Finance Committee on March 13th, 2012

[Tyler Sommers]

A small step forward.

[Shelly Glover, Conservative, Saint Boniface, MB]

A small step forward.

Banning unsolicited credit card cheques to protect consumers from hidden fees and interest rates, is that a good measure or not?

[Tyler Sommers]

A small step forward.

[Shelly Glover, Conservative, Saint Boniface, MB]

Okay.

As I see, we continue to go forward. I was looking at your website. I'm quite disappointed, in fact. The top line of your website says, and I quote: For the past 20 years, Canada's finance ministers have done nothing effective to ensure banks serve Canadians fairly and well at fair prices, and act responsibly.

We've just been through only a fraction of the things that have been done under this government since 2006, and I can assure you there were measures taken even by the previous Liberal government that in fact protected consumers.

So it's quite disappointing to see that on your website, and yet you admit here in committee that every time there's a measure, it's a small step forward, a small step forward. I would suggest that you and your organization may want to rethink at least giving credit where credit is due. Because, to be very frank, the government is here to protect Canadians and these measures are important measures in our opinion. And I think that's a non-partisan statement on behalf of all committee members.

I must admit, I did read further in your website and you do actually acknowledge one of the measures that's taken. So your website is a bit contradictory in and of itself, where it says we've done nothing in 20 years, and on the other hand, you do actually acknowledge a small measure on your website.

Having said that, I'm going to move to Mr. Melville. Can you tell us whether the banks are able to cope with and deal with these measures fairly effectively without complaint?

[Douglas Melville]

Any clarity that prevents complaints is a good thing.

[Shelly Glover, Conservative, Saint Boniface, MB]

Are these helpful in that endeavour?

[Douglas Melville]

I think all of these create clarity for both the firm, in terms of their expectations in the marketplace, and what consumers can expect in the marketplace.

As a non-advocate, it would be inappropriate for me to provide opinions on each of them. But I will say that the clarity provided by these is, in the long term, going to be helpful to our work. Because if the expectations are clear, then what's fair and reasonable under the circumstances is largely guided by law and regulation in the market.

[Shelly Glover, Conservative, Saint Boniface, MB]

Very good. I appreciate that.

Monsieur Vinet, three times is a charm. Would you like to comment on them? You don't have to if you don't want to, Monsieur Vinet.

[Jean-François Vinet]

Of course, I want to work with you, and of course, I would like to help you. When I came here I didn't know we would have so much time, and I appreciate that from you, because this is probably the most valuable thing we have in life. Thank you for your time.

If you go down your list, I will tell you what is good and where it could be improved. Perhaps you could do that again slowly.

[Shelly Glover, Conservative, Saint Boniface, MB]

I have 10 seconds. So, are the credit card rules that require consent for credit limit increases good or bad?

[Jean-François Vinet]

Of course they're good. People were buying things. The thing is, in Quebec, it has been there for a while. It's good. It is fine, but we need to make sure it's respected. But let's go down your list.

[The Chair, Conservative, James Rajotte]

You can have another round, if you want to.

[Shelly Glover, Conservative, Saint Boniface, MB]

We'll wait until the next round, Monsieur Vinet, but I promise to come back to you.

[The Chair, Conservative, James Rajotte]

It's right now.

[Shelly Glover, Conservative, Saint Boniface, MB]

I get to continue.

The 21-day grace period on new purchases, do you have any suggested improvements? Do you think that was a good measure to help consumers?

[Jean-François Vinet]

It's a good measure. It's good because of the way it's calculated. The problem was you didn't know what you were paying, and if the interest started when you paid or the last time you had a statement. Now it's more encadré, more regulated, and it's a step forward.

[Shelly Glover, Conservative, Saint Boniface, MB]

For the same reason, we have just announced that unsolicited credit card cheques are now prohibited. Would you say that this measure will help consumers?

[Jean-François Vinet]

Indeed, consumers would receive cheques but did not know when they would have to begin paying interest. This is also an incentive to use credit. But as we know, Canadian consumers carry heavy debt loads. So should we encourage them to go deeper into debt by sending preauthorized cheques to their home? I do not think so. If we want to help Canadians to have more money, it is better to encourage them to work and to help them when they lose their jobs. It is a good idea to offer them assistance, but not credit. That goes without saying.

[Shelly Glover, Conservative, Saint Boniface, MB]

Negative option billing,

was that a problem in Quebec?

[Jean-François Vinet]

Yes it was. It affected several types of services, but in the area of telecommunications, for example, if consumers forgot to call their cable distributors a month before the end of the agreement, the agreement was automatically renewed. Obviously, many consumers forgot the expiry date of the agreement, which is normal, given that agendas rarely cover more than two consecutive years. They would forget to phone the company and were therefore stuck with a new contract that they had not really signed, and in addition, they did not have the opportunity to check what was actually offered. That did not encourage competition, it did not help consumers improve the quality of their choices, and it put them in a situation that did not benefit them.

So this is indeed a step forward.

[Shelly Glover, Conservative, Saint Boniface, MB]

So prohibiting this type of practice will help your consumers.

[Jean-François Vinet]

Yes, certainly. It is a minimum. Why was it authorized in the first place? That is the question. How could companies have been allowed to withdraw money from peoples' bank accounts without their authorization? It was completely illogical. At least now, we are back to a minimally acceptable situation.

[Shelly Glover, Conservative, Saint Boniface, MB]

The matter of access to money interests me greatly. On the website of Mr. Sommers' organization, it says that they favour immediate access to cash. We have just announced that consumers who use financial institutions will now have immediate access to an amount of at least $100. All banks will have to cash cheques.

Is this measure positive or does it indicate, on the contrary, that we have missed the boat, in a sense? Should changes be made?

[Jean-François Vinet]

If we compare the situation in Canada to that of the United States, we can see that the American system is very different, but that there are also some similarities. The difference should favour Canadians. Our banking system is relatively well spread out from coast to coast. Financial institutions have branches all across the country. There are few financial institutions in Canada, six essentially. In the United States, there are 12,000. There, when a cheque is drawn on a financial institution in the same municipality, the consumer generally has access to all of his money within two business days. Here, we will also have access to an initial $100 amount within two business days.

Yes, this is progress, but given the structure of Canada's financial market, consumers should have access to all of their funds, or at the very least, to an initial amount of $1,500.

[Shelly Glover, Conservative, Saint Boniface, MB]

In fact, access will be immediate. Furthermore, we reduced the wait time from seven to four days.