Bill C-8 (Historical)

Financial Consumer Agency of Canada Act

An Act to establish the Financial Consumer Agency of Canada and to amend certain Acts in relation to financial institutions

Financial Consumer Agency Of Canada Act

[Pauline Picard, Bloc, Drummond, QC]

moved:

Motion No. 5

That Bill C-8, in Clause 65, be amended by replacing line 6 on page 32 with the following:

“in whose names the shares are registered in the institution's registers and entitled to receive notice of a meeting under”

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

moved:

Motion No. 3

That Bill C-8 be amended by adding after line 20 on page 28 the following new clause:

“54.1 Subsection 46(2) of the Act is replaced by the following:

(2) The shareholders of a bank shall, by resolution at the meeting of shareholders called pursuant to subsection (1), a ) approve, amend or reject any by-law made by the directors of the bank; b ) subject to section 168, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election; c ) appoint an auditor or auditors to hold office until the close of the first annual meeting of shareholders; and d ) adopt a code of internal procedure respecting the conduct of meetings of shareholders.

Motion No. 4

That Bill C-8, in Clause 63, be amended by replacing lines 21 to 33 on page 31 with the following:

“63. Subsection 138(1) of the Act is replaced by the following:

1. (1) Notice of the time and place of a meeting of shareholders of a bank and the complete minutes of the last meeting of shareholders, whether that meeting was an annual or a special meeting, shall be sent not less than twenty- one days or more than fifty days before the meeting, a ) to each shareholder entitled to vote at the meeting; b ) to each director; and c ) to the auditor or auditors of the bank.

(1.1) A bank with equity of five billion dollars or more shall set out in the notice of a meeting the number of eligible votes, as defined under subsection 156.09(1), that may be cast at the meeting as of the record date for determining those shareholders entitled to receive the notice of meeting or, if there are to be separate votes of shareholders at the meeting, the number of eligible votes, as defined in that subsection, in respect of each separate vote to be held at the meeting.”

[Roy Cullen, Liberal, Parliamentary Secretary to Minister of Finance]

Madam Speaker, what I propose to do is deal with the motions in the following order: Motion No. 14 from the member for Prince George—Bulkley Valley; then those from the member for Saint-Hyacinthe—Bagot, the Bloc amendments; and then finally the amendments from the NDP member for Regina—Qu'Appelle.

Dealing first with Motion No. 14, of course the members on this side of the House do not need convincing about the importance of the credit union movement and the kind of expanded and enhanced role we would like to see them play in the Canadian economy by providing consumers with more choice and by providing more competition. That is a given. The Secretary of State for International Financial Institutions, when he spoke at committee, gave the undertaking that the government would work with the credit union movement to try to enhance its role in the Canadian economy.

With respect to this particular motion, which was actually put forward by the NDP at committee, I would just like to mention that the member for Regina—Qu'Appelle seems to argue that the legislation does not provide equal treatment to credit unions.

The credit union movement, when it came to the committee, was looking for preferential treatment. We cannot accept having treatment for the credit union movement that would be preferential to the treatment we have for other financial institutions.

Members on this side are not the only ones to work actively with the credit union movement. The Department of Finance has worked closely with it in developing Bill C-8. The resulting legislation responds to the need of credit unions for greater structural flexibility as they move to restructure their operations and become more integrated.

However with this new flexibility come prudential concerns resulting from a whole new set of ownership possibilities, most of them unknown at this point. Because the landscape is changing so quickly we must be concerned about the potential for prudential risks. The control requirement is necessary to safeguard against such risks and is designed to ensure the parent company has the power to intervene in situations where a subsidiary might get into financial trouble. These same provisions apply to other financial institutions such as large banks and insurance companies that are also widely held.

Given the broader risks associated with this new flexibility it is more prudent, in the government's view, to establish a general safety net or prohibition and to provide the regulatory flexibility to make exceptions as necessary. This is a common use of existing regulatory authorities. If unforeseen circumstances arise, a general prohibition allows us to err on the side of caution.

The change made to proposed subclause 396(a) at committee would broaden the scope of the regulation making authority and provide further comfort to the Credit Union Central Canada, CUCC, that the government had all the flexibility it needed to provide exceptions from the control requirements as necessary.

The Department of Finance is already engaged in an extensive drafting exercise to prepare the regulations stemming from Bill C-8. It has had early discussions with the CUCC on the possibility of drafting a regulation that would provide the required flexibility. Once approved, the regulations would have the same effect as legislation.

I now want to speak to Motion No. 9 by the hon. member for Saint-Hyacinthe—Bagot. This motion deals with the matters the minister might take into account in determining whether or not to approve acquisition of a significant interest in a bank.

The matters to be taken into account under proposed paragraph ( i ) of the motion are contemplated in paragraph ( f ) on the conduct of businesses and operations of applicants. Consequently, the minister shall have the legislative authority to take into account the matters outlined under paragraph ( i ).

Since there is no need to amend the legislation to allow the minister to take these matters into account, it was determined for reasons of clarity and transparency to have these matters set out in the guidelines.

The guidelines indicate the government's commitment to take these matters into account in category changes.

I will clarify a point made by the member for Saint-Hyacinthe—Bagot. In his speech he seemed to imply that a bank with assets of over $5 billion may not be subject to the widely held rule. Bill C-8 states that banks with assets over $5 billion would automatically be subject to the widely held rule.

