the world during the recent worldwide economic crisis and this legislation continues to build on and enhance an already strong system.

By way of background, I would note that the government reviews all legislation governing federally regulated financial institutions every five years, to ensure the stability of the Canadian financial services sector. Today's act is the product of the latest five-year review, which began in September 2010 with an open, public consultation. It is imperative that this act be passed by early April as there is a sunset clause in the existing legislation. The four principle acts that govern the financial sector, the Bank Act, the Insurance Companies Act, the Trust and Loan Companies Act and the Cooperative Credit Associations Act, all have their sunset dates renewed for five years.

Bill S-5 also contains changes to federal statutes such as the Financial Consumer Agency of Canada Act, the Office of the Superintendent of Financial Institutions Act, the Bank of Canada Act, the Canada Deposit Insurance Corporation Act and the Canadian Payments Act.

Not so long ago Canada's financial system was considered too conservative and small to be doing business on a global stage, but not any more. Now Canada is recognized and celebrated beyond our borders for having a strong and stable financial sector. As we all know, over the past four years the World Economic Forum has ranked our banking system as the soundest in the world. Forbes magazine has ranked Canada as number one in its annual review of the best countries to do business. The IMF as well has heralded Canada's financial system and its oversight. It states:

The Canadian banking system was able to withstand the international crisis well, and the authorities have continued to monitor risks closely.

We can be rightfully proud of the reputation we have in this area, but that does not allow us to rest on our laurels. We must constantly update our regulations, and Bill S-5 reflects our government's commitment to this effect. Growth in the industry necessitates constant diligence within our regulations and laws.

Canada's financial sector is now operating on a truly global scale, diversifying its customer base and taking best practices to countries around the world. The Prime Minister's recent tour of China promoting our economic ties there provides an excellent and timely example of this outward growth and the Canadian financial system's increasing influence in that Pacific economic superpower. While in Beijing recently, the Prime Minister announced the conclusion of negotiations toward a Canada–China foreign investment promotion and protection agreement. This agreement is a treaty designed to promote Canadian investment abroad through legally binding provisions as well as to promote foreign investment in Canada. By ensuring greater protection against discriminatory and arbitrary practices and enhancing predictability of the market's policy framework, the agreement allows investors to invest with greater confidence. Canada has consistently supported strong, rules-based investment through the negotiation of such agreements. Once fully implemented, the Canada–China foreign investment promotion and protection agreement will facilitate investment flows, contributing to job creation and economic growth in Canada. China is now Canada's second largest merchandise trading partner and our third largest export market.

Trade in financial services has been a key part of that growth and can be expected to grow continually in the years to come. Direct investment between Canada and China has increased substantially in recent years and there has been progress with respect to portfolio investment, as well as under China's qualified domestic institutional investor and qualified foreign institutional investor programs.

Just as they are doing elsewhere in the world, Canada's financial institutions are increasing their presence in China. For example, Scotiabank recently won a bid to purchase a key stake in a bank, a major Chinese financial institution with more than four million customers. In 2010, the Bank of Montreal became the first Canadian bank and one of only three North American banks to incorporate in China. In 2010, Sun Life Everbright more that tripled its reported gross life insurance business in China through its 19 branches. The company provides insurance, covering over nine million customers. In 2011, Manulife announced licences for its joint venture, Manulife-Sinochem Life Insurance Company, to enter five new cities in China, bringing its total presence to 49 cities across 12 provinces with a total population of 350 million people. Last year, the TSX opened offices in Beijing to advance Canada's capital markets. Last year, Power Corporation of Canada purchased a 10% stake in the China Asset Management Company, the country's largest asset manager.

Chinese financial institutions are also coming to Canada to invest because of our pro-trade environment. Indeed, last year, the China Investment Corporation announced the opening of a Toronto office, representing the first permanent foreign location for this huge Chinese financial institution. In the words of the president of the China Investment Corporation:

There are countries with comparable economic characteristics to Canada, but with a lot less friendly environment. In our dealings with the Canadian government, various parts of the government, with the business people, we feel that it’s a lot more congenial to our investments.

Canada's financial services industry is merely one example of an industry whose horizons have broadened significantly. As the Prime Minister's recent visit made clear, these efforts are reaping results.

Here at home, we are making the necessary adjustments to foster this growth. That is why today's bill would reduce the administrative burden. For example, federally regulated insurance companies offering adjustable policies in foreign jurisdictions would be relieved from providing duplicate disclosure requirements.

In the years to come, though it is already an attractive place for trade and investment, Canada will become an increasingly attractive choice for trade and investment, including financial services.

Being a prime choice for trade and investment does not happen easily, but here in Canada it happens for several reasons. First, we have relatively solid economic fundamentals compared to most of our peers, especially among the G7. Over 610,000 more Canadians are working today than when the recession ended, resulting in the strongest rate of employment growth by far among the G7 countries. Even better, nine of ten positions created since July 2009 have been full-time positions, with close to 80% of those being in the private sector. Real GDP growth is now significantly above pre-recession levels, the best performance in the G7. We have also reduced red tape, and we continue to promote free trade through not only our tariff changes but also our free trade agreements.

I am proud that our Conservative government has signed free trade agreements with nine countries and that we are in negotiations with an additional 50 countries, including India and the European Union. As chair of the Standing Committee on Foreign Affairs and International Development and a former member of the international trade committee, I have seen first hand how these trade agreements strengthen our economy and provide Canada with a greater voice on the global stage.

I am also proud of our low tax plan, which has resulted in Canada now having an overall tax rate on new business investment substantially lower than that in any other G7 country, and below the average of the member countries of the OECD. This low tax plan is about making Canada a strong destination for investment and jobs, not driving businesses and jobs away with massive tax hikes like the NDP proposes.

Bill S-5 will ensure that our financial system remains a critical element of our success and maintains its place in the ranks of global leaders.

If we look at what the government has been doing over the last number of years, as I mentioned earlier, lower taxes and reduced red tape have been important. Nonetheless, there have been many other things that the Prime Minister and the government have done, including trying to resolve border issues with the president of U.S., for example, so that our goods can flow more freely across our borders. I also mentioned the additional places to sell our goods through the variety of free trade agreements, as well as our continued commitment to maintaining a strong and stable banking system.

As we look at these things there are also R and D investments that we continue to make. We realize that the way we are going to move forward is by being able to commercialize some of these R and D opportunities.

We realize that a strong financial sector is not only important to business but also equally important to all Canadians, who depend upon it for jobs and for their daily financial transactions.

I encourage all hon. members to support this important legislation and see that it is passed.

[Scott Brison, Liberal, Kings—Hants, NS]

Madam Speaker, it is a pleasure to rise today to speak to Bill S-5.

This legislation does not make significant changes to the Canadian banking system. In fact, the Canadian banking system is probably, if not the most, among the most prudentially sound banking systems in the world.

That is something all of us as Canadians recognize as being important to our Canadian economy. I believe it is good for Canadian jobs. It is good for our role in the world and our influence on the world. The growth in the scale and success of Canadian banks compared to other banks in other countries, in other banking systems, in recent years has been remarkable.

It is important to recognize why that is the case. While I agree with the Conservatives when they say that the World Economic Forum and other international fora recognize that Canadian banks and the Canadian banking system are among the best in the world, where I differ from them is on the genesis of why that is the case.

The reality is that during the 1990s, when the global trend in the U.S. and Europe was to go to rampant deregulation, it was the Canadian government that said no, that refused to follow the lemmings in other countries off the cliff.

In Canada, the Chrétien government, with Paul Martin as finance minister and Jean Chrétien as Prime Minister, was under immense pressure to follow the global trend of deregulation. They said no to that. They disagreed with that because they did not believe it was in the interests of Canadian bank customers, in the interests of Canadian small business or in the interests of ultimately the prudential strength of Canadians banks to do that. The decision was made not to deregulate at that time, and thank goodness that was the case.

It is important to realize that there were many members of the Reform Party or the Canadian Alliance Party. I forget what it was at that point. They were in fact opposed to the government and the decisions at that time.

I will be the first to offer a mea culpa from my perspective, because there were times when I was critical of the government's caution at that time. I will be the first to admit that when I criticized the government for its caution at that time, I was wrong. I will admit I was wrong, and I will not take credit personally for the decisions made by the Chrétien and Martin team at that time. I was wrong; they were right.

I just wish that at some point the folks on the other side, who were also wrong at that time, would admit that they were wrong and Mr. Chrétien and Mr. Martin were right. I do not take credit personally for the fact that some very strong and sound decisions were made by the Chrétien and Martin government, because I was criticizing those decisions at the time.

Again, I was wrong. Mr. Chrétien and Mr. Martin were right and the Liberal government was right. All I am saying is that when the government speaks of, and boasts of, the prudential strength of Canadian banks and our reputation in the world, it ought to do the same thing, have the same journey I have gone on where we embrace our inner honesty and expunge our inner hypocrisy, and we feel so much better. It is completely cleansing.

Let us look at what happened in the nineties. The reality is that the Chrétien and Martin government did the right thing by not following the global trend of deregulation.

There are some other reasons why Canada is doing well and our financial services sector is doing well. Part of it is that there is a massive global trend for commodities, and we have a lot of commodities in Canada: oil, gas, mining. Just in mining finances, 80% of all the mining transactions, financings, in the world over the last five years were transacted in Toronto.

I was in Calgary last week. I met with some oil and gas finance companies and some oil and gas companies. Calgary is booming in terms of oil and gas financing.

None of us in this House, not even the Conservatives, can legitimately take credit for putting the oil and gas under the ground or the minerals or potash under the soil. The Conservatives cannot say they put the oil and gas under the ground in Alberta or the potash under the ground in Saskatchewan. We all know they did not put the oil and gas off the coast of Newfoundland and Labrador. That was Danny Williams.

The reality is that we have to be honest with each other about why we are doing well as a country. Two of the reasons are that we have a strong banking system and we have become the global centre for mining and for oil and gas transactions. That is all very good.

In this bill, specifically, one of the changes the government is making is the decision that takeovers of foreign banks by Canadian banks will be subject to not public servant scrutiny in some cases but will go to the minister's office. The minister's office will make the determination, depending on the size of the transaction and the size relative to the Canadian bank's assets. It will not be OSFI, as an example, in the public service that will have the decision to make; it will be the minister's office.

I can understand the rationale from some perspectives. The government may see that as an extra level of precaution in terms of the minister's office, but I have a concern. I raised this at committee, the politicizing of these transactions. We know Canadian banks have been very acquisitive in recent years. We have seen the Bank of Nova Scotia buy all the Royal Bank of Scotland's assets in Colombia and more recently a significant retail bank in Colombia. The Bank of Nova Scotia bought 20% of the Bank of Guangzhou for $700 million in China a few months ago.

We are seeing that happen, and that is generally a very positive news story in terms of those head office jobs that will be here in Canada and the opportunity for us to strengthen our influence, financially and in business around the world. However, I want to see these transactions judged based on prudential strength, not on politics and other issues. I think we have be careful with that.

Another thing, when we are talking about the banking system, is that one of the biggest concerns we have is the level of personal debt Canadians are carrying right now. There is $1.50 of debt, on average, for every $1.00 of annual income in Canadian families. That is at a record high. That is actually higher than that of our American friends, who are less indebted personally than Canadians today. Canadian families have the highest level of debt. It is higher than the personal debt levels of Americans.

We have historically low interest rates today. People are struggling just to get by today. A lot of people have lost their full-time jobs. They have seen their full-time jobs replaced by part-time work. We have seen a bifurcation of the Canadian economy where for people who are in Alberta or Saskatchewan, which have a lot of natural resources, it is a very different kind of economy than if they were in Ontario or Quebec or the Maritimes.

The reality is that one of the reasons why we have seen growth in personal debt is not that Canadians are going out and buying big screen TVs and boats, as the Minister of Finance said when he blamed personal debt levels on Canadians' profligate spending on big screen TVs and boats. It is not that. It is that a lot of Canadians have lost their full-time jobs, which have been replaced by part-time work.

The other factor is that the government has sent signals to Canadians and in fact has changed the rules and regulations around lending to actually encourage Canadians to take on more debt. In his first budget in 2006, the Minister of Finance brought in 40-year mortgages with no down payment, for the first time ever in Canada.

The government has to take some responsibility for the growth in personal indebtedness and the degree to which Canadian citizens and families are leveraged financially today, because it changed the rules in 2006 to 40-year mortgages—

[Stella Ambler, Conservative, Mississauga South, ON]

Madam Speaker, I am pleased to speak in support of Bill S-5, Financial System Review Act, at third and final reading.

As members may recall from the second reading debate, today's bill is the result of the long established practice of reviewing legislation governing federally regulated financial institutions every five years. This practice sets Canada apart from almost every country in the world and ensures the safety and stability of Canada's financial system. This practice has also been praised as an important reason that Canada's financial system remains the soundest in the world.

Earlier this year, the independent Financial Stability Board praised this practice when it said:

...a review of all legislation to ensure that it is current, contributes to stability and growth of the financial sector and, by extension, allows Canada to remain a global leader in financial services.

The present five year review process began with an open and public consultation in September 2010 when all Canadians were invited to provide their views on how to best improve our financial system.

Before continuing today, I want to recognize and thank the members of the House finance committee for their timely review and support of today's legislation. During the committee's consideration, representatives of groups appeared, ranging from the Credit Union Central of Canada, the Financial Consumer Agency of Canada, the Office of the Superintendent of Financial Institutions Canada and more. We thank all the witnesses before the committee for taking the time to appear and give their thoughts. I will note that the witnesses were united in their belief that keeping Canada's financial system safe and secure was a very important goal.

Without a doubt, Canada's financial system is important to our economy and jobs as well. In fact, it employs over 750,000 men and women in good, well paying jobs and represents about 7% of Canada's overall economy. What is more, Canada is a world leader in this field and a model for the world to look to, especially during the recent economic turbulence.

We did not nationalize, bail out or buy equity stakes in banks like the U.S., the U.K. and Europe. In the words of Constantine Passaris, professor of economics at the University of New Brunswick:

The Canadian way is to record our national achievements in a low-key and understated manner. There is one economic achievement however, that has made the world stand up and notice. Indeed, in this case, we cannot hide from the international spotlight and we can proudly accept the global applause for our Canadian banking system.

At the end of the day, Canadian banks proved resilient in the aftermath of the 2008 financial crisis. Furthermore, they remain solid financial institutions capable of serving as the catalyst for the economic recovery. Indeed, they are a global beacon and a role model for exemplary banking in the 21st century.

It is little wonder, then, that over the past four years the World Economic Forum has ranked our financial system as the soundest in the world. The financial system review act would help ensure Canada continues to have a financial system so safe and secure that it remains a model for other countries around the world.

As I mentioned earlier, in order to keep the legal framework of our financial system up to date, Canada reviews this legislation on a five year cycle. Ordinarily this review cycle is sufficient to keep pace with new developments. However, faced in 2008 with the deepest and most wide-reaching financial and economic crisis since the Great Depression, our Conservative government took more immediate action.

Between 2008 and 2011, we took important steps to make our financial system more stable, reduce systemic risks and ensure we had the flexibility and power to support financial institutions during a crisis. Our actions included enhancing the power of the Bank of Canada to provide liquidity to financial institutions, expanding the tools available to the Canada Deposit Insurance Corporation for resolving a troubled institution and taking proactive steps to protect and strengthen the Canadian housing market.

Our approach proved effective as the Canadian financial system remained a rock of stability through the global financial crisis and won international praise. In the words of the Irish Independent:

The Canadian system has won praise worldwide, with US President Barack Obama among its fans.

The Canadian system is undoubtedly an excellent model....

Our government has not been sitting on its hands. Instead, we have improved many key elements of our financial system and strengthened it by adding new tools. Therefore, it will not shock members to learn that, in public consultations done in advance of today's bill, most agreed that a major overhaul was not needed. That is why the financial system review act focused on minor yet significant refinements of the system, not a major overhaul.

I will briefly highlight one such key element in today's bill that has attracted some attention.

The financial crisis highlighted the importance of evaluating the overall size of financial institutions, their global linkages and the impact these factors have on financial stability, and the best interests of Canada's financial system. As a partial response to lessons learned, today's bill proposes to reinstate an existing ministerial approval for select foreign acquisitions of financial institutions.

I will provide historical background. In 1992, the government of the day amended the legislation to allow federally regulated financial institutions to own a foreign subsidiary or to hold a substantial investment in a foreign institution with the approval of the minister. In 2001, the requirement for ministerial approval and review by the Department of Finance was repealed and oversight was limited to the Office of the Superintendent of Financial Institutions.

However, since 2001, the global banking crisis has highlighted new risk factors that support greater oversight to keep our financial systems secure. As such, we are reinstating some of those historical oversight provisions that were repealed in early 2001. This would simply add ministerial approval if a federally regulated financial institution acquires a major foreign entity which increases its assets by more than 10%. The criteria that the minister could consider are hard-wired in the legislation, that being the stability and best interest of the financial sector. The timeline for approval is also hard-wired. The legislation requires the minister's consideration in 30 days or it would be deemed approved. In effect, the minister has 30 days to deny or ask for an extension. This would likely apply only rarely. In fact, since 2004, there have been only a small number of cases where the proposed legislation would have applied.

I would note that the reaction from academics, bankers and the Superintendent of Financial Institutions herself have been quite supportive of the provision. For instance, Michael King, professor of finance at the Ivey Business School said:

This kind of a rule is actually one of the reasons why Canadian banks weathered the crisis so well over the years.

Canadian banks have done well. And it’s helped the Canadian economy to have such stable banks.

Our Conservative government believes that modern and effective regulation is important for consumers and for a prosperous economy. By enacting the financial system review act, we will ensure that our financial system remains safe and secure. That is why I ask all members of this House to support Bill S-5.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Madam Speaker, I believe that the amendment is perfectly relevant because the clause would grant immunity to people who have power over extremely important legislation in Bill S-5.

Once again, senior bureaucrats would hide behind the iron curtain that the Conservatives are erecting to thwart anyone who does not agree with their party. I support this amendment, and I would like my colleague to explain why the House should agree to it today.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

moved:

Motion No. 1

That Bill S-5 be amended by deleting Clause 212.

Madam Speaker, I am pleased to rise in the House to talk about our amendment, which seeks to delete clause 212 of Bill S-5, which reads:

The Superintendent, any Deputy Superintendent, any officer or employee of the Office or any person acting under the direction of the Superintendent, is not a compellable witness in any civil proceedings in respect of any matter coming to their knowledge as a result of exercising any of their powers or performing any of their duties or functions under this Act or the Acts listed in the schedule.

This clause is a concern for us. This aspect of the bill gives the institution immunity with regard to the transparency of its decisions. This is something that affects us and with which we disagree.

When we talk about Bill S-5 in its ensemble, I would like to say that the NDP is supportive of Bill S-5 and will be voting in favour of the bill. However, I would like to mention our concerns about the process regarding the bill and the results that are before us today.

The government is obliged to make revisions to the Bank Act and revisions to financial institutions on a regular interval. It is very important for the government to actually look at the situation of the banking industry in our country, look at its impacts on ordinary families and to hold a broad degree of public hearings to come forward with a bill that provides those substantial revisions to the Bank Act while protecting the fundamental stability of our financial institutions. The government has failed to do that.

The NDP has been the foremost advocate of maintaining strong and rigorous financial accountability around our banking system. Members will recall the many times when the previous Liberal government and the current Conservative government talked about weakening those regulations we ensured that we had rigorous accounting within our banking system. It has always been the NDP that has stood foremost for stability in our banking sector and ensuring at the same time that there are rigorous regulations that apply.

It is because of the defence that the NDP has mounted in the House of Commons that we continue to have stability in our financial institutions. When we compare it to some of the others around the world, when we look at what happened in Iceland and the meltdown that occurred in the United States, we can understand the risk that comes when the government moves to reduce regulation in our banking sector.

We certainly are the strongest proponents in the House of having rigorous regulation governing our banking sector. Anyone on the other side who doubts that only need look at Hansard over the past few decades to see that tradition which we have established in Parliament.

We also believe in protecting the public interest and the interests of ordinary families. The way Bill S-5 was brought forward, the fact that very few were even aware that these revisions to the Bank Act were taking place, the fact that the bill originated in the Senate, that it was brought forward in the House at a late time and had to be adopted in April did not allow for rigorous analysis of our current banking sector. That simply did not happen.

