Bill C-37 (Historical)

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 achieving three key objectives:
(i) enhancing the interests of consumers,
(ii) increasing legislative and regulatory efficiency, and
(iii) adapting those Acts to new developments;
(b) amendments to the Bills of Exchange Act to provide for the introduction of electronic cheque imaging; and
(c) 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 Bills of Exchange Act, the Canada Business Corporations Act, the Canada Deposit Insurance Corporation Act, the Canadian Payments Act, the Financial Consumer Agency of Canada Act, the Green Shield Canada Act, the Investment Canada Act, the National Housing Act, the Payment Clearing and Settlement Act and the Winding-up and Restructuring Act.

Bank Act

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, the member asks why. I guess we will save that debate for another day and we will show the Liberals some Canadians who are struggling daily to make ends meet. They are finding it hard to actually pay anywhere from $2 up to $6 every time they want to take out $30 or $40, because they do not have access to a bank and are forced to go to an ATM, and if not an ATM, a payday lender where they pay a much higher amount.

We asked for mandatory disclosure of ATM fees. We could not get the committee to agree to eliminate or reduce the fees, so we just asked for disclosure. Guess what the Liberals did. They voted against disclosure. They voted against Parliament asking the banks to disclose their fees to use an ATM. Could someone explain that to me?

We asked for public accountability for proposed bank branch closures. We asked that the banks provide some proof that a bank branch was not profitable, some display of the numbers, some reasons, some discussions with the community. Guess what. It was defeated. By whom? By the Liberals, by the Bloc and by the Conservatives.

We asked for disclosure of security breaches leading to identity theft. Guess who voted against that. The Liberals, the Bloc and the Conservatives.

We asked for adherence to international standards in handling consumer complaints. It was defeated by the usual guilty suspects.

We asked for publication of names and events violating the consumer provisions of the act. It was not allowed.

We asked for increased penalties for banks for violations from $100,000 to $500,000. It was defeated, despite the fact that in telecommunications the fees for violating the laws are more like $15 million. Those members could not agree to $500,000.

We did win one and that was that government shall require banks to hold public meetings when they are planning bank closures, not may, but shall. That was a small victory for the NDP after many attempts.

We have so much more work to do on this front. We have issues pertaining to community reinvestment, electronic payments, credit cards and simple access to information to make the way through this maze of new technologies and systems. We will keep doing that.

I hope at some point we will get the support of other members of Parliament. This is very important to Canadians. Fundamentally we are talking about the right for all Canadians to access financial services where they live in whatever part of the country and whatever their background.

[The Acting Speaker, Andrew Scheer]

I am a little bit hesitant to give the floor to the hon. member for Scarborough Centre. I thought he may have asked all his questions during the member's speech, but I will allow him to ask one now.

[John Cannis, Liberal, Scarborough Centre, ON]

Mr. Speaker, the member for Winnipeg North asked that there be public consultations when bank branches close. I will give the member some of my personal experiences but I will not name the bank because it would not be proper.

At least a decade ago, when closures and consolidations were taking place, I spoke with bank officials. Community members were brought in and we discussed the matter. The bank was very public and open before it closed.

What she is asking for now, when it was brought to the attention of banks years ago they did it. I am not here to speak for the banks but I am also not here to bash the institutions.

The member said that banks were paying exorbitant salaries. Who is she to tell these businesses how much to pay their people? It is irrelevant. We should let the public choose.

The member said that when people go to an ATM machine they are charged $5 or $6 to take out $30 or $40. I think that is an inaccurate statement. I use ATMs and I am charged a fee of $1.50. If I do not want to pay that fee, I go to my own branch's ATM. If I find myself somewhere where I need some money unexpectedly, I choose to use an ATM. If I do not wish to use it, I do not. However, I believe I pay a fee of $1.50 and she quoted $5 or $6. Her statement not only misleads Canadians but it adds fuel to the fire, which is not fair to the average Canadian. I would ask her to correct that if she will.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I would refer the member to The Globe and Mail article of a couple of days ago which had the full chart of ATM fees. He will note that I said up to $5 or $6, which is the maximum fee for accessing one's own money through a private ATM. The fee ranges from about $1 for accessing an ATM at one's own bank to a higher rate for accessing a competitor's ATM and then to a maximum of $6.15 if one were to access a private label ATM. The member can check the facts. I certainly will not apologize for giving the actual facts to the House.

With respect to the question of closures, I am glad to hear that the member had this experience with a bank and that he is happy with the fact that the bank proceeded to close. Some of us come from areas that have seen all bank branches close. In my area of Winnipeg North we lost 10 bank branches in the space of the last six or seven years and the community fought each one of them. The community went to the bank in each case. We rallied and worked together. We protested, we met, we called and we signed petitions. We did everything possible to convince those banks to stay or to at least prove that they were not profitable. We could not get the financial statements nor could get the information to know the actual situation. We could not force one bank to stay.