We have other motions before us from the member for Regina—Qu'Appelle, the NDP finance critic, and I will now refer to them.

I will move to Motion No. 10, which deals with low cost accounts. The member for Regina—Qu'Appelle and others spoke about how the government and the Liberal Party have talked about the need for low cost accounts. The amendment from the NDP would amend the definition of low fee retail deposit accounts in clause 439(1) to specify that such accounts shall cost $3. The members opposite seem to be implying that we do not have a commitment to low cost accounts.

Bill C-8 in fact establishes the low cost account and that is exactly what the Liberal government has advocated for some time. Rather than reneging on our promise, the bill delivers on that promise. As members are aware, the Department of Finance has successfully negotiated low cost account memoranda of understanding with each of the major banks.

The views of consumer groups on the desired features of the low cost account were sought prior to negotiating the arrangements. Taking those views into account, the accounts adhere to certain standards, including a maximum monthly fee of $4 and the availability of some in branch transactions. Providing banks some flexibility in pricing and designing the accounts ensures consumers greater choice in obtaining low cost accounts that best meet their needs.

Motion No. 11 from the member for Regina—Qu'Appelle deals with branch closures. I will comment on that briefly. Our proposed reforms are intended to encourage financial institutions to be more responsive to the public without unduly interfering in the day to day business decisions of banks. Some members opposite have clearly pointed out that the motion presented by the member for Regina—Qu'Appelle is intrusive into the day to day decision making of banks.

Issues such as branch operating hours and closures are a matter for individual banks and the marketplace to decide. That being said, we believe consumers should receive adequate notice of branch closures to facilitate adjustment to the closures. Under our new policy framework, should a financial institution choose to close a branch it would be required to provide at least four months' notice. If the branch is the last one in a rural community, six months' notice would be required. The notice period would give the community an opportunity to discuss alternatives with the institution or to approach other financial institutions that could perhaps fill the gap. That deals with the motions in Group No. 2.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Madam Speaker, I thank you for recognizing me at this time, which actually accomplishes a couple of goals. First, since I have had to stand five or six times to be recognized, I have been afforded needed exercise. Second, I appreciate being able to speak before the parliamentary secretary on this particular grouping because I can hopefully change his mind since I think he may have considerable influence on the way the votes are conducted on the other side. At least I would hope he has, although I sometimes even wonder about that.

Let me address the issues that are before us in this group of amendments. I will begin, of course, with the matter of the penalty that is proposed to be amended by the member from the Bloc.

He proposes that the maximum penalty be changed. In order to see how the clause reads now, I need to haul out this book, the bill we are amending, Bill C-8. It says the maximum penalty for a violation is $50,000 in the case of a violation that is committed by a natural person and $100,000 in the case of a violation that is committed by a financial institution. That is for breaches of the act and of the regulations made by the minister.

I want to draw attention to the fact that this states the maximum penalty, so I think arguments could be made in favour of this particular amendment. The maximum penalty right now is $100,000 and the amendment says it should be a maximum of $500,000. This does not mean it is going to be applied.

As a matter of fact, if we read the next section, which is not referenced in this amendment, it states that in assessing the penalty these are some of the issues which are to be taken into account: the degree of intention or negligence on the part of the person committing the violation; the harm done; the history with respect to previous convictions or violations; and any other criteria that may be prescribed.

In assessing a penalty for a violation, I am sure that a large bank, a huge financial institution, would, under that prescription, be given a larger penalty than a small credit union somewhere, depending on the severity of the violation. Yet at the same time, I am somewhat inclined to have a substantial penalty when a large business just will not comply. That could happen. I cannot imagine under what circumstances, but it could happen.

I think, for example, of a large but unnamed mall in Edmonton. When it first started in business we had the Lord's Day Act in place in Alberta, which meant that some days were available to families to spend together because basically all of the stores were closed and just essential services were provided. It was a wonderful time, actually, when I look back at it, when we could get together with our families. We had freedom. People were not obliged to go to work. It was the same day for everyone.

Then that particular mall said that if it were to be fined $10,000 a day every time it was open on Sunday that was a fair and reasonable cost of doing business. It just paid the fine and broke the law with impunity. There was no provision under the law to escalate the penalty; it was just a straight $10,000 a day. The mall gladly paid the fine and made a lot of money.

By the way, I believe that is where the erosion started. Then it went right across the country, so that working people now no longer have a day off each week that applies to all family members. Very seldom do we see a family being able to get together. Either mom has to work or dad has to work or one of the kids who has a job at the store has to work. They cannot be together.

That is an example of a penalty so small that the business was not compelled at all to obey the law. In that sense, I have a bit of a tendency to be in favour of just increasing the maximum. It would not necessarily be applied, but this amendment would put some teeth into this for those who were in blatant violation and who continued to be so.

I must hurry because I have spent too much time on that particular provision. The next motion is Motion No. 9. That has to do with the application of a problem specific to Quebec at this time but which could happen in other provinces as well. In order to preserve my time, let me simply say that I have an inclination to agree with it.

Motion No. 10 has to do with the provision that the banks should provide for a low cost account. I do not really believe that we should have this in legislation or in law, although I agree with the principle of it. I would much rather see the banks provide these necessary low cost accounts and advertise that fact.