The finance committee did have some hearings. I want to get back to some of the comments that were raised in the few hearings the finance committee had on the subject. However, the reality is, when a bill is brought forward at a late date, when the deadline is a fixed date in April when the bill has to be adopted, although the NDP has co-operated, we have raised concerns about how remarkably late and how few public hearings could be held into what is such an important matter. Some of the witnesses who appeared before finance committee raised these issues as well.

The coordinator of the Canadian Community Reinvestment Coalition flagged the fact that with record first quarter profits we have seen in the banking industry, banking profits are up 5.3% compared with 2011. These profits have occurred while raising bank fees and cutting jobs in the sector. The coordinator of the Canadian Community Reinvestment Coalition also said that past government actions have been ineffective in ensuring Canada's big banks are not making excessive profits from gouging customers, cutting services and failing to lend to job-creating Canadian businesses. This view was also shared by Option consommateurs in Quebec. Jean-François Vinet said that the bill does nothing to protect consumers from criminally high interest rates on credit cards.

This is why we object to how the government has brought this bill forward at a late date, in a scattered fashion, without any real intent to get public feedback on revisions to the Bank Act.

It is the end of March and this bill needs to be adopted within a few weeks' time, and yet, there are issues around how ordinary families are impacted by the Bank Act and by the government's failure to take action. We feel that is profoundly unfortunate.

We are not talking about a situation that is unimportant. Under the Conservative government, we see that Canadian families are experiencing a record level of household debt, a level of debt that we have never seen in our entire history. People might say that Tory times are tough times. It is very true that under the Conservative government, Canadians are poorer, when we look at the high debt levels and the real wage reduction that Canadians have experienced over the last year or two.

It is a matter of broad concern to us that while Canadian families are struggling under a record level of debt, the government did not choose to bring forward in a public way revisions to the Bank Act to allow Canadians to have their say on what is happening with the current structure of the Bank Act and financial institutions and how current levels of high interest rates are impacting them.

Bank of Canada Governor Mark Carney warned that the ratio of debt to income will rise within Canada from an already alarming record 153% that was reached last year. Many think it will approach the landmark 160% hit by the United States before the United States tipped into crisis more than three years ago.

We are talking about a crisis level in household debt. We are talking about a crisis level in how Canadian families that we represent in communities across the country from coast to coast to coast are coping with these record debt loads. A not unimportant element of those record debt loads is the high interest rates that are charged by the financial institutions.

Bill S-5 originated in the Senate and was brought to the House of Commons at a late date and after very little public input. The finance committee was not allowed to conduct the kind of public hearings that could lead to changes in the Bank Act. As the few consumer representatives that were able to come before the finance committee stated very clearly, nothing in the revisions contained within the bill deals with the fundamental questions that we have been raising in the House on what Canadians are feeling form coast to coast.

Every single member of the NDP caucus is acutely aware of the crisis levels of household debt. We have raised the issue in the House, and yet the government does not seem to think it is important. These record levels of household debt, unparalleled in our history, that Canadian families are experiencing seem for the Conservatives to be a normal manner of living.

Given the profound job loss that has been experienced over the past few months, the tens of thousands of jobs lost and the reduction in real wages that Canadian families have experienced, we think that the government should be looking to help Canadian families.

We brought forward a series of amendments in committee to address some of the issues that we felt were not being addressed by the process around Bill S-5. I have already mentioned the lack of public input, the late date at which the entire process was begun, the late date by which the government brought the bill from the Senate to the House of Commons, allowing for scant debate.

Understanding as we all do that there is a fixed deadline when the bill has to be passed, we endeavoured to bring forward a series of amendments. Every single one of those amendments was refused by the Conservative government. We think the Bank Act revisions should be treating Canadian families—

Speaker's Ruling

[The Deputy Speaker, NDP, Denise Savoie]

There is one motion in amendment standing on the notice paper for the report stage of Bill S-5. Motion No. 1 will be debated and voted upon.

I shall now propose Motion No. 1 to the House.

The House proceeded to the consideration of Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters, as reported (without amendment) from the committee.

Finance

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I have the honour to present, in both official languages, the seventh report of the Standing Committee on Finance regarding Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters.

The committee has studied the bill and has decided to report the bill back to the House without amendment.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

You're absolutely right, Mr. Chair. That being said, the concerns are that Bill S-5 changes that context.

You're absolutely right that within the Bank Act, it would be outside of the scope of this bill to make those changes. The question that Mr. Mai is asking is this. Within the scope of Bill S-5, then, currently the process requires an approval from the Superintendent of Financial Institutions. There is a requirement for approval. With the amendments in Bill S-5, it is changed from a requirement for approval to what is a default approval. If there isn't the response and there isn't an application for an extension—a consideration on the decision—it's default approval.

That is of some concern to us. We do understand it's outside of the scope of Bill S-5 to change the Bank Act. We're not suggesting changing the Bank Act. What we're asking is this. Within the scope of Bill S-5, how we would then ensure that there is no default approval. I gather what you are telling us is that the decision would have to remain with the Superintendent of Financial Institutions.

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

Couldn't this be done in Bill S-5? Would the Bank Act need to be amended?

[The Chair, Conservative, James Rajotte]

I call this meeting to order, the 49th meeting of the Standing Committee on Finance. The orders of the day, pursuant to the order of reference of Tuesday, February 14, 2012, are Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters.

We're very pleased to have officials here from the Department of Finance. We have Ms. Diane Lafleur. We have Ms. Jane Pearse, Ms. Leah Anderson, Ms. Eleanor Ryan, Mr. Joseph de Pencier, and Mr. Khusro Saeedi. Thank you all for being with us. You're here obviously for any questions members may have.

Colleagues, we have nine amendments from the official opposition. The first amendment I have deals with clause 53, so we will go through clause-by-clause consideration, and as you know, pursuant to Standing Order 75.1, consideration of clause 1 is postponed. Therefore, the chair will call clause 2.

Now, I'd like to proceed.... Mr. Julian.

Business of the House

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

Mr. Speaker, on the contrary. It has been suggested in the past when we have had budgets on Thursdays that we were doing that so we could go out and talk to Canadians about it for several days. Clearly, our interest is to tell Canadians about our economic action plan 2012 which is focused on keeping taxes down and creating jobs and economic growth for Canadians. We hope we will be able to speak about it a lot to Canadians. We are confident that they will see that we share their priorities strongly. I thank the opposition House leader for giving me the opportunity to explain that.

We will conclude this hard-working, productive and orderly week in Parliament by continuing debate on Bill C-31, the protecting Canada's immigration system act this afternoon and tomorrow. We will also debate that bill on Monday, March 26.

Next week is a constituency week where we will all be hard at work in our ridings.

The highlight of the week we return to Ottawa will be when the Minister of Finance rises in the House to present Canada's economic action plan 2012. That will be on Thursday, March 29 at 4 p.m. Canadians can look forward to our economic action plan which will include, as I indicated earlier, important measures focused on jobs and economic growth.

I understand that the Standing Committee on Finance agreed to a responsible work plan for its study of the financial system review act, Bill S-5 so that this House can pass the bill before Canada's banking laws expire in mid-April. Canada has the world's soundest banking system. It is important that we keep it this way. That is why I trust we will see a responsible approach to this bill in the House, similar to what we saw at committee. In anticipation of the bill being reported back to the House tomorrow afternoon, I will be giving priority to report stage and third reading of Bill S-5 on Tuesday, March 27 and Wednesday, March 28.

If we have additional time on those days, I hope we can finish second reading debate of Bill S-4, the Safer Railways Act, and then deal with Bill C-12, the Safeguarding Canadians' Personal Information Act, at second reading.

On Thursday, March 29, we will resume debating Bill C-24, the Canada–Panama Economic Growth and Prosperity Act, before question period. After question period, the House will turn to Bill C-15, the Strengthening Military Justice in the Defence of Canada Act.

Friday, March 30, shall be the first full day of debate on the budget.

[The Chair, Conservative, James Rajotte]

I appreciate that, and Mr. Phillips, I appreciate your brief and your presentation.

You support Bill S-5 going forward, but you'd obviously like to see the review. You're heartened by the comments from the finance department and from the Senate committee. Now in your responses to some of the members' questions, my understanding is this could be the start of the review and the next five-year Bank Act review, or would you like it addressed before that?

[The Chair, Conservative, James Rajotte]

Now are you suggesting, though, that we amend Bill S-5 in any way?

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

First, I would like to thank our witnesses for being here today.

We believe that, with Bill S-5, the government has imposed too many limits. This is a five-year review. The government has not engaged in a review which would protect consumers against fees, or protect the superintendent and cooperatives. We do not think that the government has done its job.

The government sent the bill to the Senate. If I remember correctly, the Senate received 30 briefs. It then proposed a technical review only, when in fact that would have been a time to find solutions. I think that what you are saying today is very important. It is important to study every aspect of the bill. Mr. Phillips actually said a few words about that, and Mr. Giguère will also ask you some questions on that matter.

I personally would like to focus on issues which affect consumers, who have been forgotten in the bill. Section 219 offers some protection, but it is not enough.

My question is about banking fees. Can you talk a little more about banking fees and credit card interest rates? What are the problems? Were they addressed in the bill? By the way, I don't think so. What problems are associated with credit cards and banking fees?

Mr. Sommers, you can answer all of these questions.

[Jean-François Vinet]

That is a very good observation.

In fact, we are not here to attack every aspect of Bill S-5. We are not here to review the entire bill. We have five minutes, and then we have one-minute discussion periods.

We have focused on that one aspect which, in our opinion, is the most important one. It regards—

[Shelly Glover, Conservative, Saint Boniface, MB]

Forgive me. I agree. You have, absolutely.

Monsieur Vinet, I'd like you to speak directly to Bill S-5.

Draft section 219 is aimed at consumers and calls for consumer protection regulations. The fine would increase from $200,000 to $500,000.

Do you think this will help to protect consumers? In what way does this help protect them? Will the increase have a beneficial effect?

[David Phillips]

—the extension of the charter, so I spoke directly to Bill S-5.

[David Phillips]

But I am here to talk about Bill S-5 and I made three points—

[Shelly Glover, Conservative, Saint Boniface, MB]

Yes, and I have a question about Bill S-5 for Monsieur Vinet as well, Chair.

[The Chair, Conservative, James Rajotte]

Mr. Phillips did want to address your point on what he has concerns about in Bill S-5.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you.

It's just because that with Bill S-5, as we're making these determinations, it's so valuable for us to get your feedback about some of the things that are being changed. I'm going to ask you if there's anything within Bill S-5 that is particularly bothersome, but after I address what Mr. Melville just said.

As you know, our government is planning to shortly release what was promised in budget 2010, which is that any and all dispute resolution bodies will have to be approved by government and that they will comply with uniform regulatory standards and be monitored by FCAC. My question to you would be, does OBSI doubt that other dispute resolution bodies are capable of meeting those same standards as your organization?

[Scott Brison, Liberal, Kings—Hants, NS]

Bill S-5 deals with bank regulation and the regulatory framework under which Canadian banks operate. As such—

[Shelly Glover, Conservative, Saint Boniface, MB]

The reason I'm asking this question is that you've obviously come here for this specific reason, which you've admitted is really not about Bill S-5.

We're here to talk about Bill S-5, and it seems that Mr. Sommers, Mr. Phillips, Mr. Melville, and Monsieur Vinet all want to talk about something else, which is unfortunate, because it's a very important bill, which has some significant—

[Shelly Glover, Conservative, Saint Boniface, MB]

I didn't hear anything that was really relevant to Bill S-5 in what you had to say, so it begged the question, unfortunately—you know, why are you here?

[Shelly Glover, Conservative, Saint Boniface, MB]

Have you read Bill S-5?

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chairman.

I will share my time with Mr. Thibeault. I have the following question for all four witnesses.

Did you know that a review of the Financial Services Act had been planned? Were you able to make recommendations last fall, when the review was announced, at least on a website?

Mr. Phillips clearly explained what, in his view, should be added or changed with regard to Bill S-5, but I would like to ask the three other panellists to tell us what they see as being the shortcomings of the bill.

[David Phillips, President and Chief Executive Officer, Credit Union Central of Canada]

Mr. Chair, members of Parliament, thank you for inviting us to share with you some comments on Bill S-5, the Financial System Review Act.

My name is David Phillips, and I'm president and CEO of Credit Union Central of Canada, also known as Canadian Central. Canadian Central is the national trade association for its member organizations, and through them, 368 Canadian credit unions. Credit unions are full-service cooperative financial institutions that are owned by their member customers.

Canada's credit unions operate a branch network with more than 1,700 locations. These branches serve more than five million members and employ almost 26,000 people across Canada. Almost one-quarter of credit union locations serve small communities where they are the only financial services supplier in terms of bricks-and-mortar presence in that community.

Credit unions in Canada are provincially regulated financial institutions. However, Canadian Central is incorporated as an association under the Cooperative Credit Associations Act. As such, Canadian Central is itself a federal financial institution with a corporate charter that is extended by this legislation. Further, all of our provincial central members have opted to be regulated under the Cooperative Credit Associations Act.

In 2010 the credit union system welcomed provisions in the Jobs and Economic Growth Act that made amendments to the Bank Act to allow for the establishment of federal credit unions. We are currently providing input to the Department of Finance in connection with regulations that would allow credit unions the opportunity to operate a federal charter under the Bank Act.

From the perspective of credit union centrals and potential federal credit unions, we have an interest in Bill S-5. There are three matters we wish to address in connection with the bill.

First, we want to indicate our support for the proposed amendments to the Canadian Payments Act that will allow a federal credit union to participate in the governance of the Canadian Payments Association as part of a cooperatives class of CPA member financial institutions.

The amendments will allow federal credit unions to vote for CPA directors who represent cooperative financial institutions. Without this amendment, federal credit unions would not have a real voice in the governance of the Canadian Payments Association, because they would be nominally represented by directors who are elected from the commercial banks.

Placing the federal credit union in the cooperatives class will preserve and strengthen the credit union system's representation at the Canadian Payments Association. It ensures that a federal credit union will be represented by a director who can bring the perspective of cooperative financial institutions to CPA matters.

Secondly, we wish to indicate our support for the proposed amendment to paragraph 376(1)(g) of the Cooperative Credit Associations Act. This amendment increases the powers of associations incorporated under the act to market and to sell their technology services. It will allow a credit union central to provide payment technology services to any member of the Canadian Payments Association, thereby introducing more competition into this market.

Finally, we are not so pleased about the proposed amendments to sections 425 and 428 of the Bank Act in Bill S-5. These proposed Bank Act amendments have the effect of reversing two recent Supreme Court of Canada decisions in which the court determined that an unperfected personal property security interest held by a credit union had priority over a subsequent Bank Act security interest held by the bank.

While we understand the federal government's wish to clarify the situation resulting from the court's decision, we seriously question why a special security mechanism that is only available to the banks should continue to be retained in the Bank Act.

[The Chair, Conservative, James Rajotte]

I call this meeting to order. This is the 48th meeting of the Standing Committee on Finance. I want to apologize to all our witnesses, both here in Ottawa and in Montreal. We were detained in the House of Commons by a vote. I very much appreciate your patience in staying here with us.

We have the orders of the day, today, pursuant to the order of reference of Tuesday, February 14, Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters.

We have four witnesses here to present on the bill. First, we have the Canadian Community Reinvestment Coalition. Second, we have the Credit Union Central of Canada. Third, we have the Ombudsman for Banking Services and Investments.

Lastly, from Montreal, we welcome Option consommateurs.

You will each have up to five minutes for an opening statement, and then we will have questions from members.

We'll begin with Mr. Sommers, please, with your opening presentation.

[Shelly Glover, Conservative, Saint Boniface, MB]

I would like to ask you a brief question about the OSFI.

I see that Bill S-5 contains a change. Your organization is often invited to testify in civil trials. How will Bill S-5 help you, since you will be compelled to testify in such cases? Why would that be important for your organization?

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

Thank you.

My next question pertains to demutualization, which is threatening some cooperatives, in that the accumulated assets of past investors and participants may be shared amongst the current members. As far as this matter is concerned, the amendments proposed by Bill S-5 do not necessarily afford all the protection that was desired.

Would you please provide me with your comments, please?

[Randy Hoback, Conservative, Prince Albert, SK]

Well, Chair, I'll take that ten seconds if he wants to give it up.

Ladies and gentlemen, it's great to have you here this afternoon, and it's great to listen to you. As we look at Bill S-5, it's a technical bill by nature, so it's something that I don't think the government could move forward on or see progress on without your cooperation and involvement.

I know that Mr. Julian's first question to the minister was on the process, so perhaps I'll cross all the bases and ask you, first, were you consulted? What was that system like? What was the process like?

Mr. Campbell, I'll start with you and then go across the group. How did you find the process we used to consult with you to get the changes you're asking for?

[Ursula Menke, Commissioner, Financial Consumer Agency of Canada]

Good afternoon. Thank you very much for inviting me here.

My opening remarks will be short and will focus on the impact of Bill S-5 on FCAC.

FCAC welcomes the changes the government is proposing to make to the Financial Consumer Agency of Canada Act. The changes are largely technical amendments or clarifications to existing provisions.

Among the changes which would have an impact on our activities are the cashing of cheques. The proposed change would allow us to streamline the service we offer consumers with respect to cashing government cheques, whether or not they are clients of a bank. This would confirm that Canadians, including a banks' clients, could cash government cheques of under $1,500 without paying fees, in any bank in Canada.

Among the changes that will be impacting our agency's activities, there is also increasing the maximum penalty for a violation of a consumer provision. The amendment will increase to $500,000 the FCAC's maximum administrative monetary penalty, bringing it in line with other federal regulators such as the Office of the Superintendent of Financial Institutions and the Financial Transactions Reports Analysis Centre of Canada. The bill also provides that the commissioner, officers, and employees acting under their direction are not compellable witnesses in any civil proceedings on matters relating to their duties or functions.

The other amendments included in the bill are minor technical elements. They will have no significant impact on the work we do.

This ends my brief comments, and I look forward to any questions you may have for me.

[Frank Swedlove, President, Canadian Life and Health Insurance Association Inc.]

Thank you, Mr. Chairman.

I'm Frank Swedlove, the president of the Canadian Life and Health Insurance Association. I have with me today Frank Zinatelli, who is the CLHIA's general counsel.

The Canadian Life and Health Insurance Association accounts for 99% of the life and health insurance in force in Canada.

The Canadian life and health insurance industry provides products such as individual and group life insurance, disability insurance, supplementary health insurance, and individual and group annuities including RRSPs, RRIFs, TFSAs, and pension plans.

Overall, the industry protects more than 26 million Canadians and over 45 million people internationally.

Mr. Chairman, we welcome the opportunity to appear before the committee today as you review this important bill. The industry is very supportive of the bill and urges that it be passed in a timely manner.

Following up on the Minister of Finance's September 2010 request for input on the scheduled review of legislation governing federally regulated financial institutions, for us—and I've already been quoted on this by the minister today—Bill S-5 represents a welcome fine-tuning of the various financial institutions' statutes. The bill contains provisions to promote financial stability, to fine-tune a consumer protection framework, to reduce administrative burden, and add regulatory flexibility.

With respect to the first of these objectives, we are pleased to see the amendment to the Winding-up and Restructuring Act, which changes the priority status of segregated fund policies in insolvency situations and will facilitate timely transfers of policies.

As for consumer protection, the bill improves the Financial Consumer Agency of Canada Act and gives the government increased regulatory powers in this area.

As for the third objective, which is improving the efficiency of the legislative and regulatory framework, the life and health insurance industry particularly supports certain technical but useful proposals.

For example, amendments would be made to the Insurance Companies Act as follows: to reduce administrative burden from fairly regulated insurance companies offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements; to allow a segregated fund to invest in an insurance company through a mutual fund that the insurance company controls, provided the shares of the company are part of a recognized market index; to provide federal financial institutions with enhanced flexibility to issue shares to foreign institutions owned by foreign governments; and future adjustments on the limits on transfers to shareholders from participating policy accounts will be facilitated by adding regulatory flexibility.

In conclusion, Mr. Chairman, the industry strongly supports the provisions of Bill S-5 that are relevant to the life and health insurance industry, and it is willing to assist in whatever way it can in ensuring the bill's timely passage.

Thank you very much.

[The Chair, Conservative, James Rajotte]

I call the meeting back to order.

Colleagues, we have an hour with four organizations, so it will be very tight: the Canadian Bankers Association, the Canadian Life and Health Insurance Association, the Financial Consumer Agency of Canada, and the Office of the Superintendent of Financial Institutions.

I want to welcome all of you to the committee on this topic, Bill S-5. You have up to five minutes for an opening statement. I would strongly recommend, though, that you shorten it if at all possible to allow members time to ask questions, because I know they are very interested in this bill.