When the last bank closed a few years back, which was CIBC, we managed to convince it to give a bit of money to study an alternative financial services centre and managed to get the bank to sell its building to the community for $1.

The community rallied. My community felt that they had been loyal to their banks for many years and if the banks could not in turn be loyal to them, they would do it on their own. In November of last year, the Alternative Community Financial Services Centre was opened in my constituency of Winnipeg North as a result of the community coming together, working with the credit union movement, the Assiniboine Credit Union, SEED Winnipeg, the United Way and a number of organizations that realized the importance of every community having some sort of banking presence. This was a very successful victory.

We are now working hard on trying to bring regulations over payday lenders because that is what we have been left with.

What we are trying to say in this review of the Bank Act is that with $19 billion in profits, there is no way in heaven's name that banks should be closing bank branches arbitrarily and paying their CEOs that kind of money without some accountability to the community. If the member does not understand why we are here, what our role is as an MP and what Parliament does, it is to ensure that Canadians have some access to justice and fairness.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I was pleased to hear my colleague tell us about the gigantic profits of banks, the huge and out of line salaries of CEOs and their friends, the use of tax havens by banks—which is essentially tax avoidance—and, finally, an issue that is dear to my heart, namely territorial inequity.

She talked about territorial inequity by raising the fact that citizens from rural areas pay the price for branch closures and lack of services, which is even more outrageous when preceded by the comments that I made about what the member said.

I would like to have her opinion on community reinvestment, if she has the time to tell us about that.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I thank the member for her question. It is very important to talk about alternative proposals with regard to this issue.

I will continue in English, because I lack many words on this subject.

I want to thank the Community Reinvestment Coalition, the Canadian Consumer Initiative, the Consumers Association of Canada, the Public Interest Advocacy Centre and Democracy Watch. Those are all the organizations that came to our committee with alternatives and with suggestions.

I also want to commend the Bloc for bringing forward an amendment dealing with the community reinvestment legislation. This is, interestingly, legislation that exists in the United States. It requires banks to actually invest in their communities, to put back into the communities the money that they received as a result of client and consumer loyalty. It is key to this notion of rebuilding communities by involving the banks and financial institutions and ensuring that we have the provisions to give everybody in our society the ability to play a role and make a difference.

I would like to commend the Bloc and everyone who takes up this mantle of the community reinvestment act. I know we did not get the legislation through at committee but I hope that some day we will get this legislation in this country. It is not often that we use the Americans as an example of doing something positive but in this case the legislation works. It ensures that banks have some commitment to give back to their communities and it provides for necessary community economic development.

One of the reasons we were so excited in Winnipeg when we got the alternative services up and running is that it allows low income earners to get help with setting up bank accounts, saving money and budgeting. It also provides some cheque cashing arrangements without having to go to usurious payday lenders and it has some micro-lending capacity.

It is a very exciting initiative and the first of its kind in this country. I look forward to the day when we can see this kind of notion spread across this country. I hope some day the banks come back to this notion of community investment and working with community groups to build strong, self-sufficient families and communities.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the member talked a lot about accountability, transparency and openness. She spent a lot of time in her speech advocating for saving ATM fees, $1 to $6, for those who cannot afford them.

How can she be an advocate for transparency, openness and accountability when she and her party are supporting the government on the taxation of income trusts, which steals $25 billion away from the value of the investments of Canadians, mostly seniors and those living on their retirement incomes? These trusts are their nest eggs.

How is it that the member would have the duplicity to come to this place and say that she is a champion of accountability, transparency and openness and turn around and stab seniors in the back?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, we would not be in this situation today if the Liberals had taken this issue seriously when they were in government.

We know that over a a dozen years the Liberals were warned that they had to deal with the growing problem of tax leakage because income trusts were taking on a certain dominance in the investment sector. In fact, just before the 2006 election, the minister then was in the middle of a consultation process, which was cut short because of the looming election, and probably therein lies the difficulties they faced consequently.

However, the real issue here for seniors and Canadians everywhere is the potential loss of over $1 billion annually as a result of corporations using income trusts for a tax advantage. That had to be stopped and the Liberals know it. It is time they declared their position.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Mr. Speaker, on behalf of my constituents of Don Valley East, I am pleased to address Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters.

Canada is somewhat unique in the sense that all federal legislation relating to financial institutions is subject to a sunset clause and must, therefore, be reviewed every five years by law. This has the effect of making Canadian financial institutions more efficient by keeping up with rapid changes in technology and the variety of services which arise from new technologies.

As the hon. member for Markham—Unionville has indicated in the House, the main content of Bill C-37 is largely based on the white paper commissioned by the former Liberal government in preparation for the statutory review of the Bank Act.