If a bank were to have an ad in the paper that said there were a number of people in our society from whom they just did not make a great deal of money but for whom they felt obliged to provide a banking service at a low cost, I think the bank would get a lot of public relations benefit simply by advertising that and providing a service. The bank could ask small businessmen in towns and cities or wherever to support its business with their business. I think it would benefit the bank.

I agree with the principle that a person of limited financial means should have the ability to go into a bank and cash a cheque and to have a low cost bank account. That is definitely a principle I agree with. As I said, the only reason I would vote against this is that I think would be overkill. I also do not agree with putting in a fixed amount, because maybe the bank could do it for less. Maybe of necessity it has to be $4 and a bank would be in violation if we ensconced $3 in the legislation.

I am opposed to this particular motion on the basis that it is too specific, and I think the same goals, which I agree with, can be achieved by other means.

I turn now to Motion No. 11, also put forward by the NDP member, which proposes that the closing of the branches of a bank “can only take place for reasons of financial non-profitability.” I hate to say it, but this is a dreadful amendment.

I think it is a huge imposition on business operations. It is like telling farmers they could plant only a certain kind of crop and the only reason they could ever quit planting would be if they were not making money on it; otherwise, they would have to plant that crop. I disagree with that.

I believe the banks should have a certain degree of flexibility to open and to close branches based on an efficient way of providing services in the community. For example, let us say that there is a branch over here and there is a branch over there. With modern transportation it is now much easier for people to get around, so if the banks decided to have one branch operating in the middle instead of having two branches operating, it would mean the closure of two branches. Neither of them might be losing money, but the bank could be more efficient and provide a better service for less cost, including services for low income people. I do not think we should stand in the way of this. In this particular instance, I would simply say that I would be really hard pressed to support Motion No. 11.

The last motion is the one on the credit unions, proposed by the member for Prince George—Bulkley Valley. I propose that we heartily support it. This is where I want to get the ear of the parliamentary secretary over there and have him influence all of his Liberal colleagues to vote in favour of this very fine amendment.

I happen to believe in the credit union movement. My dad was a leader in the credit union in Saskatchewan for many years. He was on the board, on the finance committee and on the loans committee. He did all sorts of things. As a result of having grown up in that kind of an atmosphere, I guess, I am sort of inclined toward credit unions.

Over the years I have given some business to the banks for different reasons, but I have found that in a competitive market my dealings with the credit unions have been most satisfactory. I do not hesitate at all to give a little bit of free advertising to them here today. They can use this clip if they want to. I give them permission. I do not know whether the rules of the House of Commons permit that, but I certainly support the credit union movement and this amendment strengthens it. The reason we should favour this amendment is that one of the best things for the Canadian financial services industry is to have good competition, where we can say to our financial institutions “Treat me like that and I am out of here”.

I am going to run out of time here, but I remember when I had a bank loan for purchasing a car. I asked the bank whether I could pay the loan off more quickly. The bank said that I could but I would have to pay a penalty. Members would not believe it, but the total payment the bank wanted in order to have me pay off that loan early was greater than the sum of the remaining payments. I said to the bank that either it was nuts or it thought I was. I was not willing to comply with that. I just finished off my payments and said that if that was how the bank did business I would look elsewhere. Sure enough, soon I found another financial institution that pleased me more and I just moved my business to it.

That is the very best thing we can do: provide competition. Credit unions are one of the primary ways of holding the banks responsible and giving them some real competition.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Madam Speaker, I would like to go back to the comments made by the hon. member for Drummond on the importance of the whole issue of the classification of banks and the degree of ownership.

For the benefit of those who are listening, I should point out that the new bill on financial institutions establishes three categories of banks: major banks, that is those with equity of $5 billion or more; medium size banks, that is those with equity of $1 billion to $5 billion; and small banks, that is those with equity of less than $1 billion.

For each of these categories, the degree of ownership is different. For example, in the case of major Canadian banks, such as the Royal Bank, an individual cannot hold more than 20% of the voting shares, while 80% of the shares must be widely distributed among the public.

The bill has a major impact on medium size banks, such as the National Bank in Quebec. For these banks, including the National Bank, the new degree of ownership is 65:35. In other words, a single individual can own up to 65% of the voting shares and thus have full control over the National Bank, while the other 35% must be widely distributed among the public.

This new provision leads us to fear the worst in Quebec. This bill discriminates somewhat against the National Bank, the largest in Quebec, because the treatment of the Royal Bank, the largest in Canada, where one individual is allowed to own a maximum of 20% of voting shares, and the National Bank, where one individual may own up to 65% of voting shares, creates discrimination which is unjustified under the circumstances.

We are told that the purpose was to improve the National Bank's funding flexibility. I have often asked the Minister of Finance why one individual holding 65% of National Bank shares confers more flexibility than 65 individuals with 1% each. I have never had an answer. These new provisions are cause for alarm.

Recently I read comments by economists to the effect that this is no big deal, because the National Bank's equity is increasing by leaps and bounds anyway, and soon will be in excess of $5 billion. Such an analysis is wrong.

It is certain that the bill states that the banks can be reclassified. This means that, should the National Bank one day have over $5 billion in equity, it could be classified as a major bank and therefore the voting share split would be 20%:80%. In other words, with this bill a single individual could own 20% of voting shares and the other 80% of voting shares would be public, rather than the present 65%-35% split.