We'll start with Mr. Campbell, please, from the CBA.

[Ted Menzies, Conservative, Macleod, AB]

Thank you.

I share the comments that you make. It is not only in the United States; when I was in Europe before Christmas I heard the same thing from European bankers, saying that they would like to find a way to invest in Canada. I said, “Well, come on down. We'd be happy to have you.” It's a good model that we have put forward and a model that many other countries perhaps should emulate. I certainly appreciate that the Irish are having a struggle, but we'll support our motherland.

We've done a number of things to modernize our banking system: strengthening the authorities within the Canada Deposit Insurance Corporation—that is the fundamental protection for people's investments in the banking system—and there are a number of tools within Bill S-5.

Perhaps I could defer to one of my colleagues here or one of the people who know all of the background of some of the other pieces in the bill that are important to protecting the banking system.

Mr. Rudin.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Mr. Chair.

Minister, thank you so much for being here today. We really appreciate your presence.

You mentioned earlier that Prime Minister Cameron, right here in our own Parliament, spoke about how the Canadian financial system is a model for others around the world. I just want to cite a few others who have mentioned the same thing.

President Obama a couple of years ago said that in the midst of the enormous economic crisis Canada has shown itself to be a very good manager of the financial system and the economy in ways that the U.S. hasn't always been.

Ireland's Independent newspaper said recently that Ireland's financial regulatory system is due for a radical overhaul, with the Canadian system being held up as a role model.

Last week I was in Washington and had a number of meetings with various congressmen on both the House side and the Senate side. I guess The Washington Times must have known I was there, because I caught an article whose headline was, “America, home of the free. Canada, home of the future”. The first paragraph is, and I'll quote it: “Canada has strong banks, a stable real estate market and rock-bottom corporate tax rates, and it's about time Americans paid attention....” That was from The Washington Times last week.

I want to also say that throughout my meetings with members of the House and members of the Senate, the Canadian story is well known down in Washington, as you probably know. We are being looked at as a role model of how to craft a secure and stable financial regulatory system. It makes you feel proud, when you're down there and speaking to senior legislative officials of the United States government and they have that to say about our country's financial system.

Being from Toronto and from Ontario, I just want to ask you this. There are 400,000 jobs that are directly linked to the financial system; the job rate has grown 42% over the last ten years in the financial system; and 280,000 additional jobs are ancillary to the financial system. So clearly the financial system plays a key role in the economy of the province of Ontario, particularly in the city of Toronto.

Notwithstanding what we have here in Bill S-5, the government has taken a number of other steps along the way in the last number of years to further secure our financial system, in addition to what we see here in Bill S-5. Could you please talk about those?

[Ted Menzies, Conservative, Minister of State (Finance)]

Thank you, Chair.

This is, as I say, becoming a habit, but I am glad to be back among the financial champions in the House of Commons. Thank you for allowing me the opportunity to appear once again before this committee.

Today we are talking about Bill S-5, the Financial System Review Act.

I have with me Jeremy Rudin, Jane Pearse, Eleanor Ryan, Leah Anderson, and Joe de Pencier from the Department of Finance. If you ask me any technical questions I will probably defer to them, because this is a rather technical bill, but it is nonetheless very important.

From the start I want to underline for the committee that while this legislation is important, it is mandatory, routine, and as I say, primarily technical. But it is important, in that it will ensure that we keep Canada's financial system safe and secure, a system all of our constituents depend on almost every day, be it making a bank deposit or applying for a loan to start a business.

Our financial sector plays an important role in financial stability, safeguarding savings and fuelling the growth that is essential to the success of our Canadian economy. It also represents about 7% of Canada's GDP, employing over 750,000 Canadians in good, well-paying jobs.

Before I start talking about some of the highlights of today's bill, I want to explain the background of why and how it came to be. The committee should know that every five years the government reviews all legislation governing federally regulated financial institutions. This is a long-established practice in Canada, with the last review being completed in 2007 in the 39th Parliament. Such mandatory five-year reviews are a big part of why Canada has a well-regulated financial system that is safe and secure. Indeed, earlier this year the independent Financial Stability Board praised this aspect of our system:

...review of all legislation to ensure that it is current, contributes to stability and growth of the financial sector and, by extension, allows Canada to remain a global leader in financial services.

I'll note that the present five-year review process formally began in September of 2010, when our government launched a broad public consultation process. During that consultation we heard from a wide range of Canadians on ways to help further strengthen Canada's financial system.

What's more, as we know, Bill S-5 has already been reviewed in the Senate and received extensive study by the Senate Standing Committee on Banking, Trade, and Commerce. As we know, the senators know a lot about money, so they would have scrutinized this very closely.

The committee engaged in a timely review of the bill, hearing from groups ranging from Credit Union Central of Canada, the Canadian Life and Health Insurance Association Inc., the Financial Consumer Agency of Canada, the Office of the Superintendent of Financial Institutions, as well as others. While noting Bill S-5's technical nature, the witnesses were very supportive of the bill overall. For instance, the Canadian Life and Health Insurance Association Inc. noted that “Bill S-5 represents a welcome fine tuning of the various financial institution statutes”.

Before highlighting some of the items in today's bill, let me mention that due to the legislated sunset date, it is essential that it be renewed by April 20, 2012 to allow Canada's financial institutions to continue to function. No pressure, Chair, but keep that in mind.

I will now take this opportunity to outline some of the measures contained in Bill S-5. Once more, while the majority of the bill is purely technical, its passage is nevertheless essential to guarantee that Canada's financial system remains stable and secure. That's why broadly, the bill will make changes to, first of all, update existing legislation to promote financial stability and to ensure that Canada's financial institutions continue to operate in a competitive, efficient, and stable environment; fine-tune the consumer protection framework to better protect Canadian consumers; and improve efficiency by reducing red tape and regulatory burden on those financial institutions.

More specifically, key measures contained in this act include reinstating the required approval of the Minister of Finance for select, extremely large foreign acquisitions by Canadian financial institutions; reducing the administrative red-tape burden for federally regulated insurance companies offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements; promoting competition and innovation by enabling cooperative credit associations to provide technology services to a broader market; more than doubling the maximum fine that the Financial Consumer Agency of Canada can impose on financial institutions that violate consumer provisions, increasing that from $200,000 to $500,000; and also guaranteeing that all Canadians, especially those who are most vulnerable, have the right to cash any government cheque under $1,500 free of charge at any bank in Canada.

When we saw the failure of some of the world's most well-known banks, the recent global economic turbulence has made clear the importance of keeping Canada's financial systems safe and secure through the passage of the Financial System Review Act. Canadians recognize how much we have benefited from our prudent regulations and sound financial oversight in recent years. In fact, for the fourth year in a row Canada has been ranked number one by the World Economic Forum for having the soundest banks in the world.

Without a doubt, Canada's safe and secure financial system has served as a model for countries and is envied around the world. In fact, U.K. Prime Minister David Cameron recently praised our system when he said:

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.... Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.

As well, the prominent Economist magazine made this proclamation:

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

Likewise, a recent report from the United States Congressional Research Service underlined how well our financial system is regarded and examined as a model for others to build on. I'm quoting directly from that report:

...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.

In conclusion, let me say that our government believes that modern and effective regulation is critical for an innovative and prosperous economy. What's more, we recognize that we must keep Canada's financial system secure so that it continues to be a fundamental source of strength for our economy. The measures contained in the Financial System Review Act will provide a framework that will benefit all members of the financial services sector, and also all Canadians.

The well-established practice of regular five-year reviews of the regulatory framework for financial institutions is a unique practice that sets Canada apart. It is a positive practice that has proven vital to the stability of this sector.

All Canadians know the importance of continually examining how we can better ensure the safety and soundness of our financial system for the benefit of all Canadians, and today's legislation does just that.

I encourage all members to support this important legislation.

On that note, I'll wrap up and would welcome any questions.

Thank you.

[The Chair, Conservative, James Rajotte]

A unanimous welcome back from the committee, Minister Menzies. Thank you so much for being with us here to present the position on Bill S-5.

I understand you have some officials at the table, who you will be introducing in your remarks. We'll have questions from all committee members after your remarks, so please begin at any time.

[The Chair, Conservative, James Rajotte]

I call this meeting to order, the 47th meeting of the Standing Committee on Finance.

Pursuant to the order of reference of Tuesday, February 14, 2012, we are considering Bill S-5, an act to amend the law governing financial institutions and to provide for related and consequential matters.

We have two panels with us here today, colleagues. In our first panel we're again very pleased to welcome back the Honourable Ted Menzies, the Minister of State for Finance.

[The Chair, Conservative, James Rajotte]

Thank you.

I want to thank all of our witnesses for being here to respond our questions. It was a very lively debate. If you have anything further to submit to the committee, please do so. We will all consider it.

Colleagues, I just wanted to see whether there was agreement to proceed with the proposed operational budgets for Bill C-25, Bill S-5, and Bill C-311. You should all have the numbers in front of you. Is there agreement to these three bills and the witnesses?

Standing Orders and Procedure

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Madam Speaker, I am not making any accusations; I am just pointing out the obvious. I have given one example of Bill S-5, which was unduly delayed by the NDP opposition. I have many more, but I will just give one because I know we have a limited amount of time here, and that is Bill C-11, the copyright modernization act.

We brought the bill in the same form that it was presented in the last Parliament, which had the bill before committee. When we reintroduced it in this Parliament, after 75 speeches, the NDP opposition still refused to send it to committee. Those members still said that they had more people wanting to speak to it. The ironic thing is they said, at the same time, that they thought the bill needed amendments. Well the committee is the place to make amendments, yet they refused to send it. They forced us into time allocation so then they could turn around and say that the government was being anti-democratic.

The strategy of the NDP is clear. We understand that. I think all Canadians understand it by now as well.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

One of my Liberal colleagues says he is getting a Twitter feed right now from one of the two individuals I just mentioned.

All kidding aside, these were two very experienced parliamentarians who were very knowledgeable about Standing Orders and chose to share their expertise at every opportunity in the House. I am glad to hear that they are watching this debate.

This is the fourth time we have had the opportunity to debate Standing Orders in this place. In 1982 a special committee on Standing Orders and procedures recommended that in each Parliament in the first session following an election there should be a debate on Standing Orders. In the past there were many suspensions of this debate, sometimes because of an early election, or prorogation or because there had been debates on Standing Orders in other forums.

To stand here today and debate the Standing Orders and to talk about some of the proposed changes that we would like to see is a healthy thing for democracy. It allows all backbenchers as well as frontbenchers to express their views on how we govern ourselves and the rules that we adopt.

I should also point out that many of the Standing Orders that we follow today have been around literally for decades, in some cases for 100 years. There are many Standing Orders that just need to be modernized, that is some of the ones our party will be advocating and some of them will be suggestions that we will bring forward to committee.

I will give the House a few illustrations of what I mean to try and give a sense got the rest of the members in this place of the type of modernization that we think is necessary.

Standing Order 16(4) says “When the House adjourns, members shall keep their seats until the Speaker has left the Chair”. That has not been observed for generations, so why have it at all? We suggest we may want to look at deleting that phrase.

There are also references in the Standing Orders to something called “dinner hour”. In previous Parliaments many years ago, Parliament sat during the afternoon and evening and there was a specified dinner hour. That does not happen anymore, but we still have the reference in the Standing Order. We feel modernizations, deletions of terms like that, which are somewhat archaic, are necessary to ensure we have Standing Orders that actually fit the time.

I want to focus most of my remarks on a couple of issues raised by my friends in opposition, primarily on time allocation. A lot of members in this place, and a lot of members of the general public, confuse the term time allocation with closure. They are completely different elements of the democratic process that we follow in Parliament.

With respect to time allocation, what I hear from members opposite is that our government has used time allocation indiscriminately, that we have used it to try and advance our agenda without consideration to debate or to members comments opposite. In fact, nothing could be further from the truth.

My colleague and my friend, the chief opposition whip, said that time allocation should only be used in cases where the opposition tends to filibuster a bill. That is exactly what has been happening. We have seen time and time again with pieces of legislation that our government has introduced the opposition quite clearly and openly demonstrate to Parliament and to Canadians that it has no interest in simply debating the bill. It simply wants to delay the passage of the bill and if it had the opportunity, it would, with apologies to Quentin Tarantino, kill the bill. That is not democratic. That is simply an opposition trying to run roughshod over Parliament.

We have a democracy in the country that elects governments. We have been fortunate. We have been graced to have been given a majority government by the people of our country. Therefore, we feel very compelled to advance our legislative agenda as quickly as we can after adequate debate. However, the opposition does not believe in normal or adequate debate. It wants to delay, delay, delay and obstruct, obstruct, obstruct.

I will provide just two examples of many which prove my point.

The first example is Bill S-5, a financial institutions bill. This bill, quite frankly, is almost pro forma. The bill comes before Parliament once every five years. Its intent is to merely ratify the rules and regulations of financial institutions in Canada. In the past number of Parliaments that have dealt with Bill S-5, debate has primarily lasted one day. Usually one speaker from each party makes comments, the bill is referred to committee, in which members look at the legislation to ensure that all of the elements of the legislation in the bill are unchanged, and it is passed. Without doing so, the regulations that govern our financial institutions would basically be gone.

This bill is non-controversial and it is one that should be passed quickly. However, when we asked our friends in the opposition, primarily the official opposition, the NDP, they demonstrated absolutely no willingness to accommodate the quick passage of it out of this place and into committee so we could ensure our financial institutions would have the ability to perform as they always have. That is obstruction.

Financial System Review Act

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Madam Speaker, the financial system review act, or Bill S-5 , would continue to ensure that our financial system continues to be secure for Canadians and is a fundamental strength for our economy. If we look at some of the things the bill includes, it includes measures to update financial institutions legislation, to promote financial stability and to ensure Canada's financial institutions continue to operate in a competitive, efficient and stable environment.

The bill would also fine-tune the consumer protection framework, including enhancing the supervisory powers of the Financial Consumer Agency of Canada. The bill would also include measures to improve efficiency by reducing the administrative burden on financial institutions and by adding regular flexibility. These are just some of the things that the bill includes.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Madam Speaker, the truth is that the government has had a lot of important legislation come before the House since we were elected. There are a number of priorities that we have been moving forward on.

We appreciate the fact that we have a very sound financial system here in Canada and Bill S-5 would continue to keep Canada's financial system strong and secure. We have a lot to be proud of as Canadians with a great banking system.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Madam Speaker, I would like to take this opportunity to speak in strong support of Bill S-5, the financial system review act.

In my time here today, I will focus on what our Conservative government has done to enhance protection for consumers of financial service products. This act builds on an already strong record of our government. From the outset, the government's approach to strengthening consumer protection has been straightforward. Canadians who use financial services are entitled to clear and simple information. They deserve to be treated in a fair and transparent manner.

Since forming government in 2006, our Conservative government has had a proven record of strengthening Canada's financial system. For instance, as part of Canada's economic action plan, we took action to better protect Canadians who use credit cards. We all agree that Canadians should not be forced to deal with hidden surprises on their credit card statements. That is why we took landmark action to force credit card providers to provide easily understandable information on credit card application forms and contracts and timely advance notice of changes in rates and fees. We also limited credit business practices that do not benefit consumers.

Specifically, we required credit card issuers to provide consumers with a minimum 21 day interest-free grace period on all new purchases when consumers pay their balance in full by the due date. We also required a minimum 21 day grace period on all new purchases in a billing period, even if the consumer had an outstanding balance. We moved key information, such as interest rates, grace periods and fees, out of the fine print buried in credit applications and contracts and into a prominent summary box so that consumers signing applications know exactly what kind of financial arrangements they are agreeing to without needing a magnifying glass and a legal dictionary. These pro-consumer measures are ensuring that Canadians have a clear picture of what they are signing up for and fully understand their rights and responsibilities.

It is little wonder that our government's measures have been so warmly received by consumer and other public interest groups. For instance, Casey Cosgrove, director of the Social and Enterprise Development Innovations' Canadian Centre for Financial Literacy praised them saying:

Understanding interest rates, fees and increases to monthly payments are key challenges many Canadians face when managing their credit cards. The measures announced by the government today will contribute to financial literacy by bringing clearer and more transparent information to consumers.

Additionally, Bruce Cran, president of the Consumers' Association of Canada, applauded the measures and said that all of the things in there “are actually just what we asked for”.

Laurie Campbell of Credit Canada also spoke highly of our actions. In particular, she highlighted the importance of the summary box I mentioned earlier. She stated:

The idea is that there will be a box somewhere on your statement, and it's going to show okay, this is how much you have outstanding, and this is your minimum payment on that amount outstanding... Any time we're trying to educate the public on how to manage their money better, on how to understand credit better, and how to minimize the amount of interest they're paying, it's a good thing. So this is a great step.

I am happy that our pro-consumer measures are in effect today. They provide Canadian consumers with precisely the kind of financial information that allows them to make the best choices to suit their needs. The reality is that there are more than 200 credit cards available on the market. While having so many choices ensures competition and varying interest rates, decisions about which card is best can be difficult without knowledge.

All consumers can only benefit by increasing their understanding of interest rates and the dangers of compound credit card interest. I am pleased to remind Canadians and members that important information on this very subject is available through the Financial Consumer Agency of Canada's website. The agency provides free comparison tables outlining the rates and features of numerous credit cards offered in Canada by a variety of issuers.

Our Conservative government has done more for small businesses and retailers who raised concerns about certain credit and debit card practices. Our Conservative government shared these concerns. One concern was the unpredictable costs associated with accepting credit and debit card payments, which prevented merchants from reasonably forecasting the monthly costs associated with accepting those payments.

That is why our Conservative government created the landmark code of conduct for the credit and debit card industry to better protect small businesses and retailers. Under the code, small businesses and retailers will be guaranteed clear information regarding fees and rates, as well as advance notice of any new fees and fee increases. They will be able to cancel contracts without penalty, should fees rise or new fees be introduced. There will be new tools to promote competition and the freedom to accept credit payments from a particular network without the obligation to accept debit payments and vice versa.

I am happy to report that small business has welcomed the measures laid out in the code of conduct.

Here is what the Canadian Federation of Independent Business had to say on the first anniversary of the code:

The Code's effectiveness has already been tested several times and CFIB is pleased to report that it has passed on every occasion. CFIB has used the Code to resolve issues on debit cards for e-commerce, disclosure of important merchant fee information, and exit penalties for fee changes in processing agreements. Merchants have new powers under the Code that have helped them achieve tangible results in their dealings with the industry. This simply wouldn't have happened without the Code.

Whether it is a question of saving for retirement, financing a new home or balancing the family cheque book, our government's commitment to improving the financial literacy of Canadians will do even more to ensure the integrity of our financial system. Canada has made the financial literacy of Canadians a priority. It has introduced legislation to create a financial literacy leader to improve financial literacy in Canada.

Bill S-5, the financial system review act, would build on the many pro-consumer measures we have introduced since 2006, including the three that I have already highlighted. The bill would more than double the maximum fine the Financial Consumer Agency of Canada could impose on financial institutions that violate a consumer provision, increasing it from $200,000 to $500,000. The bill would guarantee all Canadians, especially those who are most vulnerable, the right to cash any government cheque under $1,500 free of charge at any bank in Canada.

Informed consumers are the very foundation of a solid financial system. Canada's economic success is ultimately the sum of the financial success of all Canadians. That is why I am proud to support the financial system review act. It would further strengthen our Conservative government's commitment to this crucial objective.

[Mike Sullivan, NDP, York South—Weston, ON]

Madam Speaker, I rise today to speak to Bill S-5, an act to amend the law governing financial institutions and to provide for related and consequential matters, and to express my disappointment about the inadequacies of this bill.

The member opposite suggested that somehow we were against this kind of thing. We are not against it: we are in fact disappointed that it does not go far enough. I think we have heard their mantra over and over again throughout this entire Parliament. We are disappointed that the government does not do enough, that it does not protect seniors and immigrants and does not protect the rights of ordinary Canadians.

Again we are faced with a bill that does not seem to go far enough. It is our hope that these inadequacies can be addressed at committee, as has been suggested. So far we have not had a good track record of changing bills at committee. Unfortunately the government does not like to listen to our advice, does not want to hear debate, and intends through the time allocation motion it introduced yesterday and passed today to have only one further day of debate before going to the standing committee, which will then have about five weeks to go through this very complicated bill.

I say “complicated” because the bill amends 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. Why are we rushing?