One of the aspects of this bill that I approve is the provision for an increased disclosure regime that would provide Canadian consumers and businesses alike with the information they need in order to make the most informed investment decisions possible. Bill C-37 would ensure that the savings products disclosure regime is just as effective for the millions of online bankers as it is for branch customers.

Strong competition and information disclosure are two of the best tools available to ensure that Canadian consumers' needs are being served well by our financial institutions. On the disclosure front, however, I am disappointed that the Conservatives have ignored one strong suggestion from the white paper regarding the complaint process for financial institutions.

I imagine that many Canadians are not very familiar with what the complaint process is at their local banks. Legislating that information with respect to the complaints process be readily available would have been a good idea.

I am willing to bet that there are a good number of Canadians who do not even know that there is an ombudsman for banking services should they exhaust all venues available to them. However, the ombudsman for banking services and his office do fine work and I would like to have seen a requirement for information about his service be made readily available.

Canada's mortgage loan insurance threshold would also be changed by this bill. Currently, any homebuyer who provides less than a 25% deposit is required by law to ensure that a mortgage through the Canada Mortgage and Housing Corporation or similar private sector providers will be able to attend to this.

Bill C-37 would reduce this minimum requirement of 25% to 20%, allowing more Canadians to secure a home mortgage without having to pay the additional costs of mortgage insurance. Obviously it is sensible to have some sort of legal threshold under which Canadians must purchase their mortgage insurance. During the Mulroney years of uncontrollable inflation, it was far more than sensible. It was both prudent and necessary.

After decades of strong Liberal leadership, however, this country is enjoying both low inflation and record low unemployment rates. As a result, it is more important than reasonable to reduce the minimum deposit that Canadians must have in order to secure a mortgage without insurance.

I would also like to say that from the outset Canadians must place their trust in government to provide adequate consumer protection. Last year, however, the Conservative government shocked the nation with a devastating announcement that brought a key election promise.

On October 31, the Conservative government dropped a bombshell on Canadians by imposing a new tax regime on publicly traded income trusts. The effect on Canadian markets was devastating, resulting in the permanent loss of well over $20 billion in wealth, most of it at the expense of Canadian seniors who were relying on income trusts for day to day living expenses.

Worst of all, Canadian investors were lured by a Conservative election promise made by the current Prime Minister. In the middle of the last election campaign the Prime Minister said, on December 9, 2005, “A Conservative government will never raid seniors' nest eggs by taxing income trusts”.

Canadian investors took the Conservatives at their word and put more and more of their life savings into income trusts, making this the fastest growing sector on the market, all until the Prime Minister broke his word to Canadians. Sadly, Canadians are learning the hard way. The Conservatives are more than willing to betray election promises without any regard for the damage done to thousands of seniors who worked hard for their life savings only to have it wiped out with the stroke of a pen.

This is a sample of one of many letters and emails that I received from my constituents of Don Valley East. It states:

The damage done to the value of my investments in income trusts is devastating. I have incurred a 20% decline in value. It is my sincerest wish that an election will be held in the very near future and that the majority of Canadians will not re-elect your party. This is a very sad commentary and one I wish was not necessary to write. However, I have definitely lost my confidence in your party's approach to fair treatment of its citizens, particularly seniors of which I am one.

The current Prime Minister knew how much seniors were depending on income trusts and yet he was determined to break his word. With one hand the government has swiped billions from seniors through their income trust savings and with the other offered very little in the form of income splitting. In fact, some have construed this pension splitting to be income splitting. It is not.

Pension splitting will do little to curb poverty among seniors and even less to alleviate the huge losses they have suffered as a result of the Conservatives' broken election promises. Hundreds of thousands of single seniors, the majority of them women, will not see a penny from this policy.

I am pleased to support Bill C-37 at this stage. I am glad to see that the Conservatives are continuing to implement the Liberal agenda on so many fronts. It is, after all, the same Liberal agenda that saw Canada make a complete economic U-turn after years of Conservative fiscal mismanagement. It was not long ago when the Wall Street Journal referred to Canada as a third world economic basket case because of the damage done by the previous Conservative government.

Thank goodness the Liberal Party was able to come to power to eliminate Mulroney's $42 billion deficit, balance the books for eight straight years, while offering Canadians the biggest tax break in Canadian history.

I sincerely hope that Canada's alleged new government will continue to use our ideas to their fullest and can refrain from returning to the dangerous incompetencies of the previous Conservative government, which was so damaging to Canada's economic well-being.

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Mr. Speaker, the member made the same error that previous Liberals made when she tried to attribute the debt and the deficit to the Conservatives. First, I will state my credentials. I am a math type guy. One of the things I learned was some math and finance. It is a very elementary computation, which we have all heard, called compound interest.