The point on which I disagree with the economic experts is that, under this bill, which must be read carefully, the Minister of Finance has three years to change the bank's classification. That time limit can be extended as he sees fit. In other words, even if the National Bank attains the $5 billion equity ceiling, the Minister of Finance could decide to wait three years before reclassifying it as a major bank subject to the 20%:80% split of individual and public voting shares.

Not only may he wait three years before recategorizing it, but he has the authority to extend this period. In other words, even with equity of $5 billion and more, the National Bank would not automatically be recategorized as a major bank and would therefore still be in the 65:35 category, that is 65% of shares held by one person.

There is a danger in this. Not only is the National Bank the biggest bank in Quebec, but it is also the bank that finances SMBs. As well, Quebec is proud to have such a large bank, which, through the contribution of people like Mr. Bérard, has grown at record speed to become the flagship it is today.

Concern about this is so great that even Mr. Landry, former finance minister and deputy premier, and now premier, of Quebec, wrote to the federal Minister of Finance last June 2 to suggest a number of public interest criteria for evaluating any banking operation involving a mid-sized bank.

To my great surprise, just before the election, the Secretary of State for International Financial Institutions had even agreed to these criteria being part of the banking bill. He had even signed beside the four criteria suggested by Mr. Landry, saying “Yes, provided that it is not only for Quebec, we can Canadianize—as it were—these criteria, and make them part of the bill”.

A few days later, the secretary of state changed his mind. I do not know why, but after putting his signature on this document, he changed his mind and subsequently refused to include these evaluation criteria in the bill.

There is no substantive difference between Bill C-38 as it was before the election and Bill C-8 today. When the Minister of Finance and the secretary of state released the new Bill C-8, they also issued press releases and attachments, one of which concerned the evaluation criteria for operations involving mid-sized banks, such as the National Bank.

On reading these criteria, we realized that the government had understood the message on additional criteria. We were satisfied with that, but only half satisfied. What we called for, and this is the heart of the amendment, it is the essence of the amendment we are proposing this morning, is that these criteria, which parallel the bill and are to be used as guidelines by the Minister of Finance in making a decision regarding the shares in a medium size bank, such as the National Bank, must not be left to one side and left out of the decision making process, but incorporated in the heart of the Bank Act, to ensure reference is made.

In other words, we are not telling the government to reject all transactions involving the National Bank. That is not the intent. We want to ensure additional security, additional criteria leading to the best possible decisions benefiting Quebec's economy and finances and the financial sectors of Quebec and Canada too.

We are not asking the government to be obtuse or to reject every proposal. We would be the first to criticize this sort of attitude, because we want our financial and banking institutions to move ahead and to take their place in the world, the National Bank and others too.

So, it is with an open mind that we are proposing these amendments and we hope that the government will accept them. I would say, and this is evidenced by all the representations that we have made, that since the beginning of the process, the McKay study, the white paper and the bill before us, the Bloc Quebecois has always looked positively at the reform of the financial institutions act, particularly since it is three or four years late. The delay is getting longer by the week, considering how quickly the financial sector is changing in Quebec, in Canada and in the rest of the world.

We hope this bill will be quickly passed. However, would it be possible for the government to show some openness for once? We are not asking much; we are not asking for a complete overhaul of the bill. We are simply asking the government to reassure Quebecers who are concerned about the new provisions that specifically apply to the National Bank. They hope that this new reform of financial institutions will have a positive impact on the financial sector and will not raise concerns about takeovers that would be detrimental, particularly to the interests of small and medium sized businesses in Quebec.

I urge the government which, through its secretary of state, has already agreed to the four conditions, the four criteria proposed by Mr. Landry in June, to include these criteria in the core of Bill. It recently tabled a document, along with Bill C-8, that includes these criteria, albeit in a different format, but it includes them nevertheless.

So, I am asking the government to simply show some openness by taking that document and including it directly in the core of the bill. If it does that, the Bloc Quebecois will support the bill.

[Pauline Picard, Bloc, Drummond, QC]

Madam Speaker, I want to tell you how proud I am that the occupant of the Chair is a woman. Women often have to work really hard to get certain prestigious positions. So, it is always with pride that I take the floor when you are presiding over our proceedings.

First, I would like to say that the Bloc Quebecois supports Bill C-8, and to reassure certain groups, we agree that the bill ought to be passed as quickly as possible so we can have a swift and smooth transition.

Nonetheless, the bill as it stands does not meet all the requirements of certain groups.

The most important thing for Quebec is to protect the largest bank in Quebec, the National Bank. This is a very important concern for our nation. This bank is the Quebec's largest bank, and Quebec businesses have their money there.

This bill will make the National Bank more vulnerable than the big Canadian banks, and that is unacceptable. This bill provides for a three tier system, as far as individual control of banks goes.

I would like to explain once more something I have already talked about in the House, and I think I made myself clear at the time. Let me just go over the general concept to show the people who are watching, as well as you, Madam Speaker, what is going on in that system that we want to create and that seems acceptable to us.

As we all know, for the big Canadian banks, the Royal Bank for example, voting shares that one shareholder can own increase from 10 to 20%. So, for banks with assets worth $5 billion or more, one shareholder could own 20% of the bank's shares.