This is a pretty important thing. I do not think there is a person in Canada whose relationship with banks and financial institutions is not somehow touched by this bill. There are few in my riding who do not have bank accounts, I will admit, but as the member for Winnipeg Centre reminded us, they are being served by other institutions that are gouging them, the payday loan companies that have sprung up like mushrooms to replace the banks that have left.

It is very unfortunate that we are not going to get enough time to debate this bill, because it is going to deprive Canadians of a really comprehensive and transparent review of our financial system, unlike the cursory and rushed treatment this bill unfortunately received in that other house, the Senate. We are talking about regulating this country's financial service industry, which employs thousands of Canadians and handles trillions of dollars in assets, and the Senate review of this legislation took three weeks from start to finish. The bill was introduced in the Senate on November 23 of last year and adopted at final reading on December 16.

Several questions arise from that. Why did it take so long to get here? We are in the middle of February and are now dealing with this in a rush because we have to meet a time allocation motion. It is almost three months since it was introduced and two months since it was passed in the Senate. Is the banking system therefore less important to Canadians than guns? Is the banking system less important than copyright legislation? Is the banking system less important than the Wheat Board? These are all things that went before it, and the banking system is thus apparently not seen as important, not as important to ordinary Canadians. We disagree.

Why the Senate? Is the government trying to make work over there in the other chamber? Is that really what is going on? To justify its position that the Senate is an effective place of sober second thought, does it have to find ways to introduce actual government bills in the Senate to give that chamber work to do?

If this is so urgent, why did the government wait so long even to introduce it in the Senate? The deadline has been known for years. The deadline was always going to be the middle of April of this year. Why has it taken so long? It baffles us.

We certainly have time to do this correctly, or we should have had the time to do this correctly. However, the government's mismanagement of this file, given that the five-year review was well known, has contributed to this rushed process whereby the government invokes closure for the umpteenth time and limits our job as parliamentarians to do a proper review of this important sector.

It is as if the government were governing on the back of a napkin. Every time we turn around, there is something that it has forgotten, something it has forgotten to do. This is another one. It forgot about this: “Oh, we better do it in a hurry. We have to get it through.”

We owe it to Canadians to address some of the real problems with the financial institutions, such as by protecting consumers from excessive user fees, not only ATM fees but also remittance fees on transfers that many new Canadians in the diaspora send to families they are supporting back home. Those remittance fees are huge and they are charged by banks and other financial corporations alike, and sometimes they amount to as much as 30%, 40% and even 50% of the money they send overseas.

Why do they have to send money overseas? It is because their families cannot be reunified here in Canada. We now have wait times of as long as 106 months between the time an application is made and a parent or a grandparent is permitted to come back to Canada, and it is as long as 33 months for spouses and children. All the while, the people here who have recently immigrated to Canada and are trying to reunite with their families are trying to support their family overseas by working in Canada and sending what little money they can. When the banks, the financial institutions, the payday lenders, whomever, take 30%, 40% or 50% of that money, it is a crime, and it is not something that the government has addressed.

We need to review the treatment of financial derivatives. Nothing in the legislation talks about that. It was speculation, as we saw in the United States, in particular, that provoked the financial crisis from which we are still recovering. These practices do not contribute to the economy but to the financial volatility that threatens to destabilize economies, and yet there is nothing in the bill to deal with that. The housing bubble in the U.S. created by those derivatives has caused ordinary citizens to lose billions of dollars in the value of their properties, in large measure as a result of banks and other institutions trading and speculating. Canadian banks were not immune from this: Canadian banks lost money on these derivatives.

We need to review mortgage lending practices, particularly in light of the comments made by Bank of Canada Governor Mark Carney, who said that record consumer debts are the greatest domestic threat to the country's financial institutions. Right now, consumer debt is 151% of disposable income, partly as a result of aggressive home equity loan marketing that has placed Canadians in vulnerable situations should interest rates rise. If interest rates rise, we are in for a huge collapse in our credit system in Canada. We do not want to see the disastrous practices witnessed in the United States' housing portfolio come here to Canada.

This is an inadequate measure, a missed opportunity to do better for Canadians. The consultation process has been pathetic, to say the least. Apparently, there were some consultations conducted by the government online. Some 30 people found out about it and submitted recommendations. The government cannot release the results of most of those to anyone because it forgot to get the required disclosures from those people for their information to be released. Therefore, we will never know what the feedback to the government was.

On our side, we will support the bill at second reading because we hope that the deficiencies in the bill can be corrected at committee. Some government members have actually said they want to listen and make amendments to the bill, where necessary, at committee. Thus far I cannot remember any bills coming to this House from committee with amendments. Maybe this will be the first. Who knows. I hope my colleagues on the government side will participate in the committee review of the bill in good faith to improve how our financial sector serves Canadians. This will be a challenge, given the time constraints imposed by the government today.

We owe Canadians this effort. I owe this to Canadians in my riding, as does every single member of Parliament here who represents all Canadians, all of whom will be touched by the measures that the government has put forward today in the bill.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Madam Speaker, I am pleased to have this opportunity to address Bill S-5, the financial system review act. I would like to take a moment to say a few words about how this bill came to be before the House.

This bill is the outcome of the mandatory five year review of the framework that governs federally regulated financial institutions, which began in September 2010. Such regular reviews help to ensure that Canada remains a global leader in financial sector stability.

I would also note that this bill needs to be passed and its supporting legislation renewed by April 20, 2012 to allow financial institutions to carry on with their business and provide the services that Canadians depend on.

I was pleased to hear in some previous speeches in the House that members opposite are willing to send the bill to committee for further study. I hope they will support swift passage of the bill.

I want this piece of legislation, as technical as it is, to be understood by ordinary Canadians so they know how it affects them in real terms. Key measures in the bill are aimed at protecting consumers of financial services, building on important consumer protection actions our Conservative government has taken in recent years.

I will briefly explain the rationale for these initiatives while providing a bit of context. Throughout our time in office, our Conservative government has aggressively focused on helping Canadian consumers identify and take advantage of the best possible financial products and services for their needs. For example, in the next phase of Canada's economic action plan, we will further strengthen Canada's financial system by moving forward on the recommendations of the Task Force on Financial Literacy and announcing the government's intention to appoint a financial literacy leader. We will be enhancing consumer protection by banning unsolicited credit card cheques and developing measures related to network branded prepaid cards. In doing so, we are making a strong system even stronger.

Canada has many advantages that have mitigated the impact of ongoing global economic turbulence. For instance, Canada has a prudent and well-regulated banking system, ensuring that our lenders demonstrate responsibility and restraint. The result is Canada did not suffer a single bank failure or need to bail out any of its financial institutions.

As the Toronto Star said, “Unlike in the United States and Europe, no banks collapsed or had to be rescued in Canada during this financial crisis”. On the contrary, Canada's financial system remains strong, based on effective risk management and supported by a very effective regulatory and supervisory framework.

Some of the remarks I have heard in the House in relation to Bill S-5 allege that Canada's fortunate position during the global financial crisis was in spite of our Conservative government's policies, not because of them. What they say is that as Conservatives we tend to shy away from regulations in favour of competitive markets when it comes to the financial sector. Let me be clear on a couple of points.

First, it is true that we tend to favour less government intervention where possible, but we keep a close eye to ensure the system remains strong, thanks to the work of the hard-working, world's best finance minister that we have.

Second, our Conservative government, under the leadership of the Prime Minister, recognized early on that prudent regulations and supervision were necessary in the financial sector. In fact, we witnessed that other nations had to massively intervene in their markets as a result of under-regulation, and effectively nationalized their financial institutions.

Let me be blunt. Canada has emerged from this financial crisis as the only true free market financial system in the world. Indeed, Canada's strong economic and fiscal fundamentals have been recognized internationally. Today our country has the world's soundest banking system, as ranked for the fourth year in a row by the World Economic Forum. In fact, our five Canadian financial institutions were recently named to Bloomberg's list of the world's strongest banks, more than any other country.

Before I focus on our Conservative government's commitment to consumer protection, I want to address another aspect of the bill.

Bill S-5 gives authority to the minister to approve the acquisition of major foreign entities by federally regulated financial institutions where that acquisition would increase that institution's assets by more than 10%. Some in this House during earlier debates have suggested this could politicize the process. In fact, this is a historical oversight provision that was repealed in 2001. We are merely restoring that authority. There is a good reason for that. We understand that a regulatory and oversight balance is necessary to keep our markets healthy.

Let us say, for example, that a Canadian bank or federally regulated institution acquires a foreign company that increases its assets by more than 10% and that foreign company then succumbs to poor conditions in its market, a collapse of that economy or sector of that economy. That would have a negative impact on a significant portion of a Canadian bank's holdings and our Canadian markets would be affected by extension. That is why we feel it is prudent to have these risky acquisitions reviewed before they go ahead, to ensure that they are in the public interest.

Julie Dickson, the Superintendent of Financial Institutions, had this to say about this decision:

It’s now being moved back to the Minister of Finance, and we fully support that decision. It makes sense for the Minister of Finance to ultimately have the ability to approve. It’s just going back to the way it used to be.

Alec Bruce, a noted Times & Transcript columnist, gave the following insight:

When our banks top up their foreign holdings in this environment they do, in fact, chance importing this contagion to these shores, and injecting it into the arteries of the country’s economy....It’s not too much to ask....

Let me reassure all members that this Conservative government has an ongoing commitment to ensure that consumers are protected in their dealings with our financial institutions. That is why our government has an entire agency working to protect and educate consumers of financial services. It is the Financial Consumer Agency of Canada, FCAC. The agency does its part to help inform financial consumers in Canada by developing plain language educational material on a wide range of financial products and services. It has developed innovative approaches, such as a mortgage calculator that quickly determines mortgage payments and the potential savings resulting from pre-payments. It has also introduced online tools that help consumers shop for the most suitable credit card and banking package for their needs.

The agency has created two new tip sheets to help Canadian consumers looking for ways to save money. One is on choosing the right banking accounts and the other is on keeping service fees low. Recently the agency has been instrumental in lending its support to Financial Literacy Month, that being November, which featured 200 events and outreach initiatives across the country.

We have a steadfast commitment to improve the financial knowledge of Canadians and that commitment includes this bill. The proposed legislative package before us includes measures that would strengthen the consumer protection framework, including increasing the maximum fine the FCAC can levy for violations of a consumer provision from $200,000 to $500,000, and would guarantee that any Canadian has the right to cash government cheques up to $1,500 free of charge at any bank in Canada.

Our Conservative government believes that Canadian consumers deserve accessible and effective financial services that meet the needs of consumers and that operate in the public interest. By enacting the financial services review act, we would further ensure that our financial system remains a competitive Canadian advantage and that consumers receive the highest possible standard of service. It is the level of service that Canadians deserve and have come to expect.

I ask all members of the House to support Bill S-5 to ensure that our financial sector remains strong, stable, secure and a model for other countries to follow.

[Pat Martin, NDP, Winnipeg Centre, MB]

Madam Speaker, thank you for the opportunity to enter this debate on this comprehensive and sweeping piece of legislation regarding our financial institutions, both their well-being and their duty and obligation to provide adequate service to Canadians.

I need to preface my remarks by noting that the bill is entitled Bill S-5, the S meaning that it does not originate in the House of Commons, the chamber of the duly elected representatives of the people. It has its origins in the other place, the Senate of Canada. As democrats, each and every one of us should take note, pause and reflect on the significance and meaning of the bill. More and more, we are finding bills originating in the Senate, when in fact all pieces of legislation should find their origins in the duly elected chamber of the House of Commons, not the unelected, undemocratic Senate. I profoundly resent this chamber being seized with a bill that has originated there. I will state that for the record.

The other thing comment I would say before discussing the substance of this legislation is the fact that once again we are faced with a debate on a bill with a gun to our heads, under pressure, under the time limitation placed on our democratic review, scrutiny, analysis, and due diligence of the bill, the very reason we were sent here as representatives of the people. We are being denied that right systematically once again by a government that introduces a closure motion almost on the same day it tables a piece of legislation. This is the 16th time in a row, in this short session of this 41st Parliament, that we are being denied our democratic right to give full study and examination of the bill and to have our comments within this place recorded in Hansard.

I do not want anyone in the country who has been observing the activities of our Canadian Parliament to think for one minute that these are normal circumstances. These are anything but normal. These are extraordinary. This is the most appalling abuse and undermining of the democratic process that anyone has ever seen.

I have been a member of Parliament for six terms. I have sat in majority and minority Liberal governments. I have sat in majority and minority Conservative governments. No one has ever seen anything like this before. This cannot be allowed to continue without condemning it in the strongest possible terms. I hope the people of Canada take note that the Conservative government of the day, and I do not say this lightly, is undermining the integrity of our parliamentary institutions by systematically denying the right of members of Parliament to study bills, per our constitutional parliamentary democracy. It offends the sensibilities of anyone who calls himself or herself a democrat to see this happening systematically.

While I am on the subject, I would also note that I just came from a committee meeting earlier today, where there has been a systematic denial of the public's right to know what its government is doing with its money, in its bills and policy development, by invoking the shroud of secrecy over the otherwise ordinary activities of parliamentary committees that have traditionally been held in public. The government has moved to put these in camera. For any ordinary Canadian watching, this means that the doors will be shut, everyone will be asked to leave, and there will be no cameras and no one will have any right to ever divulge what happened behind those closed doors. That is the in camera rule.

In times gone by, three or four years ago, it used to be the rare exception if the activities of a parliamentary committee were held in camera. It would be in matters of national security, or of profound commercial sensitivity where someone's right to privacy in a commercial setting would otherwise be violated.

Now in camera meetings are being used willy-nilly for any little issue that may be controversial or potentially embarrassing to the government. The government slams down the in-camera rule and shuts down the cameras, ironically. Everyone is kicked out of the room and no one in that meeting is ever allowed to divulge anything that happened behind those closed doors under the rule and penalty of the Speaker of the House of Commons. It is a very serious violation to contradict the in camera rule. There is no justification for this whatsoever. I cannot even divulge the matter we were discussing at today's in camera meeting, because it was in camera.

This has been a systematic undermining of the democratic procedures and the processes that have evolved over time to make our Westminster model of parliamentary democracy the best in the world. However, I caution the members across and anyone listening that our parliamentary democracy is a fragile construct. It exists only by virtue of both sides stipulating that they agree to abide by a set of rules that includes openness to the greatest possible, and respecting the role of the opposition to test the merits of the proposals put forward by the government before they are implemented into legislation.

Again, I caution the government of day. It may in fact be doing irreparable harm to our democratic institutions. I think that if it allows pendulum to swing too far this way, it will never get it back to the norm. The toothpaste might never go back into the tube; the genie might never go back into the bottle. The government has pushed the limits of the integrity of our system. It is like pulling a thread on a sweater: the whole sweater can unravel if we keep yanking on that thing. That is what the government is doing. It is testing not only our patience but also the integrity of our whole fragile, yet precious, parliamentary democracy.

I resent profoundly that we are facing closure once again on this bill for the 16th time since we returned to work after the parliamentary summer recess. It is an absurd situation that we find ourselves in. We are being systematically denied the ability to do our job as agents of the people who elected us here to provide scrutiny, oversight and due diligence and to hold the government to account. That is the very function of Parliament and it is what is being denied to us.

We are talking about banks. If there were any subject in the country that warranted a greater examination by the elected representatives of the people, it is the way banks are, or are not, serving the best interests of Canadians. It warrants enhanced scrutiny. It warrants not only a thorough examination but also a royal commission. The failure of banks to meet the needs of Canadians, and their gouging us in the process, is almost ridiculous. The biggest PR campaign in the country right now is not to sell cars, not to promote the oil sands, but the PR job of banks trying to peddle themselves to Canadians as warm, fuzzy and benign institutions that have our best interests at heart.

I challenge that. I would have welcomed the ability to challenge it in a much more thorough way as we go through the bill to amend the law governing the financial institutions of this country. I say this because in the riding of Winnipeg Centre, which I represent, chartered banks are closing like crazy. They are disappearing. They are going the way of the dodo bird. Whereas we used to have a bank, an accessible institution, on the street corner, they are all shutting down and are being merged into one conglomerate. There were 14 bank closures in my riding alone.

Do members know what is filling the void left behind? It is the fringe banking institutions, the Money Marts and payday loan outfits that are charging not the 60% that the usury laws of this country allow them to charge, but which should have been reviewed in this process, but 1,000% to 1,500%. The Government of Manitoba did an investigation and one example it found was a payday loan charging 10,000% interest.

Do members not think that warrants a bit of debate and analysis and scrutiny by the elected representatives of the people, the fact that people are being gouged because of the unwillingness of our chartered banks to live up to the terms and conditions of their charters to provide reasonable financial services to Canadians no matter where they live?

Because of their failure in that department, they have left a void that is being filled in by these predatory lenders. I do not know what can be done to make a 10,000% profit. Selling cocaine does not even give, I presume, a 10,000% profit. However, they are springing up like mushrooms all over the inner city and preying on poor people and gouging them in the most egregious way. The Parliament of Canada is silent on it because we are being denied the right to even do a thorough analysis of the job that financial institutions are doing to provide basic services.

We need to remind ourselves that we granted the chartered banks their charter and what comes with the charter is the exclusive monopoly for certain very lucrative financial transactions, the credit cards, cheque cashing and all of these things, that are enormously profitable. In exchange for the exclusive monopoly on these lucrative transactions, they were to provide at least the basics that financial consumers might need.

We in the NDP have been trying to rectify this for a decade or more, which is why these rare, once every five years, opportunities are so precious. Myself and the former leader of the NDP actually got some proxy shares and used to crash shareholder meetings of the big chartered banks. We would go to the Royal Bank shareholders meetings, as well as the Bank of Montreal, the Toronto Dominion Bank and the CIBC meetings. We would move motions at those shareholders meetings trying to bring these big institutions to account, to stop the gouging and to make them responsible.

Exactly. I see my colleague gets it. He seems as perturbed as I am about this situation.

I will give an example. This is quite an experience. Everybody here should do this. Members should go to a shareholders meeting of one of the chartered banks, such as the Royal Bank of Canada. My good friend, John Cleghorn, was the CEO of the Royal Bank. I had just enough proxy shares to move some motions. Nine motions were moved that year at the shareholders meeting of 1,500 people and I moved all nine of them. Everybody else just goes there to find out how much money they made. I went there to try to introduce some democratic reform to these appalling undemocratic organizations.

One of the motions I moved even my colleague from Nepean would enjoy. I moved a motion to limit the CEO's salary to 20 times that of the average employee. Now the average employee salary, if anyone did the math, is about $47,000 a year, and 20 times that is almost $1 million year, which is pretty good. Sadly, however, the motion was defeated.

Another motion, however, that we moved was for gender parity on the board of directors. This motion was what scared John Cleghorn. Matthew Barrett was not nearly as amused by all of this but John Cleghorn was a good sport. The motion for gender parity on the board of directors failed by this ratio, the exact same as the last Quebec referendum, 49.4% to 50.6%. We almost got it.

There is a lesson here. The shareholders' democratic movement should be inspired by this. A room of 1,500 people who did not come there to talk about amendments to democratic reform or corporate governance had an appetite for corporate governance. There was an interest.

Again, when we did the same thing with Matthew Barrett, he had a hissy fit and was openly wondering how Alexa McDonough ever got in there with any shares in his bank.

Other people are interested in this and, believe me, on behalf of those people who are being victimized by fringe banking in low income neighbourhoods like mine, we owe it to them to give a far more thorough analysis of our once in five year opportunity to amend the laws governing financial institutions and to provide for related and consequential manners. We should not be having it rammed down our throat by a bunch of unelected senators, hacks, flaks and bagmen in the Senate, many of them recently appointed by the government.

With all due respect for the Senate of Canada, it has no business introducing legislation for the House of Commons to have to deal with. It is supposed to be the other way around.

I have talked briefly about the importance of charter banks. I will talk at length, if given the opportunity, on the importance of charter banks and their obligation to provide basic financial services to ordinary Canadians. They have reneged on that deal systematically over the last many decades, to the point where they are now charging money at an ATM. First, they brought in ATMs, presumably to save money so they could lay off bank tellers. Finally, when they got people used to the idea that they had to use ATMs, they started introducing service fees. So they are not only saving a fortune and posting record profits every quarter, even through the economic downturn, but they are gouging ordinary Canadians for $1.50 each way to take $20 out of their bank account. I would like to see the percentage charge on that, extrapolated over the lending fees associated with the usury provisions. I think in the Criminal Code of Canada, if more than 60% is charged they are guilty of usury.