Let us take the debt in 1984, which the Conservatives inherited from what the Liberals had done in the previous 14 years, from 1970 onward, and set it aside. When the Conservatives were defeated and the Liberals took over in 1993, that debt, by plain, simple compound interest, would have grown to the amount that it was in 1993. I do not know those numbers in my head right now, but I remember having computed it because I was challenged on that fact. It turns out that at the going interest rate, this is exactly what happened.

The debt we still have is the heritage of those years under Trudeau. When Mr. Jean Chrétien was the minister of finance, he had record breaking deficits. That is what drove us into debt in the first place, and we are still suffering from it all these years later.

The Conservatives, on the other hand, put some measures into place to try to address that. When the Liberals came back to power in 1993, those measures were in place and they were able to address the issue, and we were very glad they did. In the Liberal way, they could have found new ways to squander the money again. We are glad they did not.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Mr. Speaker, I am an accountant by trade and economics is my forte. If what the hon. member is saying represents his party's position, then we are in a real bad turn. We are going to go into a deficit because they do not know economics at all.

In good economic times, if we cannot balance the budget, if we keep on giving eight consecutive deficits, how can we do anything in bad economic times? The economy that the Liberals inherited was devastated. We were called a third world country, a basket case. If the Conservatives were such good economic managers, why could they not turn the ship around?

We inherited $42 billion in deficit, $500 billion in debt and we were able to manage. We also gave the Conservatives $13 billion in surplus. They cannot beat that record and we do not want the country to go into deficit again.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the NDP spokesman came before the House to deal with the bill, but then proceeded to talk about a range of other things, which I suppose now is relevant to the debate. One of those issues has to do with the fact that the finance minister, when he presented information before the committee, turned out to be no information.

On the matter of income trusts, Conservatives still have not explained where they got the tax leakage. They still have not responded to the expert witnesses about the flaws in the methodology of computing the tax leakage. That is not transparency, openness and accountability, upon which this bill rests.

I raise the matter for the member's comment. Have we seen with this bill, which only received three hearings days and a few hours of debate in the House, a bill dealing with 12 different acts, a comprehensive enough review for a process which is transparent, open and accountable?

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Mr. Speaker, something which I find quite unethical is the behaviour of NDP members in this, especially in the area of income trusts. They have made spurring allegations, they have spoiled reputations and yet they do not have the courtesy to apologize. They have to apologize for the leakage, for getting the RCMP to do things, when they knew full well. They spoiled the reputation of the former finance minister. Even more galling is the NDP went to bed with the Conservatives and destroyed everything that was so important to Canadians such as the Kelowna accord, the child care agreement, Kyoto, the Status of Women. They then claim to be advocates for small people. They claim advocacy and transparency. I do not believe it. They are duplicitous.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, the banks are given the exclusive monopoly for a variety of very lucrative financial transactions such as credit card exchanges, cheque cashing, et cetera, in exchange for providing basic services to all Canadians. That is the nature of their charter. A lot of people do not realize that there is some reciprocity and some obligations there.

I would like my colleague's views on this. In my riding of Winnipeg Centre, the five big chartered banks have closed 15 branches in the last five years. Neighbourhood banking, as we used to know it, is gone, leaving a service vacuum that is being backfilled by ripoff payday loan artists, pawn shops and fringe banking of every variety. These payday lenders are like a scourge in my community. They are sucking the life right out of my community, in a financial analogy, because they are preying on poor people who are being denied basic financial services by the big banks.

My colleague finds fault with the comments of my colleague from Winnipeg North Centre, who is experiencing the exact same circumstances as I in Winnipeg Centre, where banks are completely abandoning their obligation and duty to provide basic financial needs. I do not understand for whose side she is advocating. I do not understand why she is being critical of my colleague, the finance critic for the NDP. We are simply pointing out that the general public needs some representation in the House of Commons when it comes to the service they get from the big banks.

I really have to wonder whose side members opposite are on sometimes. The banks have plenty of apologists. They have apologists coming out of their yin-yang from both business parties. Only one party has been trying to advocate on behalf of the end user, the consumer who is not being served well by the banking system and by the big banks. The big banks have a lot to answer for.

In the Bank Act it specifies under what circumstances banks may close branches. The tests, when we read them on the face of it, are quite high. They cannot close branches because they are not profitable. They have to view their profitability overall, and their profitability is not wanting with a $19 billion surplus. Profitability is not justification for closing a bank branch. They then have to provide alternate subsequent services to those long term clients to keep up their end of this trust relationship that they enter into with Canada.

Does my colleague agree that the Bank Act should be strengthened to curb banks from abandoning small town Canada, inner city Canada? Does she also agree that if the banks continue to disregard their obligations under their charter, we should tear those charters up? We should scrap the idea of chartered banks. Botswana did it. It kicked them out, left it open to competition and let the chips fall where they may.

[The Acting Speaker, Royal Galipeau]

The hon. member for Don Valley East should know there is half a minute to respond.