The problem is, however, and this is the case in Quebec, that small banks, those with assets worth less than $5 billion, the Minister of Finance is allowing one shareholder to own up to 65% of the bank's voting shares. This means that one shareholder could purchase 65% of the shares of the National Bank. That individual would control the assets of the Quebec people. It is incredible. Why is there such a difference?

Why is one shareholder allowed to own 20% of the Royal Bank's voting shares, but when it comes to the National Bank, a single shareholder, it could be a foreigner, if he has the money and holds 65% of the bank's voting shares, could decide to transfer the bank's head office, lay people off, transfer the bank's assets, transfer Quebecers' money outside the country because he is a foreigner, and the whole company will be administered in a foreign country?

So, those are the people's concerns. What will happen? In fact, jobs will probably be lost, and it is unacceptable to think that only one individual can manage most of this financial institution's assets. That is why we are denouncing this situation.

However, there was a certain change while this bill was being studied. Mr. Landry, now the Premier of Quebec, made demands that were incorporated in this bill. However these demands are like guidelines on the reclassification of the banks that were included before in schedule 1, banks with equity capital of less than $5 billion, of which the National Bank is one.

The idea was to include these guidelines in the bill, but they remained guidelines. It is a small step, but not enough for us. We must really ensure that these guidelines are incorporated in the bill. I would like to quote some of them:

All transactions involving a reclassification will be evaluated on the basis of merit. It will have to be shown that the operation will add to the bank's growth potential and that it will lead to better customer service.

The guidelines also state:

In determining whether a transaction involving a reclassification is in the public interest, the Minister of Finance shall take into consideration all the factors he considers relevant, including the security and solidity of the bank, the direct and indirect jobs, the location of the decision-making centre and the management of the bank, the needs of consumers, the bank's business and activities and the bank's prospects for the future in the context of world markets.

These elements, as they are not in the bill, may be amended by the minister as he sees fit. This is a matter of concern for us. It is all very nice that these guidelines were accepted, but what bothers us is that they are not included in the bill. They may be respected or not, as the minister sees fit.

The public as well as parliamentarians must put a great deal of trust in the minister right now, because he tells us is completely sincere. However if a new minister comes along, because ministers do change, whose philosophy is different from that of the current minister who wants us to trust him, how could we be sure that what we ask this new minister with a different philosophy will be respected? It is very important that this be included in the bill.

This process has to become more transparent and it should not cause us any more problem. Right now, there is something of a sword of Damocles over the National Bank because everything is up to the minister and nothing is set out in the bill. If it were, we could always refer to the legislation to show what the intent was, but it is not the case.

As I said earlier, we support the bill. We have worked very hard. My colleague from St-Hyacinthe—Bagot has even tabled a brief with the committee. He has put forward points that were included in the bill. However, we feel that we have been elected to protect the interests of Quebec consumers in our ridings. We are somewhat concerned right now, and when I say somewhat, I really mean to say that we are very concerned about the situation in which this bill puts the National Bank and the small banks with less than $5 billion in capital.

I raise the issue, but this is a concern not only for members of the Bloc Quebecois, but also for the directors of the National Bank. In view of this, the National Bank decided a few weeks ago to adopt a series of rules in order to prevent a hostile takeover at its expense. Looking for strategic partners, the president of the National Bank said that maintaining the head office in Montreal was simply not negotiable.

The shareholders passed two resolutions to protect the National Bank against a hostile bid. They agreed to drag things out so the directors would have more time to examine other bids. They also agreed to drop the limit on the number of common shares that could be issued by the bank. These measures clearly illustrated the concerns generated by the new environment.

With this bill, the Minister of Finance is giving himself the power to determine at his discretion, the future of Quebec's major banks. As I mentioned before, we find it unacceptable that this discretionary power has such sway, more even than the law itself.

In concluding, I would like to say once again that we will support this bill, but we would like the Minister of Finance to take into account the concerns of Quebecers and of the members of the Bloc Quebecois.

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

moved:

Motion No. 10

That Bill C-8, in Clause 113, be amended by replacing line 21 on page 72 with the following:

“tail deposit account available to each customer for a monthly fee of 3 dollars and that has the prescribed”

Motion No. 11

That Bill C-8, in Clause 125, be amended by replacing line 14 on page 79 with the following:

“on either of those activities. For greater certainty, the closing of the branch can only take place for reasons of financial non-profitability.”

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

moved:

Motion No. 9

That Bill C-8, in Clause 98, be amended by replacing lines 24 to 26 on page 62 with the following:

“out by the affiliates of the bank; h ) the best interests of the financial system in Canada; and i ) the impact of the transaction on the security and soundness of the bank, on direct and indirect employment at the head office and branch offices of the bank, particularly professional and specialized positions, on the location of the centre of decision making and management of the bank, on the needs of consumers, on the business and activities of the bank, and on the future prospects of the bank in world markets, the best interests of Canadians and, where the bank operates principally in one region, the best interests of those living in that region.”

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

moved:

Motion No. 2

That Bill C-8, in Clause 19, be amended by replacing line 15 on page 11 with the following:

“committed by a natural person, and $500,000”

[Gilles-A. Perron, Bloc, Rivière-des-Mille-Îles, QC]

Madam Speaker, since this is the first time I have addressed the House during this parliament, I am sure that you will permit me a small aside.

I wish to thank the 50% of the voters in the lovely riding of Rivière-des-Mille-Îles who voted for me in the last election and to assure the other 50% who did not that I am still their MP and I will represent everyone in my riding, regardless of how they cast their ballot.

Second, I especially wish to thank the volunteers, who played a big role in my getting elected, as you know from your own personal experience, Madam Speaker. It is thanks to the work of your volunteers and mine, who worked their hearts out, that we have a seat in this House.

Third, I wish to welcome the new recruits, particularly my friend, the member for Châteauguay. He will find the House a place of wonderful experiences.

Fourth, I would ask you to pass on a message to the Speaker and to all your colleagues who were elected and appointed. I am certain that you will do a splendid, non-partisan job, and that you will ensure that we pay careful attention to the rules and procedures under which we must operate. Madam Speaker, I thank you in advance for the work you will do.

Now for the main topic. As everyone knows, I rise this morning to address Bill C-8, an act to establish the Financial Consumer Agency of Canada and to amend certain acts in relation to financial institutions.

I will begin by giving a brief background to the bill. It will be recalled that the MacKay report was tabled in 1998. My colleague, the member for Saint-Hyacinthe—Bagot, was a key player, suggesting some interesting amendments.

However, although we supported Bill C-38 in theory, subject to certain amendments, there was an exchange of correspondence with Quebec's then finance minister, Bernard Landry, who is now, as everyone knows, Premier of Quebec.

However, this exchange of correspondence between the Quebec minister of finance of the day and the federal Minister of Finance went nowhere. Fortunately, Bill C-38 died on the order paper because of the call of the precipitous election in November, for wich most Canadians still doubt.

Here we are this morning debating Bill C-8, which replaces C-38. Basically, the Bloc Quebecois can live with it, so long as a number of amendments are made. We have noticed in the new C-8, which is almost identical to C-38, that a number of changes have been made as the necessary result of the exchange of correspondence between the two finance ministers.

However, it leaves a bad taste in the mouth, since the concerns of the Quebec finance minister of the day, Bernard Landry, are not included in the bill. They are, rather, included in a schedule setting out guidelines for the reclassification of the banks, which had been in schedule 1 previously and whose owner's equity was less than $5 billion.

With regard to this schedule, the Bloc Quebecois has some concerns, since the schedule provides that:

—the Minister of Finance, in his sole decision, shall take into consideration, before permitting an exchange or the sale of one bank to another, the security and solidity of the bank, the direct and indirect jobs, the location of the decision-making centre and the management of the bank, the needs of consumers, the banks business and activities and the banks prospects for the future in the context of world markets.

The six points I have just outlined are just wishful thinking, since the bill would allow the current Minister of Finance, who, I believe, owns a shipping company, has adopted the practice since, of being the only master on board, like the ship's captain, when decisions are to be made. So, the minister has all the powers to ignore these six points without us being able to say or do anything about it.

Bill C-8 is much too important to allow a single individual, a single captain, that is the Minister of Finance himself, make the decisions about any changes to this legislation. This is very close to dictatorship. It is also dangerous considering that the government opposite has a great tendency to engage in cronyism and take care of its friends. We should be careful.

I strongly suggest that the final decisions be made by parliamentarians. We are here to make decisions. We are not decorating plants, we must make decisions. We must really be careful.

Another issue that is of concern to me and certainly to my friend, the hon. member for Drummond, is that the bill is three tiered with the possibility for an individual to own a bank.

It begins with large banks, that is those with equity in excess of $5 billion. The limit on individual ownership of shares is 20% of the value of the bank.

The second group includes banks with equity of one to five billion dollars, such as the National Bank, the only Quebec bank with a federal charter. Since equity for these institutions is less than $5 billion, 65% of the shares of that bank can be held by a single shareholder.

So we are back to the style of our finance minister, our great shipmaster, the only person who can decide how a bank can run itself. Will the bank defend the interests of its shareholders? Surely, since it is the majority shareholder. However, it will defend these interests to whose detriment. To the detriment of service and employees. This is cause for concern.

Then there are small institutions with less than $1 billion in equity, which can be owned 100% by one person. Unfortunately, that was not what the MacKay report recommended, as it suggested that ownership rules be changed to allow and foster the regrouping of small and medium sized financial institutions in a financial holding.

According to the MacKay report, several small financial institutions could associate and form a large bank with equity of $5 billion or more.

I see that my time is up, but I will indicate two other issues of concern to me.

First, Bill C-8 does not meet the expectations of the Bloc Quebecois about community reinvestment, not in the least. Second, it provides no protection to savers and investors.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Madam Speaker, I am pleased to speak to Bill C-8, a massive bill, as has been mentioned. It is a bill which, when I hold it in my hands, increases my weight by about 10%.

When we look at the proposed amendments in Group No. 1, we see that they are there to improve the bill. I will speak specifically to Motion No. 1 right now, put forward by my colleague, which deals with the reporting section. The parliamentary secretary just stated that there is a provision in the bill for this. For clarity, I will read from page 15 under “Annual Report”. It states:

The Minister shall cause to be laid before each House of Parliament, not later than the fifth sitting day of that House after September 30 next following the end of each fiscal year, a report showing the operations of the Agency for that year and describing in aggregate form its conclusions on the compliance of financial institutions with the consumer provisions applicable to them in that year.

Do members notice who is reporting? It is the minister. The minister shall lay a report on the table. Of course the minister can say exactly what he or she wants. It is reported in the House and we all know what happens to reports. Routine proceedings take place every day in the House and someone presents a report under the tabling of documents. Under one of those proceedings, the minister could simply table a report showing the operations of the agency.

Motion No. 1 is really quite different. It is difficult by reasoned debate to persuade the members on the other side of the House because I am not sure they are listening. If they are listening, they do not show it by their body language. All we see is a bunch of green foreheads over there that are not really—

[Roy Cullen, Liberal, Etobicoke North, ON]

Madam Speaker, I will be speaking to Group No. 1. I take this opportunity to thank the members of the House of Commons finance committee for their constructive approach to this very important and very massive legislation.

I would like to comment on Alliance Motion No. 1 which deals with the reporting of the financial consumer agency.

I would point out that under Bill C-8, the Minister of Finance is responsible for the financial consumer agency of Canada. Reporting arrangements have been specified which would allow the minister to appropriately monitor the activities of the agency.

However, the bill currently contains a provision that ensures that the consumer agency will be fully accountable to parliament. In particular, clause 34 of the bill requires the minister to annually lay before each House of parliament a report showing the operations of the agency for that year and describing in aggregate form its conclusions of the compliance of financial institutions with the consumer provisions. The financial consumer agency of Canada accountability structure and government reporting requirements mirror those that are currently in place for OSFI.

The second motion in this group from the Alliance, Motion No. 13, deals with the Canadian payments system. The process for designating a payment system in the proposed legislation is very extensive and would require the minister to consult with payment system managers and participants before notification of designation.

It is not necessary to detail in legislation, as proposed in Motion No. 13, process issues that would likely be part of any consultation. It is likely that the minister would outline the public interest reasons for the possible designation during the consultative period. It is possible, but if the payment system manager and participants addressed the concerns of the minister, there would not be a need to designate.

I will go now to the motions presented by the member for Regina—Qu'Appelle, the NDP finance critic. Motion No. 8 concerns itself with bank mergers. I should make it absolutely clear to the House that the government recognizes the importance of the role that parliament can play in assessing the public interest impact of bank mergers in Canada.

That is why the merger review guidelines include referral to both the House finance committee and the Senate banking committee. Through the reports of these committees to the Minister of Finance, the views of parliament would be considered in reviews of large bank mergers in Canada. The report of the finance committee would be presented to the House of Commons.

The Minister of Finance, however, is ultimately responsible for the safety, soundness and efficient functioning of the financial sector in Canada. The ultimate decision regarding whether a merger is approved or not needs to rest with the Minister of Finance and should not be conditional on approval by a resolution in parliament.

Furthermore, the proposed change could seriously undermine the safety and soundness of the financial services sector. Since mergers involving troubled institutions would not require the special resolution, this would signal to Canadians that at least one of the banks involved is in financial trouble. This could lead to a run on either one or both of the institutions, which in turn could seriously undermine the public's confidence in the financial services sector and the payment system.

I will now go to Group No. 1, Motion No. 12, from the member for Regina—Qu'Appelle. The motion deals with adding a new clause that would require any regulations made under the new bill in a calendar year to be referred to a committee of the House, the Senate or both for a comprehensive review.

As members are aware, Bill C-8 is a significant legislative initiative that sets out in comprehensive detail the key policy framework announced in the government's June 25, 1999 white paper. Within this framework, there are authorities to provide flexibility to specify elements of the new regime in regulations. Any regulations proposed under this framework would be subject to the same rigorous oversight process that applies to regulations proposed under any other federal statutes.

The Privy Council Office will review the regulation to ensure that it is consistent with the objectives of the legislation and interested stakeholders will be given an opportunity to comment on the proposed changes.

A key component of this regulatory flexibility is that it allows the government to respond to rapid changes in the industry in a more timely way than might be allowed by a five year review of the legislation. The motion, as proposed, would negatively impact on this flexibility.

A yearly review of the regulations would create uncertainty for the industry as to any changes proposed by the government in a particular area. To the extent that the review created delays, the proposed motion could lead to regulatory initiatives not being completed in a more timely way than a full fledged legislative amendment. For this reason, the government does not support this proposed change.

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

Madam Speaker, that is why I was speaking in generalities about improving the powers of that financial agency. Motion No. 8, which is part of the first grouping, would speak directly to parliament through a democracy.

If there is a bank merger, under the current legislation the Minister of Finance would have the final say. That is the way it is today. The Minister of Finance has the final say. My amendment would, except in the case of insolvency, give the Parliament of Canada the final say. There would be a vote in parliament on whether or not a bank merger would go ahead. That is not very radical, but bank mergers could potentially be extremely important items on the public agenda or in terms of public policy.

We remember how in January 1998 four of the large banks wanted to merge: the Bank of Montreal, Royal Bank, TD and Scotiabank. We had a great debate on the matter. I am proud to say that our party at the beginning was very much opposed to these mergers, arguing that they would not help consumers and that they would concentrate more power into fewer hands in terms of financial institutions. I remember people saying that there was no use in fighting the large banks as they were powerful and would win. However, we led that opposition and within a year or so there was a lot of opposition across the country and in December 1998 the Minister of Finance said no to the merger of those four large banks.

As a result we now have a new mechanism in Bill C-8 before us today. Instead of democratizing the process and making parliament more meaningful in terms of the power MPs have to speak on behalf of their constituents, the Minister of Finance will have the final say as to whether or not a merger goes ahead.

We are saying in our amendment that a resolution of parliament should be the final say. We should vote yes or no. It would expand and empower the role of members of parliament so that someone from Nova Scotia, Manitoba, Quebec, Ontario, or anywhere in the country would have the final say in terms of the debate and the argument as to whether or not a merger is in the public good. We would decide if it is good for the country, if it will help consumers, or if it is good for rural Canada or different parts of Canada where mergers are to take place. The power should not reside in the hands of one minister, the Minister of Finance.

Madam Speaker, please try to divorce yourself from the idea that we will have the Minister of Finance for all time. This minister and the next minister may or may not make the proper decision. We should not leave that power in the hands of the Minister of Finance.

This is part of parliamentary democracy. It is part of democratic and parliamentary reform. It is part of empowering this place to be more meaningful and relevant to Canadians. When we see the alienation from this parliament and we see fewer people casting their ballots, it makes us wonder why we do not empower ourselves and make this institution more meaningful.

The House of Commons has to be a check and a balance on the powers of the executive and cabinet. Why do we not do that as members of parliament?

If members across the way voted for the motion, it would not be a vote of non-confidence in the government. In the case of a merger, unless there is an insolvency, parliament would have the final say. In the case of an insolvency the Minister of Finance would have the power to make that decision and make it very quickly. If the process is established under the bill, and this item is on the public agenda, then why would the Parliament of Canada not have the final say instead of the Minister of Finance?

My motion is a timid little step in the direction of parliamentary reform and parliamentary democracy and would make this place more relevant and meaningful. I hope members across the way will see this as an opportunity to bring in parliamentary reform and bring back more democracy to make this place more meaningful and more important in the lives of the average citizen.

[Dick Harris, Canadian Alliance, Prince George—Bulkley Valley, BC]

moved:

Motion No. 13

That Bill C-8, in Clause 244, be amended by replacing line 9 on page 408 with the following:

“effect of the designation. The Minister must also provide in writing: a ) a statement of the reasons why, in the opinion of the Minister, it is in the public interest to designate a payment system; b ) the process by which consultation of the manager, the participants, and other interested parties who could be affected by the designation can take place, including how the Minister's concerns can be addressed; c ) a statement to the effect that where a system fails to adequately address a Minister's concerns, the Governor in Council may designate a payment system.”

Mr. Speaker, I am pleased to rise in the House on behalf of the Canadian Alliance Party to speak to Bill C-8 and in particular to the motions we put forward at report stage.

Motion No. 1 deals with a clause in the original bill that would require, upon the setting up and operation of the financial consumer agency, the commissioner of the agency to report its activities to parliament through the Minister of Finance.

We have stood in the House on many occasions calling for the independent arms of government agencies and commissions to report not through a minister but directly to parliament, and in this case to the Standing Committee on Finance. The motion reflects that an amendment be put that would require Financial Consumer Agency of Canada to report to the Standing Committee on Finance on a permanent basis.

Motion No. 13 deals with the operation of Interac services. The bill calls for the association to report every rule change during the normal course of operation to the Minister of Finance. This is an onerous demand. We would make an amendment that would give the Interac Association a very clear and transparent framework to operate under that is self-regulating. Its compliance people would have a very clear understanding of what is required of them by the Minister of Finance.

The motion would require that the Minister of Finance provide:

(a) a statement of the reasons why, in the opinion of the Minister, it is in the public interest to designate a payment system;

(b) the process by which consultation of the manager, the participants, and other interested parties who could be affected by the designation can take place, including how the Minister's concerns can be addressed;

(c) a statement to the effect that where a system fails to adequately address a Minister's concerns, the Governor in Council may designate a payment system.

The broad, transparent and clear framework included in the bill by the Minister of Finance would be sufficient for the association to conduct its normal day to day business transactions. It would not burden it with a requirement to report and discuss every rule change so long as it was operating within the broad framework.

That is what I wanted to say as far as the motions put forward from the Canadian Alliance in Group No. 1. Overall it is a progressive bill. While we criticize the government for being tardy on it, we are happy with the bill. It is bringing Canada's banking system to a more progressive stage so that we can compete with our competition around the world.

I ask government members to see the prudence and the common sense in these amendments and I am sure they will support them.

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

moved:

Motion No. 8

That Bill C-8, in Clause 84, be amended by replacing line 27 on page 39 with the following:

“made.

(4) Except in the case where an amalgamation is the result of one or more of the applicants not being financially sound, an amalgamation must be approved by a resolution of the House of Commons supported by a majority of the members of that House and a resolution of the Senate supported by a majority of the members of that House.”

Motion No. 12

That Bill C-8, in Clause 183, be amended by adding after line 44 on page 367 the following:

“978.1 On the expiration of one year after the coming into force of this Act, and on the expiration of every year thereafter, all regulations made in the previous year by the Governor in Council under this Act shall stand referred to such committee of the House of Commons, of the Senate or of both Houses of Parliament as may be designated or established for that purpose and the committee shall, as soon as practicable thereafter, undertake a comprehensive review of such regulations and shall, within one month after the review is undertaken or within such further time as the House of Commons may authorize, submit a report thereon to Parliament including any recommendations pertaining to the object, impact or necessity of such regulations or any other aspects thereof that the committee deems appropriate.”