Therefore, how is it that the Money Marts, the payday lenders and the title loan lenders in my riding are charging 1,000%, 1,500% and, in this one egregious example, 10,000% interest and the government of the day and the enforcement agencies regarding financial institutions are silent on the matter? Clearly something is fundamentally wrong.

I have notes about Bill S-5 but many of the observations and points being made here are so narrow and specific that they miss the big picture. More often than not in this place we do not see the forest for the trees and the fact is that we are not being well served by our financial institutions. We are being gouged by our financial institutions. We should be screaming from the rooftops condemning the treatment of ordinary Canadians by the gouging that is going on.

I have talked about the shareholders' rights efforts that we used to make. We should probably mention that again but I want to talk about one other thing in the global picture of how we view the relationship we have with the financial institutions that seem to have such great influence over this country.

I hear time and time again the government side bragging that we have the best banking regime in the world, that it is due to the wizardry of our Minister of Finance and that somehow everything is rosy in this regard.

I want to remind anyone listening today that were it not for the Herculean efforts of the NDP, not five or seven years ago, the charter banks of Canada would have been allowed to merge into massive institutions, as they wanted to do. They were dying to merge. They were asking permission. They were knocking on the door. The John Manleys and the Paul Martins of the world were eager to receive the message. Do members know why they wanted to merge? It is because they wanted to play in the big leagues in the biggest game in town. The biggest game in town at that time was the sub-prime mortgage industry. Our banks were too small to play a meaningful, realistic role in that industry sector but they were dying to merge so they could dive in there and we would have been in just as much trouble as the big institutions in the United States, crashing and burning in this catastrophic notion of bundling the sub-prime mortgages and marketing them as a financial product.

Fortunately, we managed to prevail and block the urge to merge. I remember the national campaign was purge the urge to merge. It was Lorne Nystrom's campaign, the NDP finance critic of the day, criss-crossing the country. I see he is outside here today. We should recognize and pay tribute to Lorne Nystrom because we owe him a great debt of gratitude. He is a big businessman and he knows something of these things.

It is our job and our obligation to ensure the financial institutions meet the needs of Canadians, not to have it rammed down our throat in a bill put forward by the undemocratic, unelected Senate.

[Ryan Leef, Conservative, Yukon, YT]

Madam Speaker, I am pleased for the opportunity to speak at second reading of Bill S-5, the financial systems review act.

I want to begin by noting that this legislation is vital to the stability of Canada's financial sector, and explain how it came before the House today. Every five years the government reviews the policy framework that governs federally regulated financial institutions. The last review was completed in 2007.

Launched on September 20, 2010, the current five year review began with the Minister of Finance inviting Canadians to share their views on how to improve our financial system through an open consultation process. This process has helped to ensure that Canada remains a global leader in financial services. Making sure that Canadians continue to have a strong and secure financial system, one that has been a model for countries around the world during the recent global turmoil, is a key priority for our Conservative government.

This bill would help ensure that our system continues to be recognized.

For the fourth year in a row, Canada was ranked as having the soundest banks in the world by the World Economic Forum. This strength has been widely recognized by independent observers, both here and abroad. An Ottawa Citizen editorial acknowledged that, and I quote:

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, Canada's banks stood firm.

In the 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.

We have also been recognized beyond our borders. Indeed, we have heard from voices around the world.

When it recently renewed Canada's top-tier, AAA credit rating, Fitch, the world renowned credit rating agency, pointed out:

Canada's banks proved more resilient than many peers thanks to a conservative regulation and supervision environment.

The influential Economist magazine recently stated that:

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

The Irish Times commented recently that:

Canada's policy of fiscal discipline and strict banking supervision was a reason why it was one of the world's strongest performers during the recession.

U.K. Prime Minister David Cameron praised our system:

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...Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.

I echo that high praise.

Moreover, I would like to add that the financial services sector is a constant presence in the daily lives of Canadians. The industry employs over 750,000 people in good, well-paying jobs. It represents about 7% of Canada's GDP. The sector is a key pillar of our economy through its role in fostering financial stability, safeguarding savings and fuelling the growth that is essential to Canada's economic success.

Canada is set apart from almost every country in the world through the implementation and practice of the mandatory five year review that produced the bill we are discussing today. This practice ensures that the laws governing our financial institutions are updated and responsive to a constantly changing global marketplace.

I would also add that the recent financial crisis helped us recognize the importance of a stable and well-functioning housing market to the economy and the financial system. While our banks and financial institutions remained sound, well capitalized and less leveraged than their international counterparts during the crisis, in order to ensure stability in our housing market our government proactively moved three times to adjust our mortgage insurance guarantee framework.

These adjustments included reducing the maximum amortization period to 30 years from 35 years for government-backed insured mortgages with loan-to-value ratios of more than 80%. We also reduced borrowing limits in refinancing and withdrew government insurance from home equity lines of credit.

These adjustments have been applauded by observers and economists alike. TD Economics praised the changes highly, stating that “these policy changes were prudent and act to help limit risk in Canadian real estate”.

Our government is committed to renewing the key elements of our financial system and bolstering it with new tools. We are committed to fine-tuning, clarifying, harmonizing and modernizing the existing framework. We are doing just that through the financial systems review act.

Canadians recognize that the current framework functions well. Canada's financial system continues to be recognized as one of the soundest in the world. From that solid foundation, the proposed legislative package includes measures that would modernize financial institutions' legislation to encourage financial stability and ensure Canada's financial institutions continue to operate in a competitive, efficient and stable environment. Measures would fine-tune 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 adding regulatory flexibility.

Other measures contained in this bill include: improving the ability of regulators to share information efficiently with international counterparts while respecting privacy laws; guaranteeing that all Canadians have the right to cash government cheques under $1,500 free of charge at any bank in Canada; and promoting competition and innovation by enabling cooperative credit associations to provide technology services to a broader market. The bill would reduce the administrative burden for federally regulated insurance companies offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements.

I am happy to report that many public interest groups have shown strong support for today's bill. For example, the Canadian Life and Health Insurance Association proclaimed:

It is important that legislation be periodically reviewed so that it keeps up with the changing environment... The industry welcomes a number of measures outlined in [the financial system review act].

In summary, today's act would reinforce financial sector stability, fine-tune consumer protection provisions and adjust the regulatory framework so it can better adapt to new developments. It would provide for a framework that would benefit stakeholders in the financial services sector, financial institutions, as well as all Canadians who rely on our banking system daily. Our Conservative government recognizes that in order to remain an international leader in the area of financial sector stability, we must continually consider what regulatory changes are needed to foster competitiveness and to ensure the safety and soundness of our system.

Today's bill would maintain the long-standing practice of frequently reviewing the regulatory framework for financial institutions, ensuring that Canada remains the leader in this regard. I therefore urge all members to support the financial system review act, along with the sensible regulation of our banking system that has served us so well.

[Brian Masse, NDP, Windsor West, ON]

Madam Speaker, one of the things that Bill S-5 does not address is the patriot act. Canadians' personal information could be accessed in the United States through the patriot act. We need an international treaty to deal with that.

I wonder if the member supports the need for an international treaty. Without it, banking records and information and credit card information could be used by the U.S. government through its patriot act.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Madam Speaker, to you, my wife Geri, and all members, happy Valentine's Day.

Madam Speaker, I will be splitting my time with the great member for Yukon.

I truly appreciate the opportunity to lend my voice to today's debate in favour of the timely passage of Bill S-5, also known as the financial system review act. While very technical, this is a critically important piece of legislation.

This bill is the right thing for Canadians and the right thing for Canada's economy. It builds upon and complements the range of initiatives our Conservative government has introduced and will continue to introduce to improve the security of our financial system and to strengthen consumer protection for Canadians.

Indeed, Bill S-5 supports those principles in many important areas, including modernizing, strengthening and clarifying the consumer provisions in the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, and the Trust and Loan Companies Act, as well as others.

Members can rest assured that our Conservative government understands the importance of protecting consumers and the importance of protecting the larger financial system. During the global financial crisis, we came to appreciate the very real consequences of poor financial sector regulations around the world, especially in the United States and in Europe.

In particular, we saw that the interconnected structure of global finance demands a comprehensive and effective regulatory regime able to prevent problems in one area from spilling over into others. We also saw that ignoring these problems may bring unpredictable and often catastrophic results to a country's economy.

For this reason, it is important to take into consideration the strength, effectiveness and security of the broader financial sector in the regulatory framework when we discuss the positive attributes of Bill S-5.

Our Conservative government recognizes the importance of a stable and well-functioning financial system to the overall Canadian economy. Indeed, Canada has received high praise for our well-regulated financial system during a time of global economic turmoil. Even the Toronto Star was forced to admit:

Canada has won international accolades after the World Economic Forum ranked its banking system as the soundest in the world....Canadian banks...have largely skirted the worst of the turmoil. Unlike in the United States and Europe, no banks collapsed or had to be rescued in Canada during this financial crisis.

The Irish Times declared:

Canada's policy of fiscal discipline and strict banking supervision was a reason why it was one of the world's strongest performers during the recession.

In my remarks, I would like to highlight the housing market in particular. The housing sector warrants particular attention in light of its role in the 2008 financial crisis and the ongoing pressures arising from the U.S. housing bubble that are still being felt by the American financial system and have slowed that country's economic recovery.

In order to protect our housing market from the worst excesses seen abroad, our Conservative government has acted repeatedly and decisively to ensure its stability, especially with regard to mortgage financing.

Mortgage financing plays a key role in providing a reliable source of funds for prospective Canadian homeowners. Prudent mortgage lending standards and mandatory mortgage insurance for high ratio loans allowed Canada to avoid the housing crisis that occurred in other countries, especially the United States.

Since 2008, our Conservative government has taken prudent and measured steps to ensure that this system remains stable over the long term while maintaining economic growth.

In July 2008, February 2010, and January 2011, we announced a series of sensible adjustments to the rules for government-backed insured mortgages. The measures include: reducing the maximum amortization period for new government-backed insured mortgages to 30 years; requiring a 5% minimum down payment, and a 20% down payment on non-owner occupied premises; lowering the maximum amount lenders can provide when refinancing insured mortgages to 85% of the value of the property; requiring buyers to meet a five year fixed rate mortgage standard; and withdrawing government insurance backing on home equity lines of credit.

These adjustments will significantly reduce the total interest payments Canadians make on their mortgages, promote long-term sustainable home ownership, and limit attempts by banks to repackage consumer debt into mortgages guaranteed by Canadian taxpayers. Taken together, they would go a long way toward strengthening the regulatory oversight of the mortgage insurance industry. Many of these improvements to the mortgage insurance guarantee framework have helped to encourage Canadians to use their homes as a way to save responsibly for their families and their futures.

This would help to ensure that Canada's housing market remains strong. It has been applauded by numerous commentators and economists. Credit Canada's executive director, Laurie Campbell, called the most recent moves a “step in the right direction because it means more money in consumers’ pockets ”.

An editorial in Waterloo's The Record added, “The federal government has done the right thing in tightening up the rules for mortgages in this country”.

In a similar vein, a recent Calgary Herald editorial applauded the government's proactive approach and added, “It's good to see the government continue to be vigilant on this file”.

Furthermore, as the Minister of Finance has said repeatedly, our government will continue to monitor the housing market very closely and take further action if it is necessary.

We all recognize there is always work to be done to ensure the continued stability of the Canadian financial system and that ongoing vigilance is vital. That is why we are pushing for the timely passage of the financial system review act. The bill would provide the framework that would benefit all participants in the financial services sector, not only financial institutions but, more importantly, everyday Canadians. It would maintain the long-standing 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.

Bill S-5 would play a key role, together with other strong links we are forging in areas like mortgage insurance, in protecting consumers and building a more efficient, effective, sound and competitive financial system for all Canadians. Renewing the Canadian financial institution legislation on a regular basis has resulted in a robust and effective financial system that is aligned and responsive to developments in financial markets and the broader global economy.

In summary, I would encourage all members to join in our efforts to ensure the strength and stability of Canada's financial system and support the financial system review act.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I thank my colleague for Windsor West for reminding the House of that important piece of Canadian history.

There was a movement afoot from the unofficial prime minister of Canada, Thomas d'Aquino, chief executive and president of the Canadian Council of Chief Executives. He was saying that we must allow the banks to merge so they could be competitive and play on this larger marketplace. They were dying to jump into this sub-prime mortgage fiasco, but they were not really big enough therefore they should be allowed to merge.

There was a national campaign, “Purge the Urge to Merge”. People were crashing the shareholder meetings of the national banks trying to stop this runaway freight train of Canadian banks merging.

Had it not been for the sober second thought of the NDP in exposing this, as the official opposition was all for it, those banks would have merged and dove right into the big leagues in which they wanted to play. They would have brought upon our country the catastrophic outcomes that they exposed other countries to, specifically the United States.

I would ask my colleague to perhaps reflect for a moment on his own party's position on banking as it pertains to Bill S-5.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, the reality is that, in opposition, the Reform Party fought vigorously against the decision of the Chrétien government to maintain strong regulations around Canadian banks, the very regulations that kept Canadian banks from following the global trend and off the cliff like the lemmings in Europe, in the U.K. and in the U.S.

What did the Conservatives do in government in terms of the prudential management of banks? One of the first things the Minister of Finance did in 2006 in his first budget was to bring in 40 year mortgages with no down payments. This created the loosest approach to mortgage lending in the history of Canada.

Furthermore, in 2007, the Conservatives went further. Under the Liberal government, Canadians needed mortgage insurance if the down payment on their mortgage was less than 25%. In 2007, the Conservatives changed that and lowered the threshold to 20%.

Those were just some of the changes they made to create looser mortgages, looser regulations, which led to, among other things, what many economists are now referring to in Canada as a housing bubble, certainly a personal debt bubble. We have the highest level of personal debt in Canada today, which is $1.53 of personal debt for every dollar of annual income. That is the highest in our history and it is higher than that of our neighbours to the south in the U.S.

The February 4 edition of The Economist magazine states:

When the United States saw a vast housing bubble inflate and burst during the 2000s, many Canadians felt smug about the purported prudence of their financial and property markets.

It went further and cited the Prime Minister at that time boasting in 2010. It then states:

Today the consensus is growing on Bay Street... that [the Canadian Prime Minister] may have to eat his words.

The Economist then said that Canada's housing prices had doubled since 2002. This has coincided with a massive growth in our personal debt levels. We see a great increase in speculation in the housing markets, particularly in some hot markets, such as Toronto and Vancouver, among others, and we see this growth having occurred, in part, in a response to the deliberate decisions by the Minister of Finance to loosen up debt and mortgage regulations back around 2006 and 2007.

The government must be held to account for those decisions, which actually helped create what we hope is not a housing bubble that ends badly but is certainly a personal debt bubble that needs to be managed.

It is important to realize that the Conservative government cannot take credit for the prudential decisions made by the previous Liberal government, and that the current government must be held to account for some of the foolhardy decisions it made as a government to loosen banking regulations and to loosen mortgage rules early in its term.

I want to note a couple of other things about Bill S-5 because some of the changes would have an impact on Canada's incredibly strong banking sector and its role in the world. One change is requiring the minister, in order to approve foreign acquisitions by a Canadian entity, under certain circumstances, for instance if the foreign entity being acquired has equity of at least $2 billion and if the acquisition of the entity would increase the size of the Canadian entity by at least 10%.

Under those circumstances and conditions in this legislation, it would mean that the Bank Act would require the minister to approve the acquisitions of these foreign financial institutions by Canadian banks. That is a change. The previous rules simply required that the Superintendent of Financial Institutions, OSFI, would approve those within the public service, within the bureaucracy.

Recent deals that would have triggered this mechanism of ministerial approval would have been the Manulife John Hancock deal, the TD Commerce Bancorp deal, the BMO Marshall & Ilsley deal and Sun Life. There are other large acquisitions that have occurred in the last couple of years: Scotia Bank bought Banco Colpatria, Colombia's fifth largest bank, and it also bought the Royal Bank of Scotland's Colombia assets as well 20% of the Bank of Guangzhou.

I want to raise as a concern, that the government consider the politicization of these foreign investments by our Canadian banks and the potential risk to the capacity that we have in doing so. The fact is we now have some of the largest banks in the world that are world leaders in terms of governance and success. With the capacity to significantly increase Canada's influence in the world in terms of a very important financial services sector, this politicization could lead to some highly political and potentially bad decisions in the future which would limit the role of Canadian banks in the world.

I raise that as a concern and I look forward to questions from my colleagues.

The House resumed 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.

[Rob Merrifield, Conservative, Yellowhead, AB]

Mr. Speaker, it is a privilege to speak to Bill S-5, the financial system review act.

The bill has cleared the Senate and is now in the House. Some of my colleagues on the other side are asking why now and why so fast. It is not really fast. The consultation process started in September. We had to use that process to be able to get it to this place. Then we need to get it to committee and move it through so that it can actually be implemented by April of this year. That is very simple to understand.

We have a very strong and stable financial system in Canada. In fact, we came through the financial crisis with flying colours as a country, as did our financial institutions. Why? It is because we do these regular reviews. We ensured we made changes as we moved along and that nothing would be left on the back burner. We are actually moving forward and doing something with it to accommodate Canadians and their interests in the changing world in which we live.

Bill S-5 would make a number of improvements to key areas in the Canadian economy. The financial sector is very stable, and there are reasons for that. It is stable because of these mandatory reviews we are doing. It is also very big. We must realize that 750,000 people work in the system, all in well-paying jobs. It makes up about 7% of the GDP of this country. A lot is made up of the oil sands in my province, being 6% of the GDP in this country, and yet the financial institutions are larger than that and is doing very well.

The bill is not only big but also good. Why would it not be good when we have the number one Minister of Finance in all of the world? That is something that has never happened before to Canada. In fact, we are rated number one in the world in many different areas, especially in the field of financial management. In fact, the World Economic Forum has ranked Canada as having the soundest banking system in the world. Forbes magazine has ranked Canada number one in its annual review as the best country to do business with as we move forward. Bloomberg has recently listed our five big banking institutions in Canada as the world's strongest banks, more so than in any other country in the world.

There is a competitive environment in this place and opposition members do what opposition members do, they oppose.

I have a quote here from a past Liberal finance minister, the now president of the Canadian Council of Chief Executives, John Manley, who said:

Our financial system and institutions were tested during the financial crisis and have proved sound. Canada’s banking system is now widely viewed as the most stable and efficient in the world.

That is high praise from a former opposition individual who knows the financial system very well.

Last month, an independent financial stability board appeal review praised the government's swift and effective response to the global financial crisis. We did come through it quite well. In its review, it highlighted the resilience of the financial system that we have as a model for other countries to follow. As Canadians, we should be proud of that.

We must realize that as we went through the financial crisis in Europe there were many problems with a lot of the banks there, as well as south of the border in the United States. If we compare ourselves to our number one trading partner, there was a meltdown of the financial systems. Not one of the financial institutions in Canada failed. Not one failed or required direct government support in the form of cash injections or debt guarantees during the global financial crisis. That is something that did not and does not happen by accident. It happened because there was good management of the Canadian financial systems and it is directly related to what we are doing here today with this legislation.

In fact, the report stated:

This resilience, which was achieved in spite of Canada’s relatively complex regulatory structure, highlights a number of key lessons for other jurisdictions.

What are those lessons that Canada can teach other jurisdictions? The first is to be proactive with targeted macroeconomic policies supported by adequate fiscal space and flexible exchange rates that will help absorb the external shocks.

The second is a prudent banking system management so that we do not become over-leveraged, as has happened in Europe, the United States and other banking systems and sectors. This is particularly important if we are to go through a crisis, such as what is happening around the world. We hope that we are through it now and that we will not revisit it, although what is happening around the world should make us a bit cautious, particularly the debt crisis in Europe and perhaps some overspending in the United States that could impact us in years to come.

The third thing is the comprehensive regulatory supervisory framework that effectively addresses the domestic prudent concerns including, when necessary, adopting regulatory policies that go beyond the international minimum standards.

Those are three lessons that other jurisdictions can learn from.

As the board noted, since 2008, the Conservative government has taken significant steps to make our financial system more stable and to reduce systematic risk to Canadians and to the system. In fact, the first thing we did in the 2008 budget was to modernize the authorities of the Bank of Canada to support the stability of the financial system.

We came through it in glowing fashion, as far as our financial institutions, but in budget 2009 we suggested other changes. Just in case we were to run into problems with our banking system, we wanted to ensure we were able to capitalize our banks so that they would not go into receivership. This is very important. What it really allowed for was, if there was an injection needed into our banking system to sustain it, the Canadian Deposit Insurance Corporation would have the flexibility to do that. That is actually a very wise thing. We did not need it, thankfully, and, hopefully, we never will. A bridging institution was what we needed. In banking terms it is called a bridged bank. Bill S-5 includes a number of technical refinements to ensure that the efficient implementation of those bridged bank tools are there.

Budget 2011 also announced our government's intention to establish a legislative framework for covered bonds, which are debt instruments secured by high quality assets, such as residential mortgages. This bill would make it easier for Canadian financial institutions to assess the low cost sources of funding and help to create a robust market for covered bonds in Canada.

Let us look ahead. We have this five year review. It is very important that we do this review, mainly adding to some of the changes that we have made over the last number of years, chiefly technical. One of the changes that would actually make it a little stronger goes back to one of the changes that was made by Liberals in 2001. It would back that off so that any bank that invests in more than 10%--

[Costas Menegakis, Conservative, Richmond Hill, ON]

Mr. Speaker, I will be splitting my time with the hon. member for Yellowhead.

I stand today to speak in favour of Bill S-5, the financial system review act, at second reading. The bill, while largely technical in nature, is nonetheless a very important development as it is fundamental to ensuring the security and strength of the Canadian financial system. This is important not only because we depend on our financial system for day-to-day transactions like purchasing something from a store with a debit card or making a deposit in one's savings account, but because of the tremendous economic impact the financial sector has on the Canadian economy.

Indeed, Canada's financial sector is a key jobs driver providing employment to over 750,000 Canadians. This is especially important in my home province of Ontario and my riding of Richmond Hill where the financial services industry is a crucial part of the provincial economy.

The financial services sector employs nearly 400,000 people in Ontario directly. In addition, as noted by the Ontario minister of finance, the sector “supports an estimated 280,000 ancillary jobs, including in high-paying business service jobs, such as software design”. Its positive impact is especially important in the greater Toronto area where I live.

As stated by the Toronto Financial Services Alliance:

Toronto is the business and financial capital of Canada. It is the hub of Canadian commerce with a financial services infrastructure that has a reputation for safety, soundness and stability.

Toronto is home to the vast majority of Canada's largest financial services companies...and makes one of the largest contributions to the local economy.

In fact, according to Invest Toronto, the city's financial services sector contributes 13.2% directly and 7.9% indirectly to the GDP of the entire Toronto region. What is more, between 1999 and 2009 alone, the financial services sector added almost 70,000 jobs in the greater Toronto area, a cumulative growth rate of 42% or 4.2% per year on average.

Clearly, a strong and secure financial sector is vital to the economy and good, well-paying jobs in the greater Toronto area. The financial system review act would help to ensure the continued stability of the sector and the significant jobs and economic growth that depend on its health. It would accomplish this by undertaking a series of chiefly technical but very important modifications to the framework governing our already well-regulated financial system to further guarantee its stability.

I want to emphasize that these modifications and indeed this bill are the result of a mandatory process. Specifically, it is a direct product of Canada's long-established practice of undertaking mandatory five-year reviews of Canada's financial sector legislation. This review started in September 2010 when the finance minister initiated a public consultation process, open to all, where he sought the views of Canadians about our financial system. The regular review of the financial sector statutes allows the government to amend the framework so that the financial sector legislation and regulations continue to be as effective and efficient as possible.

Canada's practice of conducting such mandatory five-year examinations has been one of the key reasons we have maintained our reputation of having the safest and most secure financial system on the planet. Indeed, as we all recall, for four straight years the World Economic Forum has declared our country's banking system to be the soundest in the world. This has been a tremendous advantage for Canada and Canadians, especially during the recent global economic turbulence. While the United States, the United Kingdom and Europe has had to nationalize or bail out many of their banks, Canada's financial system has remained strong and secure.

Because of our resilience, Canada's financial system continues to be singled out as a model for other countries. As noted Toronto Sun columnist Peter Worthington remarked:

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

This is what the Irish newspaper, The Independent, had to say:

[Ireland's] financial regulatory system is in line for a radical overhaul, with the Canadian system being held up as a model.

The Canadian system is undoubtedly an excellent model....

Even U.S. President Barack Obama has admitted that Canada's system is far superior, noting:

Canada has shown itself to be a pretty good manager of the financial system in the economy in ways that we haven't always been here in the United States.

Finally, this is what Great Britain's Prime Minister David Cameron declared when he addressed Parliament last year:

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 economic crisis....Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.

Indeed, the financial system review act would build on and further reinforce Canada's sound and safe financial system with a range of important modifications. Specifically, the legislation would: modernize financial institution legislation to further assure financial stability and ensure that Canada's institutions continue to operate in a competitive, efficient and stable environment; provide important protection to consumers by boosting the powers of the Financial Consumer Agency of Canada; improve effectiveness both by cutting down on duplicative administrative red tape burdens on financial institutions and adding much needed regulatory flexibility.

The financial system review act contains numerous important measures that would make our financial system stronger which I would like to briefly highlight. They include: improving the ability of regulators to share information efficiently with international counterparts while respecting the privacy of Canadians; ensuring that Canadians, especially those who may be disadvantaged, are able to cash government cheques under $1,500 free of charge at any bank in Canada; promoting competition and innovation by enabling co-operative credit associations to provide technology services to a broader market; reducing the administrative burden for federally regulated insurance companies; and, offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements.

In summary, the financial system review act would further strengthen our already world-leading financial system by reinforcing stability in the financial sector, fine-tuning the consumer protection framework and modernizing the regulatory framework to adapt to new developments.

As I mentioned earlier, the financial services sector is of critical importance to the economic health and jobs in the greater Toronto area and indeed for all of Canada. That is why I strongly urge all members of the House from all parties to vote in favour of this bill, in favour of a strong financial sector, and in favour of the jobs it supports for Canadians.

I have appreciated the opportunity to speak to an issue important to my riding and to the economic well-being of all Canadians.

[Jinny Sims, NDP, Newton—North Delta, BC]

Mr. Speaker, there is no doubt that for every Canadian across the country the health of the banking sector is critical. The banking sector plays a critical role in all our lives, whether we are buying a house or applying for a credit card. Also, many of us get paid through our banks. Many people, not just those with a lot of money, have a vested interest in ensuring our banking sector is stable.

Knowing that a five year sunset clause was included in the legislation and knowing that the deadline for that review was April 20 this year, it interesting that my colleagues across the aisle would wait this long to table such critical legislation. Not only did they wait so long, but at the same time they tabled the legislation, they moved time allocation on it. Out of one side of their mouths they are telling us that this is critical and timely legislation and we must get it through the House. Out of the other side of their mouths they are telling us that they will not have open and transparent debate, where the opposition gets to take a look at the bill and could, and probably would, make some useful amendments.

I sat here for half an hour this morning and listened to the debate on the critical nature of the need to move time allocation. Once again, I would argue that time allocation is not needed. The bill requires thoughtful consideration because it would impact many Canadians. It would impact their savings as well as the homes in which they live.

Instead of us being given a reasonable amount of time to debate the legislation, the majority in the House once again used the duct tape approach of muzzling the voice of the opposition. Let me assure my colleagues that they might be able to move time allocation in the House, but we will send a message to our communities that we were not allowed to debate the bill in the thoughtful way we would have liked.

I am a new MP so the House will have to beg my forgiveness for saying this, but I was really taken aback this morning when a speaker on the government side said that the NDP opposing time allocation was like us bringing chaos into people's lives.

I am beginning to wonder what my colleagues across the way want. Do they want the opposition to just support any legislation they bring in? I am sure they would like that, but that is not the role of the opposition. If members of the opposition have things to say, we are immediately labelled, and some language is used that I find disturbing.

I am not a supporter of chaos, either in Parliament, in my personal life or back in my community. When I want to debate a legitimate piece of legislation, it is not because I want chaos. It is because I want to give thoughtful input as the representative of my community.

The government shows a lack of respect toward members of the opposition. I should not be puzzled by that; I should expect that. The legislation had its first unveiling in the Senate. It is a bill that would impact so many Canadians. I find it really disturbing that it was first put before an unelected, unrepresentative Senate. Why? What prevented that bill from being in the House first?

It also interesting to note that despite the patronage appointments and the payola that has gone into many of the appointments to the Senate, even that house commented that it had to look at a significant piece of legislation, with many technical components, and had concerns that with three weeks it did not have enough time and that the government was trying to rush the bill through.

We have until April 12, What is the rush? If the government knew it had until April 12 as the sunset clause, why did we not start talking about this last May, or June, or October, or November or December? Instead, we are today looking at this significant piece of legislation.

Despite all of those things, the NDP welcomes the review of the financial systems review act. We should be very proud of the banking regulations that are in place. It is because of those regulations that Canada was buffered from the worst aspects of the economic meltdown.

I also think there is an irony that has to be pointed out. We have a majority in the House that is absolutely committed to deregulation. When we look at almost everything else, like the gun registry, the Wheat Board and many of the other issues that have come before the House, they have all been for deregulation. Yet when it suits the Conservatives, they wax eloquent about the existing banking regulations. However, those regulations exist because of the work of some other governments. It was the opposition that prevented my colleagues across the way from deregulating our banking system at a certain time in our history.

When I look at the need to review the area of banking and banking regulation, I am also hit by what is missing from the legislation. I am not sure if members have read some of the newspaper articles and emails. There is nothing in the bill to limit and regulate user fees charged by banks.

Recently a senior citizen came to my constituency office. I have many of them coming in these days because they are getting very disturbed. This is what the senior citizen told me. She put her money in the bank, and when the bank wanted to automate and introduce the ATM machine, she started to use that thinking it would save the bank and her money. Remember, bank profits are very high now, yet there is always a threat of new user fees or increased user fees. This senior citizen is so puzzled because she believes she has saved so much money for the bank by it not needing the personnel in place, which I think is a huge mistake, and it being so automated. However, her fees keep going up.

This was an opportunity, with this legislation, for the government to start looking at regulating user fees that banks are gouging their customers. Some banks are even beginning to introduce fees for people to get their own money out of their bank accounts. At one time, it was only if they went to a different ATM. Now one of the banks has put out the idea that there could be user fees even if customers uses their own bank's ATM machines. That makes no sense. Canadians look to us to regulate things like that.

The other concern I have is the interest rates on credit cards. It is time the government put regulations in place that are tighter and more closely regulated to ensure banks do not charge the kinds of rates they are. People who put their money in banks are lucky to get 1% interest. With that money, the banks get to play with it and make money on it. On the other hand, if people use their credit cards, which are banking credit cards, banks charge interest rates from 12% up to 22%. If that is not gouging, I do not know what is. As far as I am concerned, a critical component that is missing in this is tackling the area of user fees for citizens who are being hurt by them. We also have to look at the rates banks charge for people who use those credit cards.

I know some people will say that people should not use credit cards. However, in today's reality some people live from paycheque to paycheque. They often end up having to spend on their credit card, hoping they can pay part of it back if they get some money coming in within the following month. I am talking about just a few people. A lot of people survive like that and not because they go out to buy some big fancy toys or go on big holidays. They are trying to make ends meet from month to month.

I would be the first one to argue that if we are getting into luxury items, then we are looking at choices. I am talking about credit cards people are using because they have no other choice. They need that flexibility to survive. Because of that, I feel the scope of this bill is really limited and needs to be widened.

I was also interested in finding out what kind of consultation occurred. I heard that 30 groups were consulted. For a country the size of Canada, only 30 groups were consulted, and 27 of those were anonymous. What kind of consultation is that? Was this consultation open and transparent?

One thing I do not like about anonymous submissions, or whatever, is people get to say whatever they want and they are never held accountable. I have a primary rule that if I get something that is not signed, I put it aside. The government has had consultations with three groups, three groups for a country the size of Canada on an issue as important as banking.

The other area we do not often talk about is the co-operative banks in our communities and how we need to support them and find ways to do that. The co-operative banks in my area do an amazing job of giving back to the community in many different ways. I am a bit saddened that this is not being addressed in the bill.

Once again, Bill S-5 is being used by the government as a prop to hold up the banks. It is being rushed through the House. From what I have read, the profits of banks has increased incredibly. It has not really gone down. We should take a look at the consumer debt, which is at a record level of 151% of disposable income. I want every one of us in the House to take a second to comprehend that. Consumer debt is at record levels of 151%, which is so high.

It is because this debt level is so high that we are becoming increasingly concerned about some risky mortgage lending practices and home equity credit lines by banks and other lending institutions.

Currently, if I go through websites or look at some of the mail that comes through my door, it is clear that a person can actually get his or her house financed fairly easily for up to 90%. That is an advantage for some, but in the long term it is also the basis for potential instability. Right now our interest rates are fairly reasonable and low, as many would say, but if they were to go up by even half of 1%, that would put many of these people in jeopardy.

To avoid the kind of housing slump that happened in the United States, surely we should be taking the time with this legislation to put protections in place. When we take a look at our regulations, we absolutely must take our time.

Mr. Speaker, how much longer do I have?

[Ray Boughen, Conservative, Palliser, SK]

Mr. Speaker, I am pleased to have the chance to address the House in support of Bill S-5, the financial system review act. For the information of Canadians and members of the House, the financial system review act is a mandatory and routine piece of legislation.

To ensure the stability of the financial sector in Canada, the statutes that govern federally regulated financial institutions must be reviewed every five years, a long-standing practice that has carried over from previous governments. As I mentioned previously, it deals with federally regulated financial institutions and, for clarity, those include domestic and foreign banks, trust and loan companies, insurance companies and co-operative credit associations.

The last similar legislative review was completed through Bill C-37 in the 39th Parliament. Prior to that, a similar review was completed in 2001 through Bill C-8 in the 37th Parliament. As with the previous five year reviews, there is a timeline for the process to be completed, as the sunset date for the financial institutions statutes is April 20, 2012. The present five year review, which has led to today's bill, commenced in September 2010 when the finance minister launched an open and public consultation process that asked all Canadians to submit their thoughts and ideas on how we could best improve Canada's financial system to make it even more stable and secure.

During the consultation process, I understand that many Canadians provided their feedback and much of that is seen in today's bill. Moreover, the public consultation process itself has been praised. For example, the Canadian Life and Health Insurance Association told the Senate banking, trade and commerce committee during its study of the bill, “The consultation process was very positive and reflected the technical nature of this review”.

The financial system review act, while largely technical, would take important steps to help guarantee that Canada's fiscal system is securely regulated and remains strong and stable for the sake of our economy. Among the bill's highlights are measures to: First, bring up to date financial institutions' legislation to support financial stability and ensure that Canada's financial institutions continue to operate in a competitive, well-regulated and secure environment; second, better protected consumers with an improved protection framework, including reinforcing the powers of the Financial Consumer Agency of Canada; and third, improve effectiveness by reducing unnecessary administrative red tape on financial institutions and adding prudently regulated flexibility.

Again, today's bill is tremendously important in supporting the continued strength of our economy, the main priority of our Conservative government and an area where we are getting results. Indeed, while there are challenges ahead, Canada's performance during the recent global downturn has been strong when compared to other industrialized countries. First and foremost, since our government introduced the economic action plan to respond to the global recession, Canada has recovered more than all of the output and all of the jobs lost during the recession. Some 610,000 more Canadians are working today than when the recession ended, resulting in the strongest rate of employment growth by far among all G7 countries.

Furthermore, about 9 out of 10 positions that have been created since July 2009 have been full time and more than three-quarters of the jobs created over this period have been in the private sector. Fortunately, Canada has fared far better than the U.S. in this regard. Indeed, Canada's unemployment rate has been lower than that of the U.S. since October 2008, a phenomenon not seen in nearly three decades.

On top of Canada's solid performance on jobs, the real gross domestic product is now significantly above pre-recession levels, the best performance among the G7 nations. It is clear that Canada has weathered the economic storm relatively well. It is also clear that this resilient performance in a climate of global uncertainty has not gone unnoticed.

Both the International Monetary Fund and the Organisation for Economic Co-operation and Development forecast that we will be among the strongest economic growth in the G7 over this year and next. Forbes magazine has ranked Canada number one in its annual review of the best countries in which to do business. Three credit agencies, Moody's, Fitch, and Standard & Poor's, have reaffirmed their top ranking for Canada. Most significant, for the fourth year in a row, the World Economic Forum rated Canada's banking system as the soundest in the world. That is something we would reinforce with today's bill.

Clearly, this is a solid performance in volatile times and it will serve this country well. Indeed, in the recent words of Scotia Bank's chief economist, Warren Jestin, “When you look at what exists in Canada, this is still the best country in the world to be in.

To truly understand the strength behind this performance, we need to consider the hard work that took place through the actions that our Conservative government took to pay down debt, lower taxes, reduce red tape, promote free trade and innovation and ensure a stable financial system.

To start with, our government paid down significant amounts of debt when times were good and kept our debt to GDP ratio well below our G7 counterparts. As a result, when trouble hit, we had the ability to respond.

The International Monetary Fund projects that Canada's net debt to GDP ratio for the last year will come in at just under 35%. A net debt to GDP ratio of under 35% is excellent considering that these rates for other G7 nations are much higher. In contrast, Germany is projected to be over 57%, the United States and the United Kingdom at over 72%, France at 81%, Italy at 100% and Japan just over 130%.

Along with this strong fiscal performance, we introduced the tax relief required to create jobs and growth in all economic conditions. In 2007, prior to the impact of the financial crisis, Canada passed a bold low tax plan that helped to brand Canada as a low tax destination for business investment. This low tax plan, along with our sound and safe financial system, plays and will continue to play a crucial role in supporting economic growth and jobs.

Our Conservative government is under no illusions that our work is finished. Major challenges remain both here and around the world. As we know, the global economic outlook remains highly uncertain and the situation in Europe is still very fragile. The changes facing our global economy are far from over and Canada will not be immune.

Despite solid job creation since July 2009, too many Canadians remain unemployed. That is why our Conservative government's main focus will be the continued implementation of the next phase of Canada's economic action plan to support jobs and growth as we prepare for budget 2012. That includes today's bill, which would help to ensure the continued strength and security of our financial systems.

Once more, we will continue to focus on improving the well-being of Canadians by sustaining the economic recovery, eliminating the deficit and making investments that will fuel long-time growth. I strongly urge all members to support and vote in favour of this important legislation and help it progress in a timely manner to passage.

[James Lunney, Conservative, Nanaimo—Alberni, BC]

Mr. Speaker, I thank the parliamentary secretary for that important reminder. Of course, he has been a point man in addressing many of these concerns. He rightly points out the excesses that happened in the United States, of government intervention, that contributed to the failure of institutions that people relied on and made unstable commitments to mortgages that were not sustainable and were not backed by real assets.

The changes that are being introduced in Bill S-5 are ones that would improve our system. They would make a very good system better.

[James Lunney, Conservative, Nanaimo—Alberni, BC]

Mr. Speaker, I must have missed something in that member's question. I am not sure how it relates to the banking bill that we are discussing today, Bill S-5. We know that this particular piece of legislation covers a whole range of issues that are important to our financial regulation. It would respond to changes to the financial sector and a rapidly changing global market, it would ensure access to banking, it would level the playing field and promote co-operation, it would enhance the supervisory powers of the Financial Consumer Agency of Canada and it would improve efficiency.

So I am not sure where the member opposite was coming from with that particular question.

[James Lunney, Conservative, Nanaimo—Alberni, BC]

Mr. Speaker, I would first like to advise you that I will be sharing my time with the hon. member for Palliser. I am pleased to enter the debate today and speak to Bill S-5, the financial system review act.

Today's act is important to Canadians because it would ensure the continued strength and stability of our financial system. That is a system that we all depend on every day, whether we are making a deposit at our bank, making at a purchase a store with a credit card or using a mortgage to buy a family home. Specifically today's act, while largely technical in nature, would reinforce stability in the financial sector. It would fine-tune the consumer protection framework and adjust the regulatory framework to adapt to new developments.

Bill S-5 would provide for a well-regulated framework that would allow Canadians to rest assured that our country's financial system will remain the safest and most secure in the world. Indeed, as many Canadians may know, for the fourth year in a row, Canada was recently ranked as having the soundest banks in the world, by the World Economic Forum.

Most Canadians are aware of this, and are justifiably proud. They are pleased that Canada did not go through the kinds of crises that many other developed democracies in the western G7 countries did, many of which had to nationalize banks and make huge taxpayer investments. Many consumers in other nations went through financial chaos because of a collapse in the financial system.

We are very fortunate to have the sound regulatory regime we have here in Canada. Before continuing, I would like to provide a bit of background on today's act and how it came before us today in the House.

In Canada our financial sector legislation is subject to a full review on a five year cycle. It covers all federally regulated financial institutions, including domestic and foreign banks, trust and loan companies, insurance companies and cooperative credit associations. This five year review practice sets Canada apart from almost every other nation in the world. It ensures that the laws and regulations by which our financial systems are governed remain at the forefront of the global financial system.

We are especially fortunate in Canada to have a well-regulated financial system, something that has been widely observed in recent years. The world itself has recognized Canada as a leader, as our banking system has been ranked the soundest in the world.

As the American magazine Newsweek wrote recently:

Guess which country, alone in the industrialized world, has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. Yup, it's Canada.

Similarly, the Brookings Institution, a well-known American think tank, recently declared:

....the Canadian banking system has long been regarded by the IMF as a paragon of international best practices. The World Economic Forum recently ranked it the soundest in the world. And it looks better with every passing day....the overall system has remained solvent and solid amid the current global crisis.

I think this is something most Canadians are justifiably proud of, or at least pleased with. Even though we have gone through our challenges in Canada, we have not faced the crises that other nations have.

Even the president of the World Bank has noted that our strength is a model for the world, saying:

Canada's experience offers lessons to others, especially its strong financial and regulatory environment that is helping it manage the shocks of the downturn, particularly in the banking sector.

As the past few years have shown, international praise for our system is well founded. While Canada's financial system was not immune to the impacts of the global financial crisis, Canada's banks stood firm, 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 step in to bail out its major banks in the aftermath of the 2008 financial crisis. This Canadian resilience matters.

A strong financial sector plays a fundamental role in supporting a strong economy, and not just in times of crisis. As members know, and I think Canadians understand, the focus of our government is jobs and the economy. It is protecting Canada's prosperity and future employment environment that will maintain the tax base that we depend on and provide the services that Canadians look to us for.

Workers, retirees and pensioners count on a strong financial sector for the security and the growth of their deposits and investments and to maintain the standard of living that they worked so hard to build. Financial consumers rely upon it for competitive financial products to keep their mortgages or other household financing affordable. Business, large and small, also depend upon it for access to competitive financing to help them to invest and to grow.

The financial crisis highlighted the importance of evaluating the overall size of financial institutions, the intricacy of global linkages, and the impact those factors have on stability and the best interests of our financial system. The crisis also led to extensive changes in the regulatory framework, ensuring that Canada's financial sector remains the soundest in the world.

The financial system review act will build on these reforms and fine-tune the efficiency and effectiveness of the framework. It will improve the ability of regulators to share information efficiently with their international counterparts. This will help fulfill our G20 commitments at a time when financial institutions increasingly operate on a global scale. It would ensure effective supervision and regulation across borders.

Today's act also proposes to better protect consumers, chiefly by enhancing the supervisory powers of the Financial Consumer Agency of Canada, 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. It is also the government's lead agency on financial education and literacy. It has advanced an array of excellent initiatives in recent years.

I think, in terms of financial literacy, Canadians are starting to pay attention to something they more or less took for granted for many years. I think we have all had a wake-up call as to how important it is that our institutions are on a solid basis and that they are managed in a very secure way.

It has developed innovative tools to help Canadians, such as a mortgage calculator that quickly determines mortgage payments and the potential savings resulting from early payments.

I know that our government is concerned about the consumer debt in Canada, as well as in the U.S. We are advising Canadians to get a handle on debt and live within their means. Sound financial management is as important for our families as it is for our institutions. The innovative tools developed by the Financial Consumer Agency of Canada, such as a mortgage calculator, help Canadians accomplish those objectives.

The FCAC has also created innovative online information to help consumers shop for the most suitable credit card and banking package for their needs. There is a competitive marketplace out there. We hear a lot of talk from our colleagues opposite about the government telling the banks what fees to charge for services. However, there is competition between the institutions. This is a tool developed to help Canadians determine where they would get the services that fit their own needs best.

The financial system review act proposes to improve consumer protection by increasing the maximum fine that could be levied by the FCAC for violations of a consumer provision of the act. It would increase the maximum penalty to $500,000, from $200,000.

Finally, the financial system review act would build on the government's ongoing actions to cut red tape by reducing the administrative burden on financial institutions and adding regulatory flexibility. This would include scrapping duplicative disclosure requirements.

These measures will support a well-functioning financial system, meeting the needs of Canadians and supporting our future economic prosperity.

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

Mr. Speaker, I appreciate the opportunity to speak to this important piece of legislation. I hope all members will support it.

[Glenn Thibeault, NDP, Sudbury, ON]

Mr. Speaker, I will be splitting my time with the fine gentleman and MP for Burnaby—New Westminster, who does a fantastic job on this file and many others.

I rise today to speak to Bill S-5, which looks to update the legislation relating to banking and financial institutions in Canada. Anyone who follows my interventions in the House will know that these issues are very close to my heart as the NDP consumer protection critic. I think it is very important for parliamentarians to have an opportunity to review legislation that relates to the banking sector.

Banks are vital to the Canadian economy. Canadian banks directly employ a quarter of a million people across the country and pay almost $1 billion in payroll taxes each year. They also spend around $15 billion on services and goods within the economy, thereby indirectly supporting even more jobs. Moreover, banks and other financial institutions provide a vital service to the economy as a whole. They provide lending services for individuals to buy homes and for businesses to invest and expand.

It is important to ensure that Canada has a world-leading system of banking regulation to allow our banks to stay strong and support the economy as we continue through a time of global financial uncertainty. Therefore, I will be supporting the bill at second reading to ensure that this important legislation gets the attention it deserves at committee.

Unfortunately, as has so often been the case since last year's election, the government is more interested in ramming through legislation than in the process of debate, which is the hallmark of Canadian democracy.

First, we again find ourselves limited in the amount of debate we can have on an issue before the House. By my understanding, the government has now shut down debate 16 times in just 80 sitting days and 4 times in the last 12 days. The bill would amend 13 pieces of existing legislation, including the Bank Act, all of which relate to the direct functioning of our economy, and yet the government is trying to push this review through without the dedicated analysis that these changes warrant.

Debate in this chamber is not just for show and it is not just some inconvenience for the government. It is fundamental to the proper functioning of our democracy. It allows various points of view representing the geographic, cultural, linguistic and social diversity of our great country. Being part of this legislative process is too important for us to continually have time allocation imposed.

Second, the bill was introduced in the Senate rather than here in the House of Commons before democratically elected representatives. Then, just as the case here, the bill was pushed through the Senate's legislative process without proper review. In fact, the whole process took just three weeks.

This is the second major economic issue the government has pushed to the Senate in order to marginalize the ability of democratically elected parliamentarians to take part in important debates. The other was the study of price differentials between the U.S. and Canada.

It also worries me that the government failed to widely consult on these changes before introducing this review. Given the important role of the banking sector in our economy, I find it disturbing that there were no coordinated national public consultations with consumer groups and small businesses to try to understand how the banking system could be improved from their perspective. In fact, the government's little publicized online review solicited only 30 submissions and 27 of those respondents opted to remain anonymous. While there may well be some important details to be drawn from these submissions, I find it highly doubtful that we can hope to understand the full range of opinions and debate on how to update our banking legislation from such a small sample size.

I will talk in detail about some of the issues addressed in this legislation, specifically those relating to my own area of focus, consumer protection.

As our consumer protection framework currently works, various government departments are responsible for consumer protection for specific issues. This makes it very difficult for consumers to know where to go when they are confronted with a consumer problem. Depending on the type of issue to be resolved, a consumer may be required to work with Industry Canada, Health Canada, or Transport Canada, or even with the Financial Consumer Agency of Canada, FCAC, if the issues relate directly to banks and financial institutions.

Ending this confusing framework would have gone a long way to ensuring that Canadians have more confidence in their day-to-day dealings with financial institutions. However, the government refuses to move in this direction, and so what is it offering consumers? First, this bill would extend the definition of consumer provisions in regard to financial institutions to include agents and affiliates of banks that offer financial products. This would extend the scope of entities that come under FCAC's consumer protection provisions, which I support. It would also increase the ability of the government to introduce regulations and deferred legislation, giving the government the opportunity to introduce further consumer protection measures in the financial sphere. Furthermore, the bill would increase the maximum fine that FCAC can levy on financial institutions from $200,000 to $500,000.

All of these changes should be welcomed, but with some caveats. The increased ability to introduce consumer regulation is only noteworthy if the government utilizes that ability; otherwise, it is simply a nice talking point. The same can be said for increasing the maximum fine the FCAC can levy. When this bill was first introduced in the Senate, various stakeholder pointed out that FCAC very rarely levied its current lower maximum penalty. Given this fact, increasing the maximum penalty seems to be somewhat of a toothless change. In effect, these changes, while welcome, seem much more powerful in theory than in practice.

This bill is missing a change that would have incurred no cost for the government and massively increased the clout of both the consumer and small business protection regimes in Canada, namely, mandating that banks must be part of the Ombudsman for Banking Services and Investments complaints resolution process. OBSI offers a fair method for consumers and small businesses to address complaints to banks that cannot be dealt with by a bank's in-house complaint mechanism.

However, under the government's watch, both RBC and TD have been allowed to leave the OBSI system and instead use a Bay Street law firm to settle complaints. That law firm has been hired by the banks, and as the banks' customer its first priority is to please its clients, not to offer a proper method of redress for consumers and small businesses. This is simply unacceptable and the government should step in and mandate that banks use an impartial investigative process.

Moreover, there is nothing in this bill to look at the fees and charges levied by banks. I have heard from hundreds, if not thousands, of Canadians regarding ATM fees, credit card interest rates and current account charges. Banks obviously need to make a profit and be viable, but when we compare this bill to, say, the amendments tabled by Illinois senator Dick Durbin in the U.S., we can see there is room for discussion and debate on these issues.

In terms consumer or non-consumer related issues, this bill has some changes requiring some vigorous debate. For example, this bill would require Canadian banks to gain ministerial approval if they wished to purchase foreign entities. It would also increase the value a bank must reach before it is required to have its shares widely held, and it would allow Canadian financial institutions to sell their shares to foreign institutions ultimately owned by foreign governments.

I could go on and on about the importance of this subject and the debate that we need to continue to have, but I know my time is running out. In summary, if the government refuses to listen to these groups and insists on passing this bill in its current form, then at best this bill will have little positive change and, at worst, could end up doing more damage than good.

The House resumed 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.

Second Reading

[Cathy McLeod, Conservative, Parliamentary Secretary to the Minister of National Revenue]

Madam Speaker, it is a privilege to rise today in support of Bill S-5, the financial system review act.

While Bill S-5 is albeit largely a technical bill, it represents an important piece of legislation as it will help guarantee the ongoing security and strength of Canada's financial system, a vital sector of our economy. Today's bill would accomplish this by making a series of alterations to the various pieces of legislation governing Canada's financial system, including the Canadian Payments Act, which I will speak to in greater detail a little later.

Before doing that, I want to underline that today's legislation is mandatory and routine. This is as result of a long-established practice in Canada of engaging in mandatory five year reviews of our financial sector legislation. I will note that this latest five year review process began formally in September 2010 when our Conservative government launched a public consultation process open to all Canadians. Such mandatory five year reviews have helped to ensure that Canada has a well-regulated financial system. Indeed, it is the safest and most secure in the world.

As most members know, for four straight years Canada has been ranked by the World Economic Forum as having the soundest banks in the world. What is more, our well-regulated financial system is widely admired throughout the world.

In the words of a recent Ottawa Citizen editorial:

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.

As I mentioned earlier in my remarks, I would like to speak to elements of the financial system review act that address Canada's payment system, something Canadians interact with each and every day. Indeed, every year Canadians make 24 billion payments, worth more than $44 trillion. These payments allow us to run our businesses, sustain our household and allow governments to fund essential programs.

Canadians use various payment instruments to purchase goods and services, to make financial investments and to transfer funds from one person to another. These instruments include cash, cheques and debit and credit cards. Except for cash, payment instruments have traditionally involved the claim on a financial institution, such as a bank, credit union or caisses populaire.

Financial institutions, therefore, needed arrangements to transfer funds among themselves, either on their own or on behalf of that or their customers. A payment system is a set of instruments, procedures and rules used to transfer these funds. In Canada, our national system for the clearing and settlement of payments is run by the Canadian Payments Association, or the CPA, a not for profit organization of federally regulated financial institutions.

Clearly, no economy can properly function without a reliable and secure system of payments. However, the payments landscape is changing. For example, experiences in Canada and abroad since the 1990s demonstrate that clearing and settlement systems do not always include banks as direct participants. That is why Bill S-5 proposes to amend the Payment Clearing and Settlement Act to remove the requirement that there must be at least one bank involved. The new definition would allow more flexibility in establishing systems to clear such complex financial instruments as over-the-counter derivatives, or OTCs. This change would allow the Bank of Canada to oversee such systems that could pose systemic risk to the financial system.

Canada's leadership in reforming the global financial system through mechanisms, such as the G20, is well-known and a source of great pride for Canadians. One important Canadian commitment to our G20 partners is that all OTCs be cleared through central counterparties by 2012. This is an important step to ensure the resilience and stability of our financial system.

To meet our G20 commitments, it is imperative that Canadian prudential and market conduct regulators have the authority, tools and information necessary to monitor and regulate the Canadian OTC derivatives market on an ongoing basis. This means coordinating activities across current federal and provincial jurisdictions, as well as foreign regulators.

Bill S-5 proposes a change to the Payment Clearing and Settlement Act to make it clearer that the Bank of Canada can dispose information to other regulators, the payments clearing and settlement systems. This information sharing would help all parties understand the risks inherent in these link systems. Furthermore, failing to form such links could delay our ability to link to foreign systems and impinge on our ability to meet our G20 commitments.

This is the kind of evolutionary change that demonstrates the importance of regular reviews of our legislative framework to maintain Canada's leadership in financial services.

Bill S-5 would make another important and much needed change to the payments landscape. As hon. members know, Canada's credit unions are an important provider of financial services. More than five million Canadians and business owners are grassroots shareholders of co-operative financial services in Canada. One in three Canadians is a member of a credit union or caisse populaire.

In recent years, our Conservative government has shown its support for credit unions by supporting a federal credit union charter to accommodate growth and expansion of the Canadian credit union system. This would enable those credit unions that so choose to reach beyond provincial boundaries and pursue business strategies that are not constrained by provincial incorporation. It would also give credit unions a means to diversify their source of funding and spread their geographic risk exposure.

In that vein, in order to give federal credit unions a more effective voice in the Canadian Payments Association, today's bill would amend the Canadian Payments Act so that credit unions would fall within the co-operative class in the act rather than the bank class. At the same time, credit unions would still employ the long-standing, well-understood and robust governance, liquidity and clearing and settlement framework in use today. While it may sound like a simple technical change, it is an important one. This change would continue to promote a level playing field within the financial sector which would foster competition among players and ensure a stronger, more stable system overall.

The Credit Union Central of Canada, the national association for credit unions in Canada, said:

...we want to note our support for the proposed amendments....

Placing the federal credit union in the cooperatives class will preserve and strengthen the credit union system representation at the CPA. It will ensure that a federal credit union will be represented by a director, who speaks for the interests of cooperative financial institutions in CPA matters. A strong advocate at the CPA is important for the credit union system's ability to advocate on behalf of credit unions and to continue to operate payments facility efficiently and cost effectively, which has a direct impact on overall credit union system competitiveness.

I think all members would agree that a strengthened credit union is good for all Canadians.

For those reasons, I urge members to support the passage of this largely technical but important act which would ensure the smooth functioning of Canada's payment systems.

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

Madam Speaker, in his speech, the hon. member spoke a lot about how Canada's financial system is setting an example for the entire world and how it is completely effective. That is wonderful, but it is not because of the Conservatives. They have always supported deregulation. And that is what they are doing now: they are deciding not to regulate certain elements.

With regard to derivatives, a Montreal exchange handles only derivatives. How does the hon. member define derivatives? Does he even know what a derivative is? What does he think about aggressive tax planning that opens the door to tax evasion? How is it that we cannot regulate all this, and that Bill S-5 does not address these issues?

[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.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Madam Speaker, before beginning, I seek unanimous consent to split my time with the member for Wascana.

I have the honour to rise in the House to debate Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters. On the surface, this bill does not seem particularly controversial to me. However, as usual, the Conservative government's way of doing things, its approach and its attitude leave much to be desired. Once again, the government has introduced a bill that it says must be passed immediately. In other words, this government sees no need to consult Canadians or experts. The government would probably tell people that, since it is in power, it can make any decision it likes. It does not matter what anyone else thinks; this bill must be passed right away.

We have known since April 2007 that this act would have to be reviewed. Despite having five years to work on it, the government appears to have been taken completely by surprise. Now it is in a big hurry to get this bill passed in just two months. This bill has to be passed by April 20 because the Bank Act has to be reviewed every five years. Today is February 3.

This government does not even have enough respect for Parliament, the Standing Committee on Finance or the institutions that will be directly and indirectly affected by this review to have introduced this bill with sufficient time to—

The House resumed 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.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Madam Speaker, the member said that it was a relevant question. I agree with him and just hope that I can provide a reasonably relevant answer.

The role of the finance committee is very important and always has been. I have not sat on that particular committee before, but I have certainly been involved at other levels of government on a committee such as the Standing Committee on Finance. I am very excited about participating on it, particularly as it relates to Bill S-5, because that committee needs to bring forward experts to talk to us about the consumer protections advertised in the bill. I say so because I do not think the way the government has gone about its consultations to date has given consumer protection advocates the opportunity to have input into this process.

At our committee, as we go through the bill item by item, we will have an opportunity to invite those experts who are out there in the field, from credit unions and consumer advocacy groups, to come in and share with us information that will help us make the bill the best piece of legislation it can be in order to get the support of members of the House.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Madam Speaker, I am pleased to have the opportunity to participate in the debate on Bill S-5. I thank the parliamentary secretary for her kind words with respect to my addition to the finance committee. I look forward to working with her and other members of that committee in the weeks and months ahead.

I want to make it clear that the official opposition will support Bill S-5 at second reading in principle. As she herself has said, it is a very technical bill. It has not received a lot of public discussion. As is the case with a bill of this nature, the devil is sometimes in the details. It will be incumbent upon us in the chamber and certainly members of the finance committee to bring witnesses forward and discuss those details to make sure there is not something untoward that causes concern. Assuming we do not find anything, we will support the bill at third reading, but we will see.

There is no question the financial services industry is a major financial force in this country. It employs hundreds of thousands of Canadian women and men and deals with trillions of dollars in assets. We also know that the banking industry is not an ordinary sector of the economy. Banks have the power to shape and influence the livelihoods of Canadians. They have the power to create currency through credit. Therefore, it is extremely important that we pay attention to the practices and procedures of these financial institutions. We only have to look at what has been happening around the world over the past couple of years to see how important that is.

While I want to go through the bill to some degree, I want to say at the outset that it makes me chuckle how the Conservatives like to take credit for the Canadian banking system that has relied on a strong regulatory and supervisory tradition and framework. Unlike our American neighbours, the Canadian government, but more importantly Canadians, have recognized how important it is that we not allow our financial institutions to run amok and do what it is they do. We therefore have been slower in deregulating our financial system.

I suggest that had there not been a minority government from 2005 onward and given what we have seen over the past number of months since the Conservatives have been in a majority situation, they may have moved before 2008 to remove some of the important regulations that saved our system in 2008. Luckily we got through that time. Even they recognize the value of maintaining regulations and supervisory control over the industry and we are continuing in that direction.

We saw with the financial meltdown that we in this country are not immune to what happens in foreign countries. It was the single largest default by a foreign financial institution which created a domino effect. It affected us and financial markets around the world.

It is important to recognize, which I know the government has failed to do on a number of occasions, that the Bank of Canada back in 2008 had to advance $75 billion through the Canada Mortgage and Housing Corporation to buy back $75 billion in mortgages from Canadian chartered banks to stem a liquidity crisis.

While the Conservatives want to try to take credit, it is important to recognize it is an established tradition that Canadians have followed. I am glad that we are going to continue along those lines for the foreseeable future.

We have a few concerns with respect to the process by which Bill S-5 reached the House. The government made a commitment in the last budget that it was going to initiate a review at that time. There is a statutory sunset clause that comes into effect on April 20 this year. The government recognized that we have to conduct this review. Unfortunately, what it did was post a request for submissions on the website. It was very quietly done, and it did not seek permission from the groups and individuals who were submitting that those presentations would be allowed to be public. Only 3 of the 30 submissions that were made have been made public and that was by those organizations themselves that posted the information on the government's website.

This idea gets to what the parliamentary secretary said in her debate. She said to Canadians who were watching that this is a very technical bill and that she would talk about very technical issues which they might not understand. That is an issue which goes to the heart of the whole question of consultation around such important matters. We need to demystify these issues. We need to present them in common language so that Canadians do understand.

One problem we are facing, which has been cited by the Governor of the Bank of Canada, Mark Carney, is that Canadians are overly indebted. Household debt has reached very problematic levels. Part of the reason we run into these situations is that we do not have a sufficiently clear and honest discussion about matters such as those contained in the bill. The questions that have been dealt with by the bill deal with consumer protection. Those are matters in which Canadians should be involved. Canadians are continuing to be gouged, in that hundreds of millions of dollars in fees and taxes are being imposed by the banks on every type of financial activity. Canadians need to play a role in discussions on the regulations that the government permits and the legislation that goes through.

It is a concern to us that the government decided to introduce this legislation in the unelected chamber. It did not start such an important bill before the members of this House who are duly elected by Canadians. The government took another route. Some would say the bill came in through the back door. It came in through the Senate. Even some august senators said that there was not sufficient time given to them to have a proper review of it. They raised concerns about it. I also asked that question of the minister.

Members of this caucus hope that the government will not bring in closure number 14 on this bill to limit debate by elected members of the House. This is far too important. It is important that Canadians understand what is going on. We need to take every opportunity to explain what it is that is being proposed by Bill S-5, to ask questions of government, to listen to the answers, and to have a general debate about what it is contained in the bill and how it will affect Canadians. That is what we are going to do.

It has been suggested that there are a multitude of housekeeping changes. However, there are a few things within the bill that I would like to speak to directly.

We welcome the broadening of the supervisory and enforcement powers of the Financial Consumer Agency of Canada and the broadening of the jurisdictional scope of the Superintendent of Financial Institutions.

We heard this morning that the Office of the Superintendent of Financial Institutions is watching closely the practices of banks, which appear to be loosening up credit, in some instances. That it is paying attention is a good thing. It is a good thing that the banks and financial institutions are not going to go down the road of predatory lending practices, which would have an impact. We have seen they have had an impact in other countries. We would not want to see that happen here. We welcome the broadening of the jurisdictional scope of the superintendent that is contained in the bill. However, we would say there was an opportunity in the bill for the government to go further to protect Canadian citizens from the predatory monopolistic practices of the banks.

I said that we have concerns that Canadians continue to be gouged by the banks in the form of service charges, user fees, and abusive credit card rates. That is one of the reasons we need to have a fulsome debate with Canadians about issues regarding our financial institutions and borrowing and lending practices.

It is also a fact that we need to provide in the bill and in regulation further protection for consumers because they are continuing to be gouged. The former leader of the opposition, Mr. Layton, was an outspoken advocate for a reduction in the credit card interest rates and the predatory practices of the banks and financial institutions as they dealt with credit cards. That is something we believe needs to happen. It is particularly galling at a time when these extra charges on Canadians are allowing banks to recognize record profits, which last year amounted to $25.5 billion, at a time when Canadian wages are declining. It is just wrong and we need to deal with that.

The responsibility for consumer protection unfortunately is not dealt with in this legislation. It is dispersed among multiple jurisdictions, departments and agencies. Again, it raises doubts as to whether the government is truly committed to the robust protection of consumers.

The modest changes that are brought about for consumer protection in the bill have yet to be tested by consumer advocates and users. We certainly hope we have the opportunity at the finance committee to bring representatives forward to deal with these issues.

We are concerned by increasingly risky lending practices in terms of mortgages and home equity credit lines by banks and other lending institutions. That concern is well-founded. It is something we heard about today and is shared by the Office of the Superintendent of Financial Institutions. Members of this House and members of the finance committee need to pay attention to that when we are discussing this bill.

Again let me say that it was through greater regulation that Canada avoided the mortgage-induced crisis, such as the one that occurred in the United States in 2007-08. We have a strong tradition in this country of supervisory and regulatory protections over our banking system, and we need to ensure that we are vigilant going forward.

This bill is missing an important step in creating a stronger economy, the regulation of financial speculation and derivatives. Billions of dollars continue to be gambled on a regular basis, destabilizing the economy and providing no benefit to everyday citizens. The government should use this opportunity to work in concert with other governments to halt the destructive speculation in Canada and abroad. We are also concerned that under this bill, large foreign acquisitions by financial institutions would be subject to ministerial approval rather than simply the approval of the Superintendent of Financial Institutions. We think this will unnecessarily politicize important decisions. These decisions should not be made in a partisan manner because there is the potential for political influence being exerted.

While I talk about the fact that the banking system in Canada has a tradition of regulation and supervision that has helped us avoid the kind of problems we have seen in other jurisdictions, there is a darker side to our stronger banking system. Canadian chartered banks have dominated the domestic market for decades. Their dominance and the fact that both Liberal and Conservative governments have only paid lip service to this issue have allowed them to continue to extract abusive fees, taxing Canadian consumers. These fees have created $25 billion in profits for the banking system. They provide the banks with enough net revenue to offset eventual speculative losses on the international capital markets and from overseas ventures, and allow them to pay out generous seven-figure bonuses to their CEOs and dividends to shareholders.

In addition, Canadian banks have been benefiting for years from tax-arbitered schemes such as the dividend gross-up mechanism that has allowed them to reduce their effective tax rates by acquiring Canadian dividend-paying stocks while hedging away the economic risk of those stocks by the use of derivatives. Banks sometimes share those tax savings with non-taxable entities, such as pension funds. This amounts to an effective tax subsidy that costs Canadian taxpayers sums that could well be in the billions of dollars. In addition to the tax effects, dividend gross-up mechanisms tie up bank capital for years and trump bank lending to small businesses and entrepreneurs. This is a complex issue that deserves much more scrutiny.

The changes being brought forward by Bill S-5 are modest. They could be greater as they relate to consumer protection. There is much work to be done and we cannot be complacent. We have seen turmoil and the damage that can be done by over-speculation and risky lending by financial institutions around the world, and we need to be constantly vigilant. However, I again say to the members opposite that we need to have this conversation about lending, borrowing and spending openly with Canadians. We need to deal with the problems created by the lack of financial literacy in this country.

We recognize that the increasing indebtedness of ordinary Canadians is a serious problem. The economy continues to be flat and has not been growing to expectations. Recently, we heard announcements indicating that the job creation figures continue to be weak.

The government is moving in directions that are having a detrimental impact on Canadians. We need to have important and respectful conversations about matters as important as to how we are managing our financial system in this country.

As I said earlier, we will be supporting the bill as it moves forward from second reading to committee. I look forward as a member of that committee to engaging with witnesses and starting to deal with some of the details so we can find out exactly what is in this legislation and make sure that it is as strong as possible for Canadians.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Madam Speaker, it is great to speak today and ask the member questions about Bill S-5, which I think is a tremendous bill for our country.

As the member travelled across the country during the break, conducting many consultations with people from the business and financial communities and discussing the aspects that are contained in the bill, what were the results of those consultations, what did she hear about the bill and what did Canadians have to say about the financial institutions and the way the government operates them in Canada?

[Shelly Glover, Conservative, Saint Boniface, MB]

Madam Speaker, I congratulate my colleague across the way on being newly appointed to our finance committee. I look forward to many future studies and discussions with him on the financial status of our country.

With regard to the bill, I acknowledge, as my colleague mentioned, that this will affect hundreds of thousands of Canadians. In fact, it will affect all Canadians. Financial systems affect not only the people who are working, but those who are benefiting from other forms of income. For example, it benefits our children. Therefore, it is very important that we continue to evaluate and ensure we get this right for all Canadians.

With regard to the Senate, we have some wonderful senators who work very hard to help move these kinds of very important legislation forward. The legislation has to go through both Houses before a decision can finally be implemented. We have a number of agenda items that affect the financial system and Canadians, including the pooled registered pension plan that we introduced recently and a number of other bills that are coming forward.

Since we have such a charged agenda, it is important that we also move Bill S-5 because of the sunset date. In our opinion, it is prudent to ensure we get this through as quickly as possible and use the expertise and the senators in a way that would help us do that.

I assure the member that the senators took great care in looking at the bill, as we will in the House. We have had a number of reviews already and I look forward to that member voting in favour to pass the bill in a timely manner.

[Shelly Glover, Conservative, Parliamentary Secretary to the Minister of Finance]

Madam Speaker, I welcome the opportunity to open debate at second reading of Bill S-5, the financial system review act.

This proposed legislation matters to Canadians because it concerns one of the most fundamental drivers of our economy, the financial services sector.

Before I go any further I would like to note that the proposed legislation is in fact mandatory. Every five years, the government is bound to review the statutes that govern federally regulated financial institutions to maintain the safety and the soundness of the sector, while ensuring that Canada remains a global leader in financial services.

The Canadian Bankers Association has remarked that its members “believe strongly in the importance of ensuring that the legislative and regulatory framework is reviewed regularly”. As the last review was conducted in 2007, the Bank Act requires that this be completed this year.

For the information of members and Canadians watching at home, the current five year review was launched on September 20, 2010 when the Minister of Finance initiated an open public consultation process on how to improve our financial system.

Here in Canada, the financial sector plays a key role in fostering financial stability, safeguarding Canadians' savings and fuelling economic growth and productivity. Aside from the fact that these institutions offer essential services worldwide, the industry employs over 750,000 Canadians. It represents about 7% of Canada's GDP and is known for its use of information technology.

Not only are our banks the foundation of our economy, but their strength and stability are a model for the entire world. Unlike the United States, the United Kingdom and other European countries, we did not have to nationalize, bail out or buy stock in our banks. In fact, for the fourth year in a row, the World Economic Forum has stated that Canada has the soundest banks in the world. The Financial System Review Act will help to ensure that our banks remain strong and effective and that they adapt to the new realities of an evolving global marketplace.

As the Canadian Life and Health Insurance Association has noted, the act represents a welcome fine tuning of the various financial institution statutes.

To effectively describe the benefits of this proposed legislation to the House it is worth revisiting our government's response to recent financial volatility.

Beginning in 2007 and through 2008, turmoil in global markets revealed serious weakness in the international financial system. Around the world many major financial institutions failed and needed to be bailed out by governments at the expense of taxpayers, but not here in Canada. Thanks to sound regulation by our Conservative government, not one single bank failed and not a single bailout was necessary, making Canada a model for the world.

Listen for example to the words of U.K. Prime Minister David Cameron who praised our banking system on a recent visit to Canada:

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... Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.

The Irish Times also declared that Canada's “strict banking supervision was a reason why it was one of the world's strongest performers during the recession”.

The International Monetary Fund also said it “commended Canada's strong financial regulation and supervision. This has resulted in a stable and resilient banking sector, which has resisted the international financial crisis well and remains well prepared to deal with most adverse scenarios”.

A U.S. Congressional Research Service report added that “Canada's financial system in particular is garnering attention, because it seemed to be more resistant to the failures and bailouts that have marked banks in the United States and Europe”.

Even so, we have responded to the crisis with quick action to ensure the long-term stability of our financial system.

First, in budget 2008, the government ensured that the Bank of Canada had modern, appropriate tools to enhance the stability of the financial system when necessary. In fact, the Bank of Canada used these improved tools to protect our financial system, particularly by redistributing liquid assets to financial institutions, which was key to preserving the flow of credit to Canadians and businesses during the so-called credit crunch.

In budget 2009, the Conservative government also strengthened the authority of the Canada Deposit Insurance Corporation, or CDIC. This enhancement gave CDIC a broader range of tools to provide financial assistance to troubled financial institutions, thus promoting stability and protecting Canadian's deposits.

We also took steps to protect our mortgage market. The American sub-prime mortgage crisis, and the recession which followed, illustrate the importance of a stable and well functioning housing market.

In Canada, our system of mortgage insurance ensures that real estate remains stable. In order to protect it from the dangerous excesses experienced by other countries, our government has acted three times to adjust the mortgage guarantee framework. These adjustments included reducing the maximum amortization period to 30 years from 35 years for government-backed insured mortgages with loan-to-value ratios of more than 80%. We also reduced borrowing limits for refinancing and withdrew government insurance from home equity lines of credit.

In budget 2011, our government announced that we would give the current rules on the mortgage insurance framework a basis in legislation. This would further promote financial stability. We are actively developing this framework.

As you can see, the government has not been idle since the last financial institutions legislative review in 2006. We have renewed many key elements of our financial system and bolstered it by adding new tools to ensure its stability. It is perhaps because of these changes that, during the consultations conducted during the 2011 review, we found that only a few minor adjustments are now necessary.

Numerous detailed and thoughtful submissions were received from various stakeholders, including industry associations, financial institutions, consumer groups and individual Canadians. I am pleased to announce that the participants were satisfied with the process.

The Canadian Life and Health Insurance Association stated at the Senate committee on banking, trade and commerce, which completed its study of this bill late last year, that:

The consultation process was very positive and reflected the technical nature of this review.

From these consultations, we received a number of excellent proposals for fine-tuning, clarifying, harmonizing and modernizing the existing framework. Our government has listened and is committed to doing just that with the proposals contained in the bill before the House today.

The current framework works well. Canada's financial system continues to be recognized as one of the soundest in the world. With that in mind, I will outline the key measures contained in Bill S-5 for members and Canadians watching at home. I remind them that this is very technical in nature. I hope that they will be able to understand the measures I will outline.

The proposed legislative package includes measures that will: respond to changes in the sector; ensure access to banking services for all Canadians; level the playing field by promoting co-operation among our financial institutions; improve the efficiency of our system; and, finally, clarify the intent of existing legislation.

Among the examples, to better respond to changes in the sector, our government is improving the ability of regulators to share information efficiently with their international counterparts.

Also, to keep pace with the growing global financial sector we are increasing the widely held ownership threshold for large banks from $8 billion to $12 billion.

To ensure universal access to banking services, the legislation clarifies that all Canadians, including bank customers, are able to cash government cheques under $1,500 free of charge at any bank in Canada.

To better protect consumers, we will enhance the supervisory powers of the Financial Consumer Agency of Canada by increasing the maximum penalty for a violation of a consumer provision, consistent with penalties for other violations under financial institutions statutes. To improve efficiency, the Superintendent of Financial Institutions will have the authority to issue a certificate to assist financial institutions in documenting incorporation information.

I am especially pleased with the responsiveness of S-5's measures to promote co-operation among our financial institutions. I would like to highlight them now.

For instance, federal credit unions will vote with the co-operatives class in the governance of the Canadian Payments Association. Competition and innovation will be promoted by enabling co-operative credit associations to provide technology services to a broader market. We have heard time and time again from stakeholders about the importance of these changes to the Canadian Payments Act.

The Credit Union Central of Canada stated:

Placing the federal credit union in the cooperatives class will preserve and strengthen the credit union system representation at the CPA. It will ensure that a federal credit union will be represented by a director, who speaks for the interests of cooperative financial institutions in CPA matters. A strong advocate at the CPA is important for the credit union system's ability to advocate on behalf of credit unions and to continue to operate payments facility efficiently and cost effectively, which has a direct impact on overall credit union system competitiveness.

Furthermore, the legislation reduces red tape and lessens the administrative burden for federally regulated insurance companies offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements.

Here are some of the other technical changes included in Bill S-5 to improve the efficiency of the financial sector. Mutual funds controlled by insurance companies through investments made from segregated funds will be permitted to hold market-indexed shares in managing life insurance companies. Greater flexibility will be provided in adjusting to new terminology under the international financial reporting standards in order to continue to promote prudential objectives.

Future adjustments on the limits on transfers to shareholders from participating policy accounts will be facilitated by adding regulatory flexibility. The Canada Deposit Insurance Corporation Act will be fine-tuned to enhance the corporation’s ability to protect insured depositors and manage the resolution of a member institution. Limited testimonial immunity will be provided to the Superintendent of Financial Institutions and the Commissioner of the Financial Consumer Agency of Canada, as well as their employees and agents, to enhance operational efficiencies and protect the confidentiality of information.

Finally, the bill before us includes a number of technical changes to clarify intent. For example, the bill clarifies the order of priorities where multiple security interests, including those taken under the Bank Act and under provincial legislation, are taken on the same collateral. It clarifies that derivatives can be cleared by a clearing and settlement system. It also confirms that banks can have an asset manager who also acts as a trustee of a mutual fund trust.

Many of the financial sector solutions now being promoted and adopted around the globe are based on the Canadian system that has served us so very well. For the fourth year in a row, the World Economic Forum rated Canada's banking system as the soundest in the world and as noted, Toronto Sun columnist, Peter Worthington, observed, “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 measures proposed in the financial system review act will further strengthen our system by reinforcing stability in the financial sector, fine tuning the consumer protection framework and adjusting the regulatory framework to better adapt to new developments.

As I have mentioned, the statutes which govern federally regulated financial institutions are subject to a five-year review cycle to ensure that Canada remains a global leader in financial services. It is imperative that this legislation be renewed by April 20 to allow financial institutions to stay in business.

Today's act would provide for a framework that would benefit Canadians by ensuring that we would have a safe and secure financial system that we could rely on by maintaining the long-standing practice of ensuring reviews of the regulatory framework for financial institutions, a unique practice that sets Canada apart from almost every other country in the world.

Our Conservative government recognizes that it must constantly evaluate what regulatory changes are needed to foster competitiveness and ensure the safety and soundness of our financial system for the benefit of all Canadians, and we have done exactly that with the measures contained in the legislation.

As the Canadian Life and Health Insurance Association noted during the Senate committee stage consideration, “prompt passage of the bill will ensure the legislative stability and continuity that are so important to the financial services sector”.

I therefore urge all members in the House to give the financial system review act careful consideration. I hope that opposition members will allow us to ensure that this moves quickly and prepares Canadians for more good things to come.

[Vic Toews, Conservative, Provencher, MB]

moved 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.

Business of the House

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

First, let me wish you, and all honourable members, a happy new year. I am looking forward to working with all members of Parliament of all parties to address Canadians’ priorities to the benefit of all Canadians.

In response to the first question from my friend with regard to management of House business and ensuring things actually do make it to votes in the House, I understand that the opposition has adopted a posture where it intends to run up the score. We have had now 13 or 14 occasions where it has refused to come to any reasonable agreement on any length of debate, or on any limitation on the number of speakers. Every time we run up to the point where we are looking at over 50, 60, 75 or 80 speakers, it becomes apparent that its intention is simply to bring paralysis and gridlock to the House.

It is not surprising. The opposition looks to its friends in Europe and in the United States and that is what it sees. That is not our approach. Our approach is to ensure that we have an orderly, productive and hard-working House that actually delivers results, and we will continue to do that.

Of course, our government's top priority is, and remains, jobs and economic growth.

Of course, our government’s top priority remains jobs and economic growth. Tomorrow, we will start debating second reading of Bill S-5, the Financial System Review Act. This bill will maintain and improve the stability of Canada’s banking system, a system that has been named the world’s soundest banking system four years in a row by the World Economic Forum. This bill needs to be law by April, so it is important to have timely passage.

Bill C-11, the Copyright Modernization Act, will provide a boost to the digital and creative sectors, which employ Canadians in high-quality jobs. This is another bill that the opposition has opposed and has tried to delay. There have already been 75 speeches debating this bill.

In context, this has been the subject of 75 speeches already in the House and a vote on a motion that it never go to second reading. It is clear what the strategy is. The identical bill in the previous House went to committee after just a few hours. Obviously, the opposition is implementing its strategy of simply running up the score and forcing the government to impose time allocation in order to get anything through the House. That being said, we want to see it go through the House.

I will be calling Bill C-11 for further second reading debate on Wednesday and next Friday. I look forward to concluding the debate and moving the bill to committee, where bills are traditionally studied in detail.

I would be pleased and delighted if they would come to an agreement to limit debate. I have invited them to do that many times. They have never come forward with any proposal on the number of speakers they would like. I invite them once again to present that to us and to do it here in the House.

I am also pleased to advise the House that next week we will start the final stages of scrapping the ineffective and wasteful long gun registry once and for all. I will be calling report stage debate on Bill C-19, Ending the Long-Gun Registry Act, on Monday and Tuesday.

Finally, I wish to designate Thursday, February 9, as the second allotted day.

Financial System Review Act

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

moved that Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters, be read the first time.

(Motion deemed adopted and bill read the first time)

Message from the Senate

[The Acting Speaker, Conservative, Barry Devolin]

I have the honour to inform the House that a message has been received from the Senate informing the House that the Senate has passed Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters.