moved that the bill be read a third time and passed.
An Act to amend the law governing financial institutions and to provide for related and consequential matters
This bill is from the 39th Parliament, 1st session, which ended in October 2007.
This bill is from the 39th Parliament, 1st session, which ended in October 2007.
Jim Flaherty Conservative
This bill has received Royal Assent and is now law.
This is from the published bill.
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.
All sorts of information on this bill is available at LEGISinfo, an excellent resource from Parliament. You can also read the full text of the bill.
Bill numbers are reused for different bills each new session. Perhaps you were looking for one of these other C-37s:
Diane Ablonczy ConservativeParliamentary Secretary to the Minister of Finance
Mr. Speaker, I appreciate the opportunity to introduce at third reading C-37. The bill would amend the legislation concerning the framework for financial institutions operating in Canada and it comes out of the five year review of the Bank Act undertaken by Parliament.
The financial services sector is key to the success of a modern industrial economy. That goes without saying. The sector plays a unique role in fuelling the growth that is essential to the success of the Canadian economy, but the significance of this proposed legislation goes beyond our borders. Canada is recognized internationally for our safe and secure financial sector and the bill would help ensure that Canada remains a world leader.
The goal of Canada's new government is to improve our quality of life and make Canada a world leader for today and future generations. How will we do that? Along with November's economic and fiscal update, the Minister of Finance introduced “Advantage Canada”. This long term plan will achieve a higher standard of living and better quality of life for Canadians as the world economy continues to transform.
I will talk a bit about the plan and illustrate just how Bill C-37 fits in.
“Advantage Canada” is rooted in the realities of global competition and Canada's existing strengths and economic challenges. As a long term vision, it will serve as the framework for government decision making for years to come. Competition drives firms to become more efficient, invest in new technologies and introduce new products and services that benefit consumers. A highly competitive and open national economy also helps our companies and organizations to be more successful when competing in global markets, which means more and better jobs in Canada.
Government has a role to play in creating the ground rules for competition in Canada. Consistent with the overall purpose and principles of the “Advantage Canada” plan, Canada's framework of competition will create competitive marketplaces that serve both individual and business consumers with low prices, choice, quality and service. The investment will also drive and foster innovation investment and efficiency that grow productivity and competitiveness and it will promote a more resilient adaptable economy.
“Advantage Canada” is about making Canada a world leader and a safe and efficient financial system is crucial to achieving that goal.
Canada has a strong and sound financial system that serves Canadians well. It is an asset unto itself, providing high end, knowledge based and well-paying jobs for Canadians. Of course a strong financial system needs to be able to adapt to the evolving needs of households and businesses.
Keeping Canada's financial institutions and markets innovative and competitive with a flexible regulatory framework founded on sound principles will ensure that they continue to meet not only the needs of our growing economy but also the needs of Canadians. That is where Bill C-37 comes in.
Just as “Advantage Canada” is about making Canada a leader in the world, the bill is about ensuring that Canada's financial system remains a leader in the world. To attain that goal, Canada must have a regulatory framework that allows financial sector participants to operate as efficiently and effectively as possible.
The Government of Canada is responsible for maintaining the safety and soundness of the financial institution sector. It is also responsible for ensuring that consumers and businesses are properly served and protected. The regular five year review of the financial sector framework is an important tool in meeting these responsibilities, and a consultation process was an integral part of that review.
A large and representative group of stakeholders provided comments to shape the review of the financial sector statutes. Over 50 submissions were received from various stakeholders, including industry associations, financial institutions, consumer groups and individual Canadians. Those submissions culminated in a white paper issued by the Minister of Finance this past June. The drafting of Bill C-37 followed to legislate the proposals set out in the white paper.
While stakeholders agreed that no major overhaul was needed, there was acknowledgement that some steps could be taken to enhance the interest of consumers, increase legislative and regulatory efficiency and adapt the framework to new developments. These three objectives are the framework on which the bill is built.
I will now illustrate how Bill C-37 meets these objectives.
First, Canada's new government wants to ensure that the interests of consumers are well served. As members can imagine, competition in the industry in technological innovation can sometimes make for a confusing array of products and services confronting consumers. It is therefore important that consumers have the information available to them to help make informed decisions.
That is why Bill C-37 proposes to improve disclosure to consumers. Perhaps one of the best examples of improved disclosure to consumers relates to the growth of online services. Currently, federally regulated financial institutions must disclose in their branches information on the amounts charged for services normally provided to their customers and the public.
However, with consumers increasingly managing their finances using Internet banking, these disclosure requirements currently do not extend to the online world. To ensure that consumers have sufficient information, Bill C-37 proposes to harmonize online disclosure requirements with those of the in-branch requirements. This proposed legislation will allow consumers to compare banking products and services more easily online.
Another important measure to address consumer interests in the bill is the proposal relating to complaint handling procedures. Federally regulated financial institutions are required to have procedures and staff in place to deal with complaints from consumers. These procedures must be filed with the Commissioner of the Financial Consumer Agency of Canada and must be provided to consumers when they open a deposit account.
However, there are currently no requirements to ensure that consumers have access to information on these procedures on an ongoing basis. In addition, consumers who do not open an account, but rather obtain other products and services such as a mortgage, do not receive any information on complaint handling procedures.
Consumer groups have raised concerns that consumers may be unable to readily obtain the necessary information on the proper complaint handling procedures when a complaint with their financial institution arises. Bill C-37 addresses that issue by proposing amendments to the financial institutions statutes that will require financial institutions to make their complaint handling procedures publicly available for all consumers to access whenever they choose.
One of the biggest advantages of a regular review of the financial sector, such as we have in Canada, is the ability to modify just the framework as the sector changes and evolves. For example, there is now increased competition in Canada from foreign banks. The framework encourages competition through the entry of foreign banks into the Canadian market. However, while foreign banks have considerable flexibility to do business in Canada, some aspects of the current regulatory mechanisms have been criticized as being complex and burdensome.
An area of significant concern has been the regulatory burden placed on the so-called near banks. These foreign entities are not regulated as banks in their home jurisdictions, but provide banking type services such as consumer loans. Of particular concern is the ministerial entry approval that near banks must obtain to undertake unregulated activities. This requirement is regarded as unnecessary and costly. Moreover, it results in delayed transactions and provides little benefit.
To simplify the foreign bank entry framework and reduce the administrative burden, Bill C-37 proposes to narrow the framework to focus on real foreign banks and remove near banks from the foreign bank entry framework by eliminating the entry approval for near banks undertaking unregulated financial services.
The financial services sector has changed dramatically in recent years. Globalization has certainly played a major part in this change but so too has convergence and consolidation in the industry and, of course, advances in technology have changed the way we do banking today. One just needs to look at the way cheques have been processed for years.
Traditionally, the cheque clearing process involved the physical delivery of cheques to the issuing financial institution before a decision could be made whether or not to make the payment. Now, with the use of computer scanning technology, cheques can be sent electronically to the originating financial institution.
The faster processing enables financial institutions to clear cheques more quickly, thus allowing consumers and businesses to have more timely access to funds. To reflect the faster cheque processing time, Bill C-37 proposes to facilitate the introduction of regulations limiting hold times imposed on cheques.
Instead of using this regulatory power, however, the government is in the process of finalizing an agreement with the banking industry to reduce the maximum hold period voluntarily for cheques to seven days from ten days. Once cheque imaging technology is fully implemented across Canada, the cheque hold time will further be reduced from seven days down to four days. This, of course, represents a significant benefit for consumers and businesses alike.
Once more, these changes illustrate the importance of having an up to date framework to allow financial institutions to evolve and prosper while benefiting consumers.
Bill C-37 also contains a proposal that would attract additional expertise to the industry. Specifically, the bill proposes to reduce the board of directors residency requirement for Canadian financial institutions from two-thirds to a majority. This would l allow Canadian financial institutions to add more foreign experts to their board. It would also enhance flexibility and give financial institutions new scope to pursue global business opportunities while maintaining a strong Canadian presence on their boards.
All told, the proposals in Bill C-37 will help modernize the regulations for our financial institutions, which makes this bill important for a number of reasons. First and foremost, the bill is important because it would cut red tape and advance the interests of consumers. It is also important because it would amend the legislative framework so that Canadian financial institutions can better compete in the international marketplace. The bill is important for Canada because it would ensure that Canada continues to be a world leader in the financial services industry.
I therefore would ask all hon. members to give this bill careful consideration and allow it to pass without delay.
Paul Szabo Liberal Mississauga South, ON
Mr. Speaker, in his speech at second reading to the House, the finance minister stated:
The government believes that the best approach to improving services for consumers is through competition and disclosure....
He went on to say:
Disclosure...ensures that consumers and businesses alike have the relevant information they need to make the best decisions in light of the choices available to them.
I raise those quotes because in the bill that was presented to the House at second reading there was an additional clause to the Bank Act proposed which basically states that no account or service shall be offered to a customer unless, and it lays out information on all charges as disclosed, information on how the customer will be notified of an increase in charges, information about the bank's procedures relating to complaints and any other information that may be prescribed.
Interestingly enough, an amendment moved at committee changed this. It added a proviso which says, in the new subparagraph 448.3(2), that the governor in council may make regulations specifying the circumstances under which a bank need not provide that information to consumers.
Could the parliamentary secretary explain to the House why it is that certain accounts or services provided to Canadians would not require the proper disclosure of the charges and other conditions of providing that service or account?
Diane Ablonczy Conservative Calgary Nose Hill, AB
Mr. Speaker, the simple answer is that all proper disclosure will be made. The amendment was passed by the committee simply to ensure there was no unnecessary red tape or redundant regulatory burdens put into place. On the one hand, we wanted to ensure that the act would ensure that consumers have full and greater disclosure but not in a way that would unnecessarily introduce red tape, which accomplishes nothing for consumers and causes more cost and inefficiency for banks.
It is a good balancing act and I think the member will support that as he considers the good balance that has been struck by the committee at report stage.
Paul Szabo Liberal Mississauga South, ON
Mr. Speaker, I think the member may have addressed another amendment that was made to the Bank Act, section 448.3. The amendment proposed by the committee was that the disclosure would be “in the prescribed manner”. I understand that is a proviso that would ensure there was no inefficiency in terms of disclosure or a lot of red tape.
However, the subclause (2) that is being added is very specific that the governor in council, i.e., the cabinet, can prescribe that certain accounts or services provided by a bank would be exempt from proper disclosure of the charges or conditions related to an account or other services.
I would ask the member again whether she can give us one example of an account or some prescribed service included in the regulations to the Bank Act that would not require disclosure or in the future may be introduced that would not require such disclosure.
Diane Ablonczy Conservative Calgary Nose Hill, AB
Mr. Speaker, this provision was put into the Bank Act to ensure there is a proper balance so that if disclosure is not needed by consumers, the banks do not need to have extra unnecessary red tape. This judgment is made from time to time by governments and the act simply allows that judgment call to be made.
However, the first focus of the Bank Act and of all governments is to ensure that businesses, consumers and the users of financial services have the disclosure they need. I assure the hon. member that nothing in the Bank Act, as it is tabled in the House, will detract from that. In fact, it enhances the choice, competition and information that is provided to consumers and the country.
John McCallum Liberal Markham—Unionville, ON
Mr. Speaker, I am pleased to speak to Bill C-37, an act to amend the law governing financial institutions.
I was glad to see that all the members of the Standing Committee on Finance delivered the bill back to the House in such an expeditious manner. We certainly look forward to continuing the debate here.
A vibrant 21st century economy requires, at its bedrock, a strong and well regulated financial sector that is not needlessly bound by red tape and yet, at the same, protects the interests of its citizens.
In many respects, Canada's financial services sector is the envy of the world. The expertise of our financial services sector is often sought out by our international friends. It has also helped our homegrown Canadian banks make real progress in expanding their services to other countries.
In fact, while our banks currently employ about a quarter million Canadians here at home, they now employ roughly 40,000 other people around the world. Indeed, this function of our banks, and at least as much our insurance companies, in taking on the world overseas in China, in India and in many other countries, is a very good thing for this country. Canada, as a whole, needs to take on the world. We need to compete with China, India and other emerging economic giants and, therefore, it should be core and central to government policy to prepare us for this new, highly competitive 21st century.
While our banks are certainly doing well, our government in the past year has been totally asleep at the switch. In terms of preparing Canada for the 21st century economy, I would contend that just as the government wasted a year when it came to the environment, cutting environmental programs until it woke up and looked at the polls, similarly, it has been totally asleep at the switch and totally wasted the last year when it comes to building a strong economy for the 21st century.
It is not a great puzzle what has to be done. We in Canada will compete with China and India, not through low wages, which is the last thing we want to do, but through good ideas, a highly educated workforce and research and training, which are all the things the government has cut.
We must also compete through lower income taxes and competitive taxation but the government raised income taxes.
At a time when the government has literally been swimming in money, with huge surpluses bequeathed to it by the previous government, it saw fit to slash funding for research, cancel programs for training Canadians and to raise income taxes. Those are all things that are the antithesis, the opposite of what has to be done in order to prepare Canada for the 21st century economy.
It is not as if our competitor countries have been standing still. We can look at what Australia has been doing. While our government insults China, Australia has been negotiating agreements with China. While Australia has reduced its income taxes, increased credits for low income Australians and made company taxes more competitive, what has our government done? It has raised income taxes. Yes, it has reduced the GST but that does nothing to make our country more competitive. While Australia forges ahead, Canada sits back and does nothing.
The United Kingdom is another example. It has ambitious targets for research and development over the next decade, backed by government support to achieve those targets. The European Union has even more ambitious targets for research. What do we do? We slash research funding.
I think this is totally irresponsible behaviour on the part of the government. When it is swimming in cash, it has no excuse for raising income taxes, no excuse for slashing research funding and no excuse for slashing support for training Canadians because it is only through well-trained, well-educated and innovative people that we will be able to take on the world, and the government has gone in the opposite direction.
I applaud our financial institutions for taking on the world and for showing success in Asia, but the government has to go beyond those successes that we see today. The government has to build a strong economy. It has to put in place policies that will create jobs for the future. The government, sad to say, has done precisely the opposite.
To return to the Bank Act, the five year review of the act is not something that happens overnight. In fact, it began more than two years ago, when the previous Liberal government began a consultation process and outlined what ground it expected the review to cover. While it is good to see good Liberal policy brought to this place--
John McCallum Liberal Markham—Unionville, ON
--it also leaves me with some concerns about the government's broader agenda.
On the one hand, I am glad to see that the Conservatives have decided to model their bill closely on the Liberal proposals. This bill really is 100% proposals from the previous Liberal government. Naturally, therefore, we do not hesitate very much to support it, but I do have some serious concerns about the government's ability to conceive of any truly new legislation.
Canada's alleged new government is actually starting to look an awful like Canada's used government. If we look beyond the Bank Act to some of the other pieces of legislation put forward by the government, it is hard to see anything that the Conservatives have conceived of themselves. The Conservatives may have promised new government, but they have only delivered borrowed government.
For instance, the EnerGuide retrofit program for homes was once thought a wasteful program by the Conservatives before they looked at the polls on environment. We remember that just three months ago the Conservatives thought spending any money on a clean environment was wasteful. Now they have brought back the old Liberal plan.
However, instead of bringing back the full program, they have eliminated portions of it, particularly the money for energy audits. What will this do? Effectively this will help ensure that low income Canadians are unlikely to be able to afford making use of the program, but low income Canadians are not the base of the Conservative Party so the Conservatives do not really care about that.
This is a shameful act, because I remember very clearly from the time when I was natural resources minister that low income people are particularly hard hit by high energy prices. Low income Canadians pay out 25% of their low incomes on energy, but how has the Conservative government amended and altered our EnerGuide program? It has cut out the audit part, the part that is essential to allow those low income Canadians to access the program.
The Conservatives have deprived these people who are most subject to difficulties from higher energy prices. They have effectively excluded those people from this program. I think it is typical of their behaviour because they do not regard low income Canadians as part of their constituency, so if those people are excluded, that is fine.
If only the government could swallow its pride and reinstate the full EnerGuide program, which I am confident is useful; I am not so confident the Conservatives see it as useful, but that is what is in my speech. Meanwhile, at least they have brought back part of the program, but they have excluded that most critical part, which is the part that is essential to help lower income Canadians.
Another example is Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, which we passed last fall. Much like the Bank Act before us today, nearly all of the bill was drawn from proposals drafted by the previous Liberal government. It was a sensible bill, but because of near complete inaction on the part of the Conservatives, Bill C-25 had to be rushed through the House and the Senate in order to make sure it received royal assent in time to be compliant with our international partners.
Today we find the same thing. Once again, we are rushing to get Bill C-37 through both chambers. The Financial Institutions Act was scheduled to sunset this past October, which is why the previous Liberal government began the consultation process over two years ago, but the Conservatives delayed. They dithered. They delayed the release of the white paper and gazed at their navels until they had to ask the House to extend the act by six months, which we of course did. Now we are forced to get this legislation through both chambers in the next 50 days in order to beat the April 24 sunset clause.
So on the one hand, I am impressed that the Conservatives have been, generally speaking, willing to implement the majority of Liberal policies that were waiting for them when they came to power last year. On the other hand, I am a little concerned that they are willing to implement some of them in such a piecemeal and rushed fashion and they seem to have so few ideas of their own in the legislative cooker.
Worse still, and this is perhaps the most important point, when the Conservatives do manage to dig an idea out of their own caucus, it is almost universally panned by everyone else. I do not think it would be a stretch to say that their so-called clean air act was a complete failure, and their reverse onus legislation has been called unconstitutional by the legal community.
Thank goodness for our financial institutions and the millions of Canadians who rely on them that this used Conservative government has decided to stick with Liberal policy on Bill C-37.
Let us hope that when the upcoming budget rolls around next month the Conservatives will remember a few other Liberal programs that they have ruthlessly cut. I am talking about literacy programs. I am talking about funding for Canada's struggling museums. I am talking about the GST visitor rebate program, without which our tourism industry will be at a competitive disadvantage with the rest of the world.
It is truly amazing that the Conservatives cut that visitor rebate program, making Canada the only OECD country that does not have such a program, depriving Canada of the convention business and of foreigners who come to this country as a consequence of that program. Experts have indicated that the government will lose more tax revenue by ending this program than it gained by cutting the program, and it has done so at a time when it is swimming in money. There was no need to cut that program, just as there was no need to cut literacy or status of women programs or museums.
The government is swimming in money but nevertheless has struck out and cut the programs that have provided assistance to Canada's most vulnerable. The Conservative government also struck out and foolishly cut programs like the visitor rebate program, which makes absolutely no sense. I remember this, because when I was doing expenditure review in the previous government the bureaucracy suggested that we cut the visitor rebate program, so I know where the recommendation came from. The Liberal government had the good sense to say no to the bureaucracy. The Conservative government simply followed what the bureaucracy recommended. That turned out to be an extraordinarily foolish and counterproductive move.
Returning now to the white paper that the Liberals commissioned in preparation for the five year review of the Bank Act, one of the most exciting things the Liberals were exploring in that paper was writing electronic cheque imaging into law. The bill states that banks will be required to use new technologies to better serve the needs of Canadians.
As it stands right now, the maximum hold period on a deposited cheque is 10 business days. That can be an excessively long time for some Canadians, especially low income Canadians who need access to those funds much more quickly in order to pay their bills and buy their basic needs. Bill C-37 will immediately lower this hold period to seven days, allowing Canadians faster access to their own money.
This can be done even faster. I am speaking specifically to electronic cheque imaging, which Canada's banks have already begun to implement. By adopting electronic cheque imaging, banks will no longer need to physically exchange copies of cashed cheques with other institutions. Instead, a captured electronic image of the cheque can be sent instantaneously to another financial institution.
Better still, when all of Canada's financial institutions have installed electronic imaging equipment in the next couple of years, the maximum hold on cheques will be reduced from seven days to a mere four days. Furthermore, I hope that as the technology advances we will be able to further reduce the maximum period.
A second aspect of this bill that I approve of is a provision for an increased disclosure regime that will provide Canadian consumers and businesses alike with the information they need in order to make the most informed investment decisions possible. Bill C-37 will ensure that the savings product 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.
As I have said, the official opposition will be supporting this bill. My colleague will expand on my remarks in terms of some other items contained in the bill. But I do hope that Canada's alleged new government will continue to use our ideas to their fullest and can refrain from returning to the dangerous incompetence of the previous Conservative government that was so damaging to Canada's economic well-being.
Perhaps I should expand briefly in my remaining time on that last comment. What do I mean by Canada's last Conservative government being damaging? There is a pattern here, in that Conservatives create deficits and leave those deficits for Liberals to clean up. The most glaring example in our recent economic history was the Mulroney government, which bequeathed to the Liberal government a $42 billion deficit. It took some time to clean that up.
Indeed, the Mulroney government received a credit downgrade in 1992. Since 1951, Canada had consistently had an AAA rating. Then, after a series of deficits that had us, according to the IMF, headed for third world status, the credit rating was downgraded in 1992. It took 10 years of the Liberal government cleaning up the Conservative mess to restore that credit rating to its AAA status.
It is not as if that is an isolated example. Looking south of the border, we saw Bill Clinton running surpluses. Who has been running the huge deficits? George W. Bush and, before him, Ronald Reagan. Or we can look to Ontario. The pattern is always the same. It was the Mike Harris-Ernie Eves government that ran on a campaign of a balanced budget, but when that government lost and the auditors came in, what did it show? It was a $5.8 billion deficit. That is of some relevance here, because three of our most senior ministers were senior members of that government.
Conservatives, whether we are talking about Ronald Reagan or George Bush in the United States, or Brian Mulroney or Mike Harris in Canada, historically have run huge deficits. They have left those deficits for successive Liberal governments to clean up.
What has happened to this Conservative government? It has been bequeathed the largest surpluses in Canadian history. That is why it is particularly incumbent on the government to use that money wisely, but it has not.
As I said, the Conservatives have done the opposite of what Canada needs for a strong economy to take on the 21st century. They have raised income taxes. They have slashed research. They have slashed learning. They have slashed programs for Canada's most vulnerable, the literacy programs, women's programs and the museum programs, and they have done all that at a moment when they have been literally drowning in the hard-earned cash of hard-working Canadians.
That is where I will conclude my speech, by saying that I hope this new government will continue to use our ideas to their fullest and can refrain from returning to the dangerous incompetence of the previous Conservative government that was so damaging to Canada's well-being.
Ken Epp Conservative Edmonton—Sherwood Park, AB
Mr. Speaker, whenever a Liberal talks about the deficits and debts of the Conservatives and how wonderful the Liberals are, I just cannot resist the temptation to get up and give the rebuttal which I believe the member should receive.
A huge ship must have its rudder moved long before the intended time of turning. The national economy is the same.
The facts are very clear. It was the years of a Liberal government with its huge borrowing and its deficits racking up a huge debt that caused this country to go into a series of deficit years in this country's budgets. It was the Conservatives who took over after the Liberals had put us on that path and yes, during the years that the Conservatives were in power, that path was not turned around. It happened three years approximately after the Conservatives were defeated. That is because the Conservatives put in place a number of measures that helped the economy to turn around and which the Liberals cashed in on. The Liberals got the credit for it.
I would simply say that we have to look at the long term when we are looking at these economic effects. The effect of one government does indeed go into the term of office of the next one.
John McCallum Liberal Markham—Unionville, ON
Mr. Speaker, I do not know what the hon. member is smoking. We are talking about simple facts here.
When the Liberals came to power in 1993 the deficit was $42 billion. That is a fact. That was the legacy which we inherited from the Mulroney government. As a consequence of that the Government of Canada's credit had been downgraded in 1992. That was one year before the Conservatives lost, I would point out to the member. It took 10 years of hard Liberal work to fix up the Conservatives' mess and to restore our credit rating to AAA. That is a fact.
The second fact is that when the current government came to power, it had a $13 billion surplus, not a $42 billion deficit. There is a difference. Not only that but the latest figures coming out of the finance department show that it may be en route to another huge surplus in excess of $10 billion, thanks to Liberal management.
Of course I believe in democracy. The Conservatives are in government but when they inherit riches of that scale, it gives them a special responsibility to use that money wisely. By cutting programs to the most vulnerable, by slashing research, by raising income tax, the government is simply squandering the massive inheritance that it received from the Liberals.
Bank ActGovernment Orders
The Acting Speaker Andrew Scheer
I would like to remind all hon. members about the provisions in the Standing Orders and parliamentary practice about relevance. We are debating a bill specifically dealing with financial institutions. There has been a lot of debate back and forth on some things that I would question as to whether or not they have relevance to this bill at third reading.
Paul Szabo Liberal Mississauga South, ON
Mr. Speaker, I was interested in the dialogue that took place although it is not directly related to the Bank Act. We have to look at what we are talking about.
I note that the finance minister in his speech at second reading made several points about the importance of building a competitive business environment and of ensuring financial stability as the reasons that we make these changes. It begs the question, are we talking about the motives and objectives of a government that wants to make changes to legislation that will show Canadians there is a basis for trust, there is a basis for proper accountability and there is a basis for the integrity of what is being done in this and related areas?
I raise the example of the income trust situation. It has to do with financial stability, integrity and accountability, of which it appears there is none.
I wonder if the member would like to comment on the degree of accountability, integrity and trust that is reflected in some of the actions that have been taken that impinge on financial stability in Canada.
John McCallum Liberal Markham—Unionville, ON
Mr. Speaker, I thank my colleague for his highly relevant question relating to financial stability and financial institutions.
Indeed confidence is key. Honesty is key. Sensible, well thought out policy is key. I must say that on all of these counts, the government's income trust policy has been an abject failure. I will give very briefly the reasons.
First of all, the Prime Minister promised as clearly as was possible to promise that he would not tax income trusts. As a consequence, hundreds of thousands of Canadians went into income trusts, at which point the Prime Minister cut them off at their knees and imposed on Canadians a massive $25 billion loss in a single day.
Second, it was the execution of that broken promise by the finance minister that was absolutely incompetent. He dropped the nuclear bomb on the industry which did maximum damage to those individuals who had taken the Prime Minister at his word. Less extreme alternative measures were available that would have achieved the same objectives of tax fairness, but at a small fraction of the damage to Canadians that was caused by the finance minister's reckless plan. He did not think it through. He acted decisively but he was decisively wrong.
I would end by saying that the NDP behaviour on this file is particularly shameful. The Bloc and the Liberals are working to bring amendments to this disastrous legislation, to help in their time of need those Canadians who have suffered billions of dollars of losses in their savings which they need for their retirement. Shamefully, the NDP to this day has refused to assist us to help those ordinary hard-working Canadians in their moment of need.
Paul Szabo Liberal Mississauga South, ON
Mr. Speaker, I want to quote from the finance minister again when he said, “The government believes that the best approach to improving services for consumers is through competition and disclosure”.
Generally, one would say that those are important principles, yet another example would be in terms of the impact on competition or the variety of instruments that are going to be affected. For instance, the income trust example shows that maybe there is a contradiction in its commitment to the variety of instruments available to investors.
John McCallum Liberal Markham—Unionville, ON
Mr. Speaker, my colleague makes another excellent point and there are two aspects of this I will touch on briefly.
The first is that he used the word “disclosure”. On this argument of the finance minister about tax leakage, we had a battery of witnesses, highly reputable people who know what they are talking about, who said that all of his numbers were wrong. What was the finance minister's response? It was a blacked out, censored document from the Department of Finance without one legible number. Talk about disclosure. If he wants to convince Canadians that he is right, the least he could do is disclose that blacked out document, because he cannot win the argument when there are six experts against one blacked out document with no numbers in it.
On the other point that my colleague raised in terms of availability of instruments, we do not have to go further than the governor of the Bank of Canada to find an expert witness who has said that the income trust sector has been useful for seniors in particular. It is virtually the only instrument that we in Canada have, unlike the U.S., which provides a relatively high yield to savers. Many Canadians, particularly seniors who have to pay their bills from the proceeds of the savings they have generated over a long lifetime, were extraordinarily dependent on income trusts.
The governor of the Bank of Canada himself has said that this vehicle is a useful savings instrument, particularly for those individuals. The Conservative government, through its reckless behaviour, has in fact destroyed income trusts.
Pierre Paquette Bloc Joliette, QC
Mr. Speaker, before I begin my remarks on Bill C-37, I would like to add a few comments on the issue of public finance.
The Liberal finance critic who just spoke reminded hon. members that the Mulroney years were extremely disastrous as far as public finance was concerned, with major deficits including the last one of $42 billion.
Nonetheless, I want to provide a few facts for the public's information and so that everyone knows the whole story. The first deficit recorded in 1975 was run by a Liberal finance minister, John Turner. Then a whole series of deficits followed until 1993-94. The Liberal solution was to offload the problem to the provinces, Quebec in particular, by creating the fiscal imbalance. If we look at the true public finance story of the past 20 or 30 years, neither side has anything to teach us.
Let us come back to Bill C-37 , An Act to amend the law governing financial institutions and to provide for related and consequential matters. The Bloc Québécois will obviously be in favour of this essentially technical bill and we will have no problem supporting it.
Precisely because this is a technical bill, it does not address the substantive questions that we would have expected the Conservative government to provide us with some answers to, some possible solutions, or even that it raise issues. I am thinking, for example, of the entire question of electronic transactions. There is absolutely no reference to that, apart from cheque imaging, which I will come back to.
We know that this is a major issue in the economic development of Canada and Quebec and all of our economies. Failing to address this question, failing to provide solutions, at least in terms of regulation, means that we run the risk of hitting a ceiling over the next few years in terms of electronic transactions. The regulatory framework is inadequate. We would therefore have expected that this question be addressed in Bill C-37.
The same is true of bank fees. It may be appropriate for there to be fees for certain transactions. But do fees need to be charged for all transactions? Some transaction charges are surely somewhat questionable. An example might be a cash withdrawal at an ATM that belongs to a bank other than the one that the person ordinarily does business with. There are relatively high fees for that transaction. This might at least have been given some thought.
In fact, the Minister of Finance will be meeting with the banks in a few days to discuss these questions. It would have been useful, before they are discussed with the banks, if we could have had a substantive discussion at the Standing Committee on Finance, based on various information that both the Department of Finance and the Minister of Finance could have provided to us. But no, the question had to be raised by one of the members of the Standing Committee on Finance and the committee had to take it upon itself to initiate a study of bank fees.
Once again, on questions of this type, we must not take an ideological approach, whether on the right or on the left. We must first try to understand why banks charge these fees, what they are for, and to establish rules or limits, to regulate this practice based on information and facts, and not based on preconceived notions.
The work on this will be done by the Standing Committee on Finance. We would have expected, however, in a bill to revise the Bank Act, something that happens only every five years, that these subjects, which have been widely debated in Canadian and Quebec society, would have been addressed.
There is another matter that should have been included in this bill. That is the entire question of reinvesting in the community. We know that discriminatory practices sometimes occur on the part of our banking institutions. I would say that they are not even committed intentionally. It is simply a certain way of doing things that is referred to as systemic discrimination.
Here is an example. Every year, the Canadian Federation of Independent Business, which is hardly a left-wing institution, as we know, speaks out against the discrimination that women entrepreneurs suffer, particularly small and medium-sized business owners. March 8 will be International Women's Day, and they will probably speak out against it again this year.
This is a known fact that even the business community recognizes, and we must therefore find ways to counter this systematic discrimination.
In the United States, community re-investment is a practice that forces financial institutions to take stock of their loan and credit applicants, and how the banks approve the applications. If it appears that certain groups are under-represented despite their applications, a special fund makes money available to those investors who have been discriminated against by the banks based on their profile. It is even better when there is no discrimination and the financial institutions take stock of the ratio of loan applications and approved loans.
However, I repeat, this is common practice in the United States, and this forces the financial institutions to re-invest in the community, in those groups that have the greatest difficulty obtaining credit, in particular, to start up a business.
Another question should have been addressed during the examination of Bill C-37 and that is the issue of tax havens. How is it that Canadian banks are such frequent users of tax havens? The Bank of Nova Scotia comes to mind, among others, since I discovered that it has locations in nearly all the tax havens in the West Indies, including Bermuda and the Bahamas. Why? Is it simply because it does not have the choice, given the global economy? We would like to know. The question has not even been asked. Is it because Canadian laws and regulations are not stringent enough? The Standing Committee on Finance began examining one possibility and will delve further into this over the coming weeks.
People will remember some interesting debates we had in the House on how companies like Canada Steamship Lines Inc. were using tax havens to avoid their responsibilities as good corporate citizens. As I was saying, we should at least have touched on this, although we still can. The Bloc Québécois intends, by the way, to introduce a motion in the next few weeks that the committee should pursue its work on tax havens.
Another aspect is identity theft. We know now that criminals can access our entire profile using social insurance cards. There are about five million too many of them in circulation.
With a certain amount of credit information, these people can go to a financial institution, take out a mortgage on someone’s house and disappear with the money. Unfortunately, these things happen every day. There is nothing about this crime, which is still not recognized as such. Sometimes people discover from one day to the next that they are indebted to the banks.
Who is responsible when this kind of thing happens? Are the banks not responsible for ensuring that when someone comes to them with certain information, he or she is the right person?
I think that we could have an interesting debate on this. We did touch on it when Bill C-37 was being studied. However, the department officials told us that it would have to be listed first as a crime in the Criminal Code before it could be included in the Bank Act.
We should have suggested a number of possibilities. The opposition parties, the Bloc Québécois and the NDP, have obviously tried to fix some things. However, most of their amendments were deemed out of order because they went beyond the bill before us.
As I was saying, this bill severely restricted parliamentarians’ ability to do their job and review the Bank Act. Unfortunately, this opportunity only presents itself every five years. I hope that the department, the minister and the Conservative government will not wait five years to do something about these issues of considerable concern to the public.
Some other things too would have deserved further consideration, such as the question of the bank ombudsman, for example.
I quite liked the debate that started up where bank representatives explained what this system was and why the banks financed it. These representatives also explained that the ombudsman is quite independent and the banks have complied with fully with his decisions since the position was created.
Nevertheless, some consumer associations and individual consumers still appeared before the committee and said they did not think they had the protection they needed to proceed with some of the outstanding legal actions between consumers and the banks.
I for my part will not prejudge the issue. However, it seems to me that we should have pursued this further. Even after Bill C-37 has gone through the study phase, consumer associations will continue to think, whether rightly or wrongly, that the Bank Act does not protect consumers sufficiently. I think that they are right at least in regard to the fact that we have not studied this issue enough and did not go into it further. To this extent, their questions remain unanswered.
As I mentioned earlier, Bill C-37 is very technical and has limited debate on a number of questions. Furthermore, this bill was studied very quickly, I must confess. The committee did this work in three sessions. I do not think that the members of the committee needed a great many more sessions, given the technical framework of the bill. However, in my opinion, in future, when we study a bill like this one, we should have much more substantial debates, especially since the Bank Act is only reviewed every five years.
As I have already mentioned, the Bloc Québécois will vote in favour of this bill. Although it does not affect the big societal debates surrounding banking institutions and the Canadian banking system as a whole, Bill C-37 will nevertheless introduce a number of measures on which the Bloc agrees. For example, it will introduce mechanisms for conveying information to consumers, and this will enable them to get more information so that they can make informed decisions regarding their use of bank services. This is a step in the right direction. More remains to be done, but we are headed in the right direction.
Also, a regulatory framework allowing the use of digital data in the processing of cheques has been introduced, and this will reduce the length of time cheques are held by banking institutions.
There too I do not think anyone will complain about the fact that, instead of their cheque being frozen for ten days or seven days, as provided under the voluntary agreement between the banking institutions and the Department of Finance, the funds will only be frozen for four days, if I remember correctly. I will come back to this. The members of the committee nevertheless wondered why the banks were continuing to freeze the funds of deposited cheques for more than 24 hours, in spite of all the electronic means at our disposal.
We will have to wait till digital imaging is put in place. We have not had any answers on this.
The time during which such funds are frozen must be reduced to a minimum. This creates a lot of problems, particularly for small investors and small and medium-sized businesses. Still, the possibility of imaging will be there. Let us hope that the banks will use it to reduce waiting times for releasing funds as much as possible.
There is a provision for reducing the regulatory burden on foreign banks, credit unions and insurance companies in order to make the regulatory approval regime more efficient. Obviously nobody wants regulations for the sake of having regulations. Everyone agreed that this was a good step, especially for the credit unions.
Facilitating the establishment of foreign banks in Canadian and Quebec markets can only be beneficial for consumers. We know that our banking market is extremely concentrated in Canada, with only five major players. Despite the efforts that have been made to create competition, in particular with the passing of Bill C-8 a few years ago, we have to acknowledge that there is not much competition, particularly in the regions.
In the case of Quebec, for example, it could be said that, in the regions, the Desjardins movement practically has a monopoly because the major financial institutions have decided to desert this market as it is not lucrative enough for them.
We find ourselves in a situation where competition does not have all the results expected and the arrival of foreign banks and credit unions provides an opportunity for real competition in the financial sector, which is quite desirable.
Regulations governing mortgage loans are also revisited: the insurable portion of a mortgage will be reduced. At present, up to 75% of a mortgage does not have to be insured; the remainder does. Naturally, that leads to additional costs for consumers who wish to purchase a home. The uninsured portion is being increased to 80%. Reducing by 5% the portion to be insured will make it easier for a number of individuals to purchase property and lower the cost of borrowing. We obviously cannot be against this measure.
Various other matters were also reviewed. They relate to the proportion of equity of a bank held by a single shareholder or groups of shareholders. This should make it easier for small banks to enter the market. That is desirable. As I mentioned, past legislation adopted has not yet led to the desired competitiveness in the financial market.
Therefore, we will support this bill. In the time allotted to me I would like to talk in more detail about certain matters found in Bill C-37.
My presentation will address the bill's objectives.
The first objective covers all matters affecting the interests of consumers. A certain number of measures in this regard were taken by Bill C-37. As I mentioned, we do not go far enough; however, some measures are headed in the right direction.
The second objective is to improve legislative efficiency and there are a certain number of measures in this regard in Bill C-37.
The last objective pertains to a group of varied measures in Bill C-37.
The first key objective, which is enhancing the interests of consumers, includes a first main element, namely to improve the system of disclosing information to consumers. I talked about it earlier, in my introduction. This will help consumers make informed decisions about the investment vehicles that they choose.
It was decided to set higher standards for disclosure of charges and obligations. Penalties that apply to various accounts and investment vehicles are also heavier. Moreover, once the act is passed, it will require institutions to clearly disclose this information in all their branches, through the Internet, and also in writing to any individual who requests it.
Some might think that it goes without saying, but these provisions were not yet included in the Bank Act. Since one can hardly be opposed to virtue itself, we will support this measure.
There is a second element in this key objective of enhancing the interests of consumers. It is, as I mentioned, the change made to the regulatory framework to provide for the introduction of electronic cheque imaging. This will allow financial institutions to reduce the hold period on cheques. That is also a change that was asked for.
As for legislative efficiency, I already talked about reducing the regulatory burden for foreign banks and for credit unions. We will have to streamline the regulatory approval process, and provide a more flexible framework for credit unions.
Finally, as regards the other measures, the most important one is, as I mentioned, to increase from 75% to 80% the loan-to-value ratio for which insurance is mandatory on residential mortgages.
In conclusion, as I said at the outset, the Bloc Québécois will support Bill C-37.
Paul Szabo Liberal Mississauga South, ON
Mr. Speaker, I thank the member for his commentary and I know of the good work that he has been doing on the finance committee. I tend to agree with him that the issue of trying to deal with an omnibus piece of legislation which touches 11 different acts related to financial institutions is a very ominous chore, particularly when it is somewhat restricted.
I think there were only three hearing days at committee and even at second reading, the speeches really could not get into some of the detail because one had to go to committee to hear the witnesses to get some of the rationale for some of those key changes.
One of the changes that has been made is to the Cooperatives Act. It has to do with the disclosure of information to consumers about some of their products. I note that specifically, even though there were only three hearing days at committee, the committee itself made an amendment. I did not quite understood why and maybe the member can help.
It has to do with clause 165 of the bill which deals with any account or service that is provided to a customer and that the individual requesting the goods or services shall receive information about all charges. It talks about how the customers will be notified about any increases in the charges and information about how they will be notified or be kept apprised of the association's procedures related to complaints.
That was in the original bill. That remains in the bill as amended by the committee with the following change. It effectively says that the governor in council may make regulations specifying the circumstances under which a retail association need not provide that information to a consumer.
It would seem to me that consumers have a need to know, so that they can make informed decisions. I have not heard an argument yet as to the nature of something that would not be applicable to disclose the fees or the charges, the notification of changes to the terms and conditions about what they got involved in, and also information with regard to complaints which will help the consumer.
I wonder if the member has some recollection as to the discussion which led to the amending of this section and indeed the related section in the Bank Act itself, which gave to the governor in council the authority to make regulations exempting an institution from such disclosure. In fact, I would have thought that the purpose of making the amendments to the act is to respond to the consumers' need to know, and to have full disclosure and accountability with regard to the fees, services and charges that are being levied.
Pierre Paquette Bloc Joliette, QC
Mr. Speaker, I thank the member for his question. He clearly examined the bill in great detail. It did not generate much debate when it was amended. I believe that this amendment was in fact introduced by the government.
Of course, my recollection may be questionable. I agree with the member that, given more time, we should have done more work on this issue in particular.
In the context of Bill C-37, more flexible measures concerning cooperative credit associations were aimed at facilitating the entry of new cooperative credit associations and at reducing to two the number of institutions that would be required to become a cooperative credit association.
Thus, small communities will have the opportunity to put in place cooperative credit associations that will be recognized as long as they have two institutions or two branches. In this case, the regulatory requirements cannot be the same as for a charter bank that has thousands of branches and which manages billions of dollars. This is why the bill was amended to account for some situations where there would be a small number of cooperative credit associations.
Another aspect is perhaps related to this fact. I admit that I would have to take another look at the text . The regulatory requirements for foreign near banks that are present in Canada were also amended so that they would be regulated almost to the same extent as in their country of origin. Once again, these are institutions that may be relatively small.
This is the only reason I can give the member. In some cases, regulations that would be too onerous would prevent communities from putting in place cooperative credit associations as long as there are two institutions. They would not be nearly as large as the Desjardins movement or other credit unions.
I think that we will have to remain vigilant to ensure that there is no abuse in this regard.
Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Mr. Speaker, I listened with interest to my colleague's speech on some rather complex issues, which the average person does not deal with every day. The issue of bank mergers is very important, in particular regarding services in the regions, as my colleague pointed out.
For several years now, we have been waiting for the government to have a transparent vision on this. Year after year, the former Liberal government put off this issue and tried to sweep it under the rug, and now the Conservative government is doing almost the same thing.
Could the member tell me what directions the Bloc Québécois wants to take regarding bank mergers? Which approaches have they proposed to ensure that the debate will be democratic enough, given that we are dealing with financial experts and people who know the system?
Our fellow citizens and the business sector are also in contact with the banks. In the regions, we can see that because of the lack of competition, the expected improvements have not materialized, even if the banks have had access in recent years to programs such as SBLs to guarantee loans, measures which shielded them from major losses.
Could my colleague assure me that the Bloc will be vigilant and monitor bank mergers, so that the end result is support for businesses and the development of our regions?
Pierre Paquette Bloc Joliette, QC
Mr. Speaker, I thank the hon. member for his very relevant question. In fact, I should have included it in the questions to be submitted regarding Bill C-37. That issue is like a sword of Damocles hanging over our heads.
Currently, there is not enough competition on the banking market to allow for mergers, particularly in the case of major institutions here. This is not to say that it will never happen, but before thinking about merging two of our five largest banks, there will have to be more competition on the market.
A number of laws have been passed so far, but they have not had the anticipated impact, perhaps because they are too recent. So, we just have to wait and see.
Also, not only will conditions be imposed on eventual mergers, but the two or three businesses—I hope there are not more than that—involved will have to demonstrate that it is in the public interest, and not just in their own best corporate interests. Even though banks are private institutions, they remain an essential public service. As citizens in a modern Canadian or Quebec society, we cannot live fully if we do not have a bank account somewhere. Even welfare recipients must have a bank account. So, the state already provides a framework, but we must ensure that the outcome is positive.
The Standing Committee on Finance has already recommended to reverse the onus. Instead of doing what the then Minister of Finance wanted to do—namely to allow banks to merge if they meet some set criteria—businesses that want to merge should demonstrate that such a move is in the public interest.
If we had a Canadian megabank to compete on the international market—our banks are very big institutions in North America—and if that megabank had financial difficulties, what would happen to the Canadian banking system?
This debate is extremely important, and I hope that it is as transparent as possible.
Judy Wasylycia-Leis NDP Winnipeg North, MB
Mr. Speaker, I am pleased to participate at final reading of Bill C-37. The bill would ensure that legislation is changed to reflect the Bank Act review.
I have to say from the outset, as we heard repeatedly at committee, that this whole process and the legislation is a major disappointment to Canadians everywhere. We are talking about a fundamental issue pertaining to communities in this country, and that is the right to access community financial service.
We are dealing with a fundamental obligation on the part of our chartered banks. We are dealing with a situation where increasingly Canadians are feeling overburdened by the regulations and the charges of the banks without access to information so that they can make wise decisions.
We are dealing with communities everywhere, especially inner city, rural and northern communities, which are faced with branch closure after branch closure. We are dealing with people in communities who are then left to deal with payday lenders and other fringe financial institutions on a regular basis where, of course, they are subject to astronomical interest charges. We are dealing with people in communities who are left to access their hard earned money through ATMs, automated banking machines, for which they must pay dearly.
On every aspect in this whole area of banks and financial institutions, Canadians have not been served well by this legislative process. This is an opportunity we have every five years to review the Bank Act and to make necessary changes to ensure that we keep pace with Canadians' concerns and that we keep pace with changes in new technology.
We have not done that in the bill. We have failed Canadians dismally. Why? How did this happen? Let us start with the fact that by and large the dominant players in this process of review and study of the Bank Act are the big banks, moneyed institutions, and people and organizations with a heck of a lot of power and money.
It is pretty hard in that context for ordinary Canadians, for everyday working families, and for non-profit advocacy organizations to compete in that context. There is no money and support from this government to help balance out the equation. There has been no attempt on the part of governments, whether it is this one or the previous Liberal one, to actually ensure a level playing field to ensure that consumer groups and everyday Canadians could have a say in this Bank Act review process and be equal to the part being played by big banks, big insurance companies and moneyed interests in this country.
As a result, we have before us a very limited piece of legislation that tinkers with the system, does make a few necessary changes, granted, but misses the boat on the most pressing issues of the day in terms of banking and financial institutions.
If there is one shining light in all of this, if there is one silver lining in this process, it is the fact that because of the turbulent political times we are in, the present government and the former government have decided to pull back on their agenda to adhere to the banks' wishes for mergers, both in terms of banking institutions and cross pillar mergers.
It is a blessing that this minority situation we have been in for the last couple of years has slowed down the agenda of big banks and their mouthpieces here in Parliament. This legislation, thank goodness, does not include any reference or any permission to allow for bank mergers, nor does it allow for cross pillar mergers which involves the sharing and the merging of responsibilities around insurance.
That was a fear many of us had. Many small insurance brokers right across this country thought that the banks would win the day and gain control not only of every other area in the financial world but also of insurance, thereby putting out a lot of independent insurance brokers and leading to tied selling and lack of competition. One good thing about this bill is that is not in the legislation. However, that is about all I can say right now on the positive side of things.
What is so sad about this bill is what is missing in terms of the everyday lives of Canadians. There is nothing in this bill to make the banks accountable to Canadians and responsible for demonstrating why the banks deserve $19 billion in profits this year. We only have to look at the statistics to know that the banks are in a very stable and very lucrative position with better profits than they have ever enjoyed. On top of the huge profits that we see being earned by the banks, the CEOs of the major banks are being paid exorbitant, unbelievably high salaries.
A recent study by the Canadian Centre for Policy Alternatives documented that the salaries of CEOs at the big banks and big oil companies were so high and out of line that the CEOs could make in a few hours what many Canadians make in a whole year.
That has certainly been revealed to us by the recent decision of the Royal Bank of Canada. By the way, the bank was up 40% in terms of profits this past year. It brought in $4.7 billion in profits. The Royal Bank gave its CEO, Gordon Nixon, a 25% raise last year, up to $11.9 million, including a salary bonus of $5 million. Mr. Nixon receives a salary of $1.4 million, a bonus of $5 million and deferred shares and stock options valued at $5.5 million. That is up from $9.5 million in fiscal year 2005. The bank also contributed about $766,000 to Mr. Nixon's pension plan, compared with $620,000 a year earlier.
Never mind that the CEOs make in a few hours what Canadians make in a year; I think those CEOs make in a year what Canadians could never make in a lifetime.
It would not be so bad if we could actually get some accountability from the banks. That is the purpose of government. That is the purpose of legislation. That is why we are here: to scrutinize legislation to ensure that there is a level playing field and to ensure that Canadians are given some protections. I am afraid we do not find that in this bill.
Before I give some of the critiques of this bill on that front, let me also say that when it comes to the big banks we also know that many of these institutions are moving their money offshore to avoid paying taxes. Let us not forget the studies. I am referring to one that is a couple of years old, but I am sure its findings are still current. It was clearly reported that Canada's top five banks have deprived tax coffers of $10 billion since 1991 through offshore tax havens. Not only are banks making those kinds of profits, they are moving money offshore so they do not have to pay taxes on it.
And of course they were anxious to make sure that we followed the advice of the Liberals and kept the income trusts alive and well on our agenda so they could have these flow-through entities and not have to pay taxes. Let us keep that in mind as we hear the former Liberal finance minister criticize the New Democratic Party which had the strength of its convictions to stand pat and stand firm and to say from the very beginning that income trusts had to be phased out, that we needed to do everything we could to stop this tax leakage and to close all corporate tax loopholes. This is something that he and his colleagues did not do when they had a chance in government. Despite all the hot air today, we know on what side their bread is buttered and on whose side they stand when push comes to shove.
Let us also be clear that the banks have used much of their money to gamble on the international casino stage. Let us not forget some of the endeavours by CIBC and its ties to Enron. Let us not forget some of the scandals that our banks have been involved in. We have seen some of the profits squandered in terms of playing the casino game on the international scene.
I say all of this to make the point that in fact we have to do something as a Parliament to get control over the situation and to hold the banks to account. Reputation is important and the banks know that. I think their response by some of the big banks to our plea for a rolling back of the fees charged to people when they use ATMs is an indication that they realize they have a public relations problem on their hands and that they must begin to deal with it.
In speaking of the need for Canadians to have confidence in the banks, I would like to refer to statements by the Office of the Superintendent of Financial Institutions and to Nicholas Le Pan's statement not too long ago when he said:
There is no other basis for the financial services business than trust and confidence! And that goes to a firm's reputation and why reputation is a zero tolerance risk.
That is the message the banks need to hear from this Parliament. The banks need to be told that they are way beyond the zero tolerance risk level. The banks do not have the trust and confidence of Canadians. They do not have absolute loyalty to the very advantageous position of the banks today. This is what we have to change. That is why we are here. We are here to say that the banks owe it to Canadians to be accountable, transparent and open. There is nothing in the Bank Act and nothing in this legislation before us that requires the banks to do that.
It is interesting that according to the Financial Consumer Agency of Canada, which is authorized under the Bank Act, there are hundreds of violations, but do we know the names of any of the banks that have violated the Bank Act and violated the laws of this country? No. There is no obligation for the banks to come forward. There is no obligation on the part of government to give their names.
Consumers who want to shop around to get the best service available cannot get the basic information to do that. We could get it if we were buying a toaster. We could get it if we wanted to take a vacation. We could get it if we were buying a house. However, we cannot get the basic information to choose a bank. Canadians cannot get the information they need to make a wise decision--
Judy Wasylycia-Leis NDP Winnipeg North, MB
--because in fact the Bank Act is not written to ensure transparency and accountability to Canadians.
I see there is some curiosity on the part of my colleagues across the way. Let me tell them what we tried to do at the committee that was studying Bill C-37. In order to get some accountability from the banks, we moved a motion suggesting that there should be publication of the names of the banks that violated the consumer provisions of the Bank Act. We were not allowed to do that. Supposedly it was beyond the scope of the bill.
I must say that outside of an amendment from the Bloc around equity in community reinvestment and a few technical amendments from the Conservatives, the rest of the amendments came from the New Democratic Party. The two hours spent debating and amending the bill were primarily focused on the 30 or so amendments that I put forward. Not one was put forward by the Liberals, not a single amendment, not a single recommendation to change the Bank Act. Nothing. Nada.
Yet the former minister of national revenue, presently the Liberal finance critic, stands up in the House and lambastes the NDP for what? For doing our job. For devoting time and energy to study a piece of legislation.
Or is it still a sore point around the income trusts and the fact that we did our job when the Liberals were in government? When the Liberal government would not answer for the suspicious stock market activity on November 23, 2005 we asked the government to do something about it. We asked the government to investigate. It would not.
Judy Wasylycia-Leis NDP Winnipeg North, MB
Excuse me, Mr. Speaker. There is a Liberal cat calling suggesting that we asked the RCMP. We did, but not until we asked the Liberal government to take this seriously. When the Liberals refused, we did the obvious thing, the only thing available, something that those Liberals would do today, which would be to ask for an investigation.
Judy Wasylycia-Leis NDP Winnipeg North, MB
Mr. Speaker, yes, I guess we could say there was no government. The Liberals were acting as though they were not a government at the time.
Bank ActGovernment Orders
The Acting Speaker Andrew Scheer
Order. I would invite all hon. members to hold off until the questions and comments period when they will be free to ask the hon. member for Winnipeg North anything that they would want to on this. I would ask for a little bit of patience. She only has about four minutes left, so we will wait until questions and comments.
Judy Wasylycia-Leis NDP Winnipeg North, MB
Mr. Speaker, let me go back to talking about the job we are doing here in Parliament trying to make Parliament work, something that the Liberals do not seem to yet grasp after their short term in opposition. I guess they still think they are entitled to govern.
We called for the elimination of bank ATM fees. We could not get it.
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.
Bank ActGovernment Orders
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.
Bank ActGovernment Orders
The Acting Speaker Royal Galipeau
The hon. member for Don Valley East should know there is half a minute to respond.
Yasmin Ratansi Liberal Don Valley East, ON
Mr. Speaker, I share some of the concerns. There are guidelines. There has been no amendments to the consumer protection area. There is the ombudsman aspect of it, where they can go. In my riding if the bank tries to close, it merges its two branches together and there is consultation. That is the answer I can give in half a minute.
Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Mr. Speaker, I am very pleased to speak today to Bill C-37. This bill is the mandatory review that is provided for regarding the operation of the banking system. Every five years, we have to review that piece of legislation to try to make it as functional as possible and to adjust it to changing technology. The Bloc Québécois will therefore be voting for the bill, because even though it is not perfect, it does contain significant improvements.
First, Bill C-37 institutes mechanisms for disclosing information to consumers, so that they will be able to make informed choices regarding the banking services they use. We all know that, historically, banking services have not always been models when it came to providing information to consumers. People did not find it easy to understand and it was very difficult to compare one bank to another. There are improvements in the bill that will allow people to get this kind of information, and this is a benefit for consumers.
Second, the bill will establish the regulatory framework to allow for digital data to be used in cheque processing, which will reduce the time that cheques are held by banking institutions. A new technology has been adopted, and this means that a cheque will be frozen in a banking institution for less time. This provides a benefit for the consumer and an important benefit for small and medium-sized businesses, which often have to wait until a cheque is released before it becomes available and can be cashed. It will facilitate both business operations and everyday management of family and individual budgets. In this respect, it is a practical application of a technology.
Third, the bill will reduce the regulatory burden for foreign banks, credit unions and insurance companies, to make the regulatory compliance mechanisms more efficient. For example, credit unions that have fewer people and that apply to do this will be recognized. As for foreign banks, the aim is for there to be more competition because a lack of competition is a problem in the Canadian system. In regions like the one I represent, bank branches have disappeared, one after the other, in recent decades.
At present, I can tell you that the Desjardins movement is represented, as is the National Bank of Canada and a few other banks, but those institutions cover huge geographic areas. The way that the rules about loans to businesses or individuals are applied, for example, increasingly fails to take the local situation into account and is increasingly often no more than a mathematical financial calculation. From that perspective, even the disappearance of the banks has an effect on how credit unions operate, because the banks' focus on profitability at any cost has prompted the Desjardins movement, for example, to review its structures with a view to that fact.
We have to find solutions to the lack of competition, solutions that may lie in providing foreign banks with market entry conditions that enable them to offer services so that ultimately the consumer wins. This should be done, on condition that appropriate operating rules are obeyed and also that we ensure that in terms of employment spinoffs, jobs are not simply being exported abroad. On that point, the amendments in the bill are acceptable, and are even attractive.
Fourth, the bill aims to amend the rules governing mortgage loans, thereby enabling more people to take advantage of that financial tool. A previous amendment has already increased the percentage that could be obtained without an insurance guarantee. This bill aims to increase it to 80%.
Lastly, the government is increasing the equity threshold from $1 billion to $2 billion, thereby making it possible for a single shareholder to wholly own a bank, and thus encouraging new competitors on the market. I mentioned that earlier. We need to ensure greater competition. This measure aims to move forward in this area.
The Bloc Québécois wants to ensure, however, that the amendments to the regulations do not allow the kind of uncontrolled mergers and acquisitions we have seen before in the banking sector. I have been a member of this House for about 12 years and we have seen all kinds of situations in terms of bank mergers. Under the former Liberal government, during my first few years as a member here, there was greater willingness to allow this. Systematic opposition from the Bloc Québécois, other parties of this House and civil society made it possible to ensure that there were no uncontrolled mergers and, that, at the end of the day, there were no fewer intervenors.
Canada currently has five major banks. If that number had decreased to only two, clearly, there would have been less competition. If we do not open the market up externally at the same time, we would be creating a duopoly, and we certainly do not want that to happen.
While the committee was studying the bill, we wanted to make sure that we continued to look at this issue to avoid unrestrained mergers.
Speaking of mergers, we demand that any amendment to the moratorium on bank mergers be made in the best interest of citizens, not just to make the financial markets happy. There is an unfortunate tendency in this sector to see this activity as being the sole province of economic players, but clients, consumers, citizens, have the right to know how these things work. We must ensure that the mechanism gives everyone a fair chance and that we have a stable, structured system that fosters real competition. In that respect, the Bloc Québécois will ensure that the committees hear all relevant witnesses so they can make good recommendations.
That, in a nutshell, is the Bloc Québécois' analysis of this bill.
I would also like to talk about promoting consumers' interests by improving the information disclosure regime. A lot of progress was needed on this issue. For example, institutions will be required to clearly disclose their information on the Internet, in all branches and in writing to anyone who asks. This is a major change to the way banks do things, a change that we applaud. We hope that this will come to pass and that the banking system will become more democratic.
We also want to change the regulatory framework to enable the implementation of digital imaging. The legislative framework must therefore allow digital imaging in order to facilitate the cheque cashing process and to reduce the length of time banking institutions can hold cheques, as I mentioned earlier.
We must also reduce the length of time banking institutions can hold cheques directly, because following the publication of the 2006 Financial Institutions Legislation Review, the government promised to reduce the cheque holding time to make life easier for SMEs and other citizens. Bill C-37 gives the superintendent the authority to limit the length of time for which cheques can be held. We will see how that works out in practice.
The white paper proposed an immediate reduction of the maximum hold time to seven days, and to five days once the digital cheque imaging system is in place. We will see how this works.
Cheque holds affect not only consumers who need to have access to those funds to pay their bills, but also small and medium businesses that must pay their employees and keep the business operating out of the funds they deposit.
There are currently cash flows because of how quickly businesses are operating and because of the introduction of just-in-time systems. Financial flows need to be just as quick. In that sense, the improvement to the bill should help businesses.
The government wants all users of the payments system—including consumers—to benefit from the increased efficiency resulting from the Canadian Payments Association initiative that involved changing the payments system to facilitate electronic imaging of cheques. These changes must do more than just improve profits. We must ensure that the services are adequate and that the savings are passed on to the consumer.
The second objective is to increase legislative efficiency by lightening the regulatory burden on foreign banks so as to facilitate their access to the Canadian market and stimulate competition.
Competition exists. However, certain problems were raised concerning the regulations governing foreign banks. This bill aims to clarify the measures applying to foreign banks operating in Canadian territory by refocusing the regulatory framework on the chartered banks and simultaneously excluding the near banks.
The near banks are companies that offer banking-type financial services. Unlike chartered banks, near banks cannot change their basic money supply, that is, they cannot borrow money from or lend money to the Bank of Canada to make new deposits or new loans.
Still in the same section, a second measure aims to improve legislative efficiency and streamline the regulatory approval regime. We want to ensure that decisions that do not impact public policy, as provided for in the legislation, are in the hands of the superintendent.
In the opinion of the Bloc Québécois, the minister must not be permitted to depoliticize operations that will have an impact on public policy. We have to make sure that the minister continues to assume his responsibilities. Given the current practice of the Conservative government of not wanting to intervene in the economy, such a caution is quite justified.
The bill also relaxes the federal framework governing credit unions. For example, in order to facilitate the opening of new credit unions, the government would lower to two the number of institutions required to constitute a credit union. At present, a minimum of 10 credit unions is needed to establish an association under the Cooperative Credit Associations Act.
Still, in light of the new commercial possibilities offered by retail associations and ongoing consultation in the cooperative credit system, the current entry threshold is too high. This is why the amendment corresponds to the market reality, which seems to be an advantage. This would increase this sector’s ability to adapt to new developments and better serve consumers and SMEs.
The third objective of this bill would increase from 75% to 80% the loan-to-value ratio for which insurance is mandatory on residential mortgage loans. This ratio was set over 30 years ago. It is a cautionary measure designed to protect lenders from fluctuations in property values and payment defaults by borrowers.
The last time this ratio was changed was in 1965, when it was raised from 66% to 75%. But the marketplace has changed since then. Lenders’ risk management practices have improved, risk-based regulatory requirements concerning capital have been implemented and the financial markets have changed and stabilized.
Finally the supervisory framework for federally-regulated financial institutions has been strengthened. So it seems that the restriction no longer plays the same role with respect to caution. A cautionary provision requiring borrowers to take out mortgage insurance at a loan-to-value ratio set at 75% might mean that some consumers are paying more than necessary for their mortgage.
The second part has to do with readjusting the equity thresholds, which would allow sole ownership or to force wide ownership. They also want to increase, from one third, the minority limit on the number of foreign directors on the boards of Canadian banks. There is an array of measures, therefore, intended to make the banking system work better.
As I said at the outset, my fellow citizens and the electors in my riding are very concerned about the availability of bank services. The banks have undertaken some major offensives over the last few years and have invaded the insurance market, for example. The insurance brokers came up with a strong response to show us what a negative effect this would have had on regional development.
The Bloc Québécois believes that this bill, generally and overall, improves the way the bank system works.
Obviously, there are still some basic questions. However, in view of the fact that the act will have to be reviewed within five years and the government has already offered an additional six-month period ending April 24, we should definitely pass this bill and hope that ultimately the government will listen to what the Bloc has to say. We will continue to monitor these matters.
I want to conclude with the question of bank mergers. This is an area where the federal government's actions have lacked transparency over the last few years. They have gone back and forth and even hidden a document for a few months on the pretext that since we have a minority government, it might have been damaging to make it public. In the meantime, life goes on.
I think that it is good to have an open public debate in a sector like this. We should take a global view now of the measures we are taking and the corrective steps we want to take, to ensure there is genuine competition and we do not just end up creating duopolies.
Foreign banks can come and compete, just as the Canadian banks can make foreign purchases. Globalization in itself is not a bad thing, but we need to ensure that it is done in a way that leaves us winners.
The federal government has often neglected to use all the tools at its disposal, including the safeguards enabling industrial sectors such as the apparel and textile industries to protect themselves, to have a transition period. This was not done in these industries.
With regard to Canada's banking system, which has grown along with Canada, it is solid but it must adjust to new global realities. It must be given the requisite opportunity to serve consumers adequately. In this regard, there are still improvements to be made in terms of the transparency of information available.
I am anxious to see whether or not the clauses of this bill that pertain to disclosure of information to consumers, will be applied correctly and if the banks will provide the maximum amount of information. In the end, the Bloc Québécois will be able to see whether or not results are achieved.
In any event, this is an on-going process. We will have to re-examine this legislation to ensure that it always reflects the market reality. However, at present, the Bloc Québécois thinks it is a good thing to vote in favour of this bill, which makes certain improvements to our banking system. We hope that the banking system will be of benefit to our entire economy and that, in particular, it will address the lack of service in areas outside of major centres, in the rural areas of Quebec and Canada. In this regard, the banking system needs to pay more attention to our citizens.
Paul Szabo Liberal Mississauga South, ON
Mr. Speaker, this particular bill amends some 14 acts and I believe there are some 450 amendments to a variety of these bills. Interestingly enough, there were a few hours of debate at second reading and three hearing days in committee where witnesses came forward to talk about some of the aspects of the proposed changes. There were a handful of changes made at committee and now we are going to have another few hours of debate. This happens every five years.
I am not sure whether the member agrees, but it would appear to me from the debate so far that a number of issues have been raised by members that are beyond the scope of this bill. There was no opportunity to have consultations with parliamentarians on behalf of their constituents to talk about issues relating to things like bank mergers, more information for consumers, foreign banks, and small and medium sized business loans and their impact.
There are so many issues that come up when we talk about this and yet it is almost impossible to deal with a 230 page act and 450 amendments. If we do not have the acts that they in fact amend, everyone will understand how difficult it is to even follow the document. We have to rely so heavily on others.
My question to the member is whether there should be consideration given to changing the way in which we view the amendments to the Bank Act and other financial institutions, so that all of the other kinds of items and the full exploratory discussions can take place so there can be influence on the content of the amendments coming forward to Parliament for discussion?
Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Mr. Speaker, I listened with interest to the comments made by my colleague, and I think that some action can indeed be taken. First, as members of Parliament, we must be aware that the act is reviewed every five years and that we can start again, as soon as tomorrow morning, to make some contacts and make proposals to the government.
Instead of waiting four and a half years or almost five years to undertake the review of the act, the government would be better to do so rapidly after three years. We should ask the committee to study the issues and we should give ourselves some extra time, so we can study the situation as a whole.
I agree with my colleague that many constructive proposals come from witnesses and members of Parliament. What we find in this bill are the main technical points that were agreed to so that the bill would pass here without confrontation. Indeed, we are very close to the limit and the original five-year deadline to review it, as provided in the act, has expired.
We should give ourselves this responsibility because there are important issues, such as mergers, information for consumers, new markets and foreign banks. These are realities that will change every six months in coming years. We should not wait five years before making proposals for the new reality.
I would invite the hon. member, as well as all members in this House, to work on this as soon as possible, so that all our fellow citizens are aware that this is an evolutionary system and that, if constructive proposals are made, we will be able to change the system accordingly. To this end, we must break through the indifference that we see sometimes in our constituents towards the possibility of influencing our action. I think that this is a concrete example of this possibility.
Bank ActGovernment Orders
The Acting Speaker Royal Galipeau
We will now go to statements by members. When the study of Bill C-37 resumes in the House, the member will have six minutes left for the period of questions and comments.
The House resumed consideration of the motion that Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters, be read the third time and passed.
Paul Szabo Liberal Mississauga South, ON
Mr. Speaker, I am pleased to participate in the third reading debate on Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters.
I spoke on the bill at second reading and raised some concerns. I think those concerns have been enforced even further by virtue of the activity at the Standing Committee on Finance. It had an opportunity to review the bill with regard to the commentary and interventions of a number of members.
This particular bill is one which is pursuant to an obligation of the government of the day to carry out a five year review of the Bank Act and related financial institutions.
It touches about 14 different acts of Parliament. It includes about 450 amendments to the various pieces of legislation that it touches upon. The House spent a few hours at second reading dealing with a bill which in itself is not readable without having the benefit of the bills to which it is related. As a consequence, we would probably have a stack of paper in front of us to properly do a review.
The reason I raise this is because I want to make a recommendation to Parliament with regard to the review of the Bank Act and related financial institutions.
At second reading we simply talked about those items which the government is proposing to change based on its own consultation and matters that may have arisen since the prior review.
The finance committee had three hearing days at which it went through a number of witnesses to discuss some of the items in this particular bill. The committee also dealt with committee stage amendments, of which there were a number. Most of them were ruled out of order because they were beyond the scope of the bill.
What it did tell me was that there were a fair number of matters of interest related to the Bank Act and other acts which were beyond the scope of the bill but which should not be beyond the scope of the bill. We can look at something that we went through and that is the budget process before it is presented on March 19. The finance committee did some broad based, cross-Canada consultations to talk about the issues that were important to Canadians. It talked of budgets and related legislation that may touch Canadians. There were policies of government, whether taxation, income trusts, deductions, child care or aboriginal health issues. There was a whole range of issues that impact Canadians and there was an opportunity for Canadians to have an input.
We do not have that kind of input in a bill like this that touches 12 or 14 different acts of Parliament. Once it is handled at second reading there is no opportunity to introduce amendments. During the debate I started to list some of the items that members were talking about. Some issues related to bank mergers; information for consumers on particular instruments; the whole idea of foreign banks, and some of the obligations and undertakings; credit union issues; bank closures in communities, particularly small communities; and small and medium sized enterprises, the instruments available to them, whether it be loans, lines of credit or other assistance that could come from the financial services industry to allow them to continue to promote competitiveness within the Canadian economy.
We have heard a lot about bank charges and ATM fees, about private ATMs, about using another bank's ATMs, and about using our own bank and charges ranging anywhere from a $1 to $6. Those are the kinds of issues that Canadians probably would have thought of when we are talking about the banks. We ought to talk about the issues that touch Canadians.
When I heard some of the discussion, particularly in the speech of the finance minister during second reading, I thought that this bill, if I were to characterize it, has to do with three words. It has to do with openness, transparency and accountability.
If we have those elements in a process as well as in a piece of legislation, then Canadians can take comfort that there has been a thorough and comprehensive review of the important issues of the day that are related to the subject matter and that they have come before the House in a manner which parliamentarians understand and have an opportunity to consult on.
My recommendation to Parliament is to encourage the government of the day in the future to commence consultations with Canadians, not just a couple of months before a bill comes forward but to treat it like the budget. We need to hear what Canadians have to say, as well as the financial institutions themselves.
It is extremely important that we have the broad input from Canadians so we have a good understanding of their ideas with regard to how financial institutions can better provide the services and products that Canadians need for their personal and business purposes. I think we ignore the needs of ordinary Canadians and the realities of people who do not have the accessibility. We have the principles of the Canada Health Act. I wonder if we should have the principles under the Bank Act of Canada about accessibility, affordability and comprehensiveness. These are the same kinds of things. They are principles that Canadians can rely on and can look to legislators to say that we will support those principles in matters such as the Bank Act.
I raise it because, quite frankly, I find it very difficult as a parliamentarian to deal with Bill C-37, which would amend 14 acts with 450 amendments, without having all of the bills. As the House knows, even with one amendment in the bill we cannot clearly understand the intent or the impact of that amendment without looking at it in the context of the legislation that it is amending.
If members were to consult with each other on this matter, I believe there would be a fair bit of support for streamlining this process so we can deal with certain areas of issues related to the Bank Act and do a better job on those areas that are most important to Canadians, as well as deal with the regulatory and jurisdictional issues that must be dealt with to respond to the changes in the international community.
That is enough about the process. I believe the process can be improved immeasurably and would improve the quality of the legislation that we deal with as we do this five year review on the Bank Act.
I will now turn to the finance minister's speech at second reading. The finance minister took the lead on the bill and thought it was important to put some of the principles forward to guide us in our deliberation on this bill. He talked about trust in the institutions and I want to talk about trust very briefly.
Many of the NDP members who have spoken have taken the opportunity to basically say that they do not like banks. They think banks are bad. Canadians should be very pleased to have a very stable financial services industry in Canada compared to other jurisdictions. We need to celebrate the fact that our banking system has served Canadians very well.
We also need to understand that Canadians rely on the financial services sector for investments, directly or indirectly, as in their pension plans or RRSP programs. A stable financial industry means that there will be a good return for those pension plans and 80% of Canadians are invested directly or indirectly in the financial services sector. It is important that they are strong and vibrant and that they give a fair and reasonable return.
The marketplace is a dynamic place. People have opportunities and they have choices. However, if the banks had usurious yields from their operations, everyone would invest simply in banks and in nothing else, but that, obviously, is not the case. The environment out there is competitive and competition, which is an area of concern to Canadians, is an important element. I do not think we have had that fulsome debate recently in Parliament and it is one that we should have.
The finance minister also talked about ensuring financial stability and he gave the reason why we had to do these reviews. He concluded his remarks, and phrased it quite well, by saying that the best approach to improving services for consumers was through competition and disclosure.
No matter which business or which industry, we know that competition is an important element to ensuring the consumer is protected, which means that the consumer has choices.
However, we have had a great deal of discussion over the years about bank consolidations and mergers comparatively speaking. One of the things we do know is that the banking industry in Canada is relatively small in the international comparisons in terms of its capitalization, notwithstanding the fact that many of the banks have had very attractive business operations offshore that have generated substantial income for Canadian banks that pay a lot of taxes.
The other thing the banks have in their stead, and which we should not forget, is their contributions back into the community. Their charitable giving through philanthropy and through community service is unparalleled in business and industry. The banks have been extremely supportive and I am sure every member in this place can find an event or activity within their own communities where the banks have been supportive in investing back and giving back to the community.
If the banks were to stop their charitable giving and philanthropy, the money would need to be made up elsewhere. On balance, it would be very difficult for a lot of members in this place simply to write off banks as being bad institutions. Bank employees, some 700,000, pay a lot of taxes. I know people see big numbers and they suggest that somehow banks are bad because they make a profit. It is a profit based on the capital invested. If we were to look at the yield, the return and the dividend ratio that they have, et cetera, I think we would find that they are blue chip stocks that not only provide a healthy return but also provide a tremendous security and stability within the financial system of Canada to ensure we have a vibrant financial community to help Canadian business and industry, as well as consumers and individuals to have safe and secure banking service. That is extremely important. I wish the NDP would give some credit at least to the important contribution that our secure financial system has given to Canada.
The other aspect that the finance minister mentioned in his speech was the whole issue of disclosure. I was a little taken aback when I read a couple of the amendments dealing with customer charges. Canadians talk a great deal about some of the charges for various services, whether it be on a particular account or on some other product that is offered to Canadians.
Two amendments are virtually identical. The first one is to the Bank Act itself and the other is to the Cooperative Credit Associations Act, basically credit unions and the like.
Some of the provisos in clause 31 of Bill C-37 with regard to a product, a service or an account that an individual may have with a financial institution, state a number of things an individual must be provided with:
(a) information about all charges applicable to the registered product;
(b) information about how the customer will be notified of any increase in those charges and of any new charges applicable to the registered product;
(c) information about the bank’s procedures relating to complaints about the application of any charge applicable to the registered product; and
(d) any other information that may be prescribed.
With regard to the products and services of banks where charges are made, that suggests to me that there is full disclosure.
A number of amendments were proposed at committee stage. Some were passed and they are available for members and are highlighted in the reprinted bill.
In the case of clause 31, to which I just referred, an amendment was made that added subclause (2), which reads:
The Governor in Council may make regulations specifying the circumstances under which a bank need not provide the information.
The whole clause in question says that customers shall be provided with all of the information on the amount of the charges, changes to the charges and complaints regarding the charges. For the life of me, I could not think of a product that we have now in the financial services sector or one that might be proposed that has charges associated with it where customers would not be entitled to know the amount of the charges, the changes to the charges or complaints regarding the charges.
I do not understand this section related to the Bank Act and with regard to the Cooperatives Act and the provision about giving governor in council or cabinet the authority to make a regulation exempting certain products or services from full disclosure. It makes no sense. The finance minister said that the best thing for consumers is disclosure.
I cannot change that. I think I will probably support the bill on balance because there are some important technical changes but these are things that I believe we should not be able to put in unless members who have proposed them, particularly government members, can explain to Canadians why it is this change is there. I have asked the question three times but I have never received an answer.
I would like to close with regard to the disclosure issue. We have had a lot of discussion today about the $42 billion deficit inherited by the Liberals from the Mulroney government. We have had all kinds of discussion about income trusts, the broken promise, et cetera. It has been way beyond the scope of the discussion but it has been allowed to proceed.
I will just close by saying that the finance committee had public hearings on the decision of the government to reverse itself in its election promise and to tax income trusts at a rate of 31.5%. Expert witnesses appeared before that committee. The finance minister failed to justify the $500 million tax linkage calculation on which he based his decision to tax trusts. He then stonewalled the committee by not giving any explanation as to the criticisms, identified clause and the methodology that were brought up by expert witnesses. In other words, the finance committee determined that there had not been full disclosure and tomorrow there will be a report tabled by the finance committee.
I encourage all members to look at the report because it shows clearly that the finance minister has not given full disclosure, has not shown accountability, has not been transparent and has not been open with Canadians. It has cost seniors, in particular, $25 billion in their hard-earned pension savings.
Maurizio Bevilacqua Liberal Vaughan, ON
Mr. Speaker, I listened to my colleague deliver yet another speech in the House of Commons. He is known as an individual who delivers quite a few speeches and that speaks to his dedication to the things that are important to Canadians. As well, he and I have shared many days and nights in the finance committee, and I can tell everyone that very few people work as hard as he does.
I am interested in the broader issue related to an issue that I think needs to be addressed as Canadian financial institutions deal with key issues and pressures like demography, globalization and competition in the broader global context. Of course my hon. colleague would know that I am referring to the issue of the merger review process as it relates not only to banks but also to the cross pillar option.
In the 21st century economy, where financial institutions play an important role, I would think that Canada should in fact have clear guidelines that relate to merger possibilities, not only for banks, as I said, but possibly also for insurance companies as well. While there is in fact a review mechanism in place that speaks to the importance of going through the Competition Bureau and OSFI, the public interest assessment portion of the merger review process is still very unclear.
I want to ask my hon. colleague if he feels that in a country like ours in this century where financial institutions are facing not only domestic competition but also competition from abroad, and as the entire financial service sector redefines itself given all these pressures, whether or not he feels that it is perhaps time for the Government of Canada to clearly outline to the financial institutions what the merger review process is.
These words I am saying should not be misinterpreted to mean that I am in favour of or against mergers, because at the end of the day they will be evaluated according to their merit, but I do want to hear from my hon. colleague what he feels about the fact that it is still not very clear what financial institutions need to do if in fact they want to engage in a merger.
Paul Szabo Liberal Mississauga South, ON
Mr. Speaker, I thank the member for Vaughan for his input, his having been the chair of the finance committee for a number of years, particularly during the period when we went through the last round of merger discussions in which it was ultimately decided that mergers would not be permitted to proceed, but that we needed to get this process right.
The member is absolutely right. This is an issue of process. If the process is right, the decision has a better chance of being right. The process has to engage all of the stakeholders. That means not just the parliamentarians and the banks. It means the people of Canada. It means those who are going to be impacted by making moves, because there is some Newtonian physics involved here. For certain actions, there will be reactions, and we have to be sensitive to that.
We know that Canadians are trying hard to understand big numbers and big business, but they often do not get all the information, so the process has to be comprehensive in the sense that it needs to be educational, engaging, open and transparent, and indeed, ultimately it needs to be accountable to the people in terms of the needs we have.
The member is quite right, though, in that this issue and the process have been done partially. I do not think that we are exactly there. I do not think there is a comfort level, either within the industry or within Parliament, or even among Canadians, that we really understand how it is going to work. It is inevitable that we will again have this more serious discussion on the issues with regard to the insurance industry, the trust companies and now with regard to banks, in that there now is a greater facility to consider certain combinations or mergers but in a better context in which there will not be unanticipated consequences.
I think there is a good opportunity here, but the member is quite right in that the process is not there in terms of the stakeholder knowledge. It is time we had that discussion.
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
Mr. Speaker, I would like to know my colleague's opinion on the provision in the bill that will reduce the minimum equity that must be applied to buying a house, in the context of a mortgage, to 80% of the value instead of 75%. I will have the opportunity to talk about this myself in my presentation. What is his opinion on this provision?
Paul Szabo Liberal Mississauga South, ON
Mr. Speaker, there is no question about it. Home ownership is part of the Canadian dream and it is not available to a lot of people. We know what has happened to the price of houses generally across the country. We are certainly aware of what has happened to the price of houses in boom areas, particularly out west. For some of us, and I am sure for most of us, it is hard to understand how people can even afford to have certain houses on which they have to carry mortgages of hundreds of thousands of dollars.
However, the member's specific question about reducing the rate to 80% has to be taken in the context of the options available. If we make it totally unfinanceable to the majority of Canadians, then we have served no one. Obviously there has to be a continuous review, I would suggest to the member, and these specific matters probably should be dealt with a lot more frequently than every five years.
These are important dynamics that affect Canadians' decisions, and they affect an important aspect of Canadian life, that being home ownership and purchase. It is an investment that is probably one of the biggest decisions a Canadian family can make. As well, they need to have some security that they are not going to be jeopardizing their financial viability without having a backstop or support from the mechanisms available to them.
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
Mr. Speaker, as long as there are no other questions, I will respond to what was just said. It is worth noting that my Liberal colleague is concerned about the matter of houses and housing in Canada and Quebec.
There was a question that I wanted to ask him, if we had the time: when the Liberals were in power, why did his government slash funding for social housing programs?
Those programs were very important and helped the most disadvantaged people in our communities. Those cuts seriously hurt people in our communities. The housing situation is a matter of concern in some neighbourhoods, in Montreal for one, but also everywhere in Quebec and Canada. I would have liked to hear his response on that subject.
I would also have liked to hear his response on another subject. The Bloc Québécois recently introduced a bill to invest the surpluses accumulated by the Canada Mortgage and Housing Corporation in social housing to help people who need it most. Why did they vote against it?
I have just bought a house. I am persuaded that most homeowners who have paid premiums to the Canada Mortgage and Housing Corporation and have had the chance to become homeowners would have been happy to lend a hand to people who have not had that chance and who are having trouble finding housing.
I find the response astonishing. I think it is a shame that when the Liberals had the opportunity, they did nothing for renters and people looking for homes—for the people. They did nothing. I will return to this a little later in my presentation.
Nonetheless, the Bloc Québécois supports the bill, for a number of reasons. First, the bill will create mechanisms for transmitting information to consumers, and this will enable them to make informed choices about the banking services they use.
Bill C-37 will also establish the regulatory framework to allow for digital data to be used in cheque processing, which will reduce the time that cheques are held by banking institutions.
Bill C-37 will reduce the regulatory burden for foreign banks, credit unions and insurance companies, to make the regulatory compliance mechanisms more efficient.
The Bill will also change the rules that apply to mortgage loans so that more individuals will have access to this financial vehicle. The government will raise the equity threshold to $2 billion from $1 billion for ownership of a bank by a single shareholder, to encourage new competitors to enter the market. For all these reasons, the Bloc will support the bill.
I will not be able to list all of the provisions in this bill, obviously. It is a very large bill, the size of a hippopotamus, and it refers to another bill, which is itself the size of a hippopotamus. It is an enormous bill. Some of its provisions were of particular interest to me.
The first, to which I referred in the beginning following my colleague's speech, is the provision regarding the ratio, the minimum equity that is required for a mortgage so as not to have to pay mortgage insurance.
At present, the minimum equity ratio is 25%, with the corollary being that the maximum ratio of the mortgage to the value of the purchase is 75%.
This rate will be reduced from 25% to 20%. If someone takes out a mortgage for 80% or less of the value of the home, he or she will not be required to buy mortgage insurance. In my view, that is good.
Allow me to recount a bit of the history of this requirement. The threshold was last changed in 1965, so quite a long time ago. At that time, the rate was 66.7% or two-thirds. In 1965, it was raised to 75%.
Now this bill would raise it from 75% to 80%. In previous times, this requirement was a prudential measure intended to protect lenders against fluctuations in interest rates and property values and ensure that we did not find ourselves in a situation where many people could not pay their mortgages back.
The market has obviously changed a lot over the last 30 years, partly because risk-management practices have improved. Banks are much better now at predicting the risk posed by various borrowers. Regulatory risk-based capital requirements have been implemented and have generally matured. This is to ensure that it is really capital, real assets, and the financial market has changed.
The supervisory framework for federally regulated financial institutions has been strengthened significantly. It seems obvious that the restriction does not play the same prudential role that they used to. As a result, the statutory requirement for a 75% loan-to-value ratio is no longer necessary.
Even if people in the market do not have enough money for the down payment, they can get mortgages with higher loan-to-value ratios, but then they will have to get mortgage insurance.
The Finance Committee held a long discussion and debate on the point at which the mortgage insurance market should be opened to other insurers than the Canada Mortgage and Housing Corporation, which currently provides most of the mortgage insurance. Genworth Capital also does so. This is a discussion that will doubtless continue.
We see more and more mortgage lenders requiring down payments even with less and less mortgage insurance. Five per cent is common now. We have even mortgage insurance of 2.5%. According to some promotions, virtually no down payment is needed any more. So the 25% down payment required to avoid having to buy mortgage insurance no longer made sense.
In fact, it forced people who were able to make a large down payment but less than 20% to buy mortgage insurance for virtually nothing. This will, therefore, help these people save a little money, which is a good thing.
I tried to introduce an amendment pertaining to mortgages, which could have been addressed in this bill, but unfortunately it was beyond the scope of the bill. As a result, my amendment was ruled out of order. We need to look at the banks' responsibility for mortgage fraud. People are increasingly concerned about mortgage fraud. For example, someone steals an individual's identity, then takes out a mortgage on the person's home or takes over the person's titles to property, then takes out a mortgage and takes off with the money.
The courts have handed down judgments in such cases, but they are contradictory or ambiguous. People whose houses were stolen or mortgaged without their consent are today being asked to pay up or lose their homes.
I would have liked to see a provision added to the Bank Act to ensure that in cases of identity theft, the bank is held responsible for the fraud and for repaying the mortgage in some other way. If this provision had been adopted, the bank could not have gone to a property owner who had been a victim of mortgage fraud and said that he or she had to repay the mortgage that had been fraudulently taken out on the property.
The amendment was not approved, but I plan to raise this issue again in the near future. In any case, I hope that the government is aware of this issue and will move forward.
Certainly, improvements can be made to protect people against identity theft in general, because as the law stands at present, identity theft itself is not a crime. Using a false identity to commit fraud is a crime, because of the fraud, but identity theft itself is not a crime as the law stands at present. This is something that should certainly be changed. A good measure would be to protect people by making sure that in cases of identity theft, the banks are automatically responsible. This would force the banks to take every precaution to avoid another fraud. If such a measure were in place, the banks would be held responsible for anything that happened. Currently, consumers are held responsible.
In our society it is increasingly difficult to protect ourselves from identity theft. There are many things consumers can do, but our personal information is given out. It circulates more and more. We have recently seen data stolen from computers. Hard drives have been lost. So it is very hard to say to consumers that they are responsible for not having their identity stolen and that, if it is stolen, it is their problem. I think it would be better to have the banks bear the burden.
I said earlier that we support the measure pertaining to mortgage loans, since it is a good measure. We had other projects for the Canada Mortgage and Housing Corporation, which I mentioned before. The bill tabled by the Bloc Québécois, which aimed to use some of the surpluses accumulated by the Canada Mortgage and Housing Corporation to provide social housing was rejected. The Conservatives and the Liberals voted against it. Regarding social housing in general, the Conservatives’ record is certainly as bad as the Liberals’.
I would also like to touch on another measure provided under this bill, namely the length of time during which cheques are held once they are deposited in a financial institution. When we deposit a cheque we have received in one branch, this is the beginning of a lengthy trip from the place where the cheque is deposited to the issuing institution. Then, once it is approved, the cheque makes the return trip to the place where it was deposited. Actually it travels around here and there and obviously may physically cover great distances that increase hold times.
The current bill makes provisions for digital imaging. So instead of having the cheque travel physically, it could travel in digital format, which would greatly speed up processing. The banks claim that this measure will reduce the longest hold time from ten days to six, and then to four days, once the system is fully operational. To my mind four days is still long. They say, though, that it is much faster in the very large majority of cases. A hold period of four days would be for the most difficult cases.
However, I must say, the question of the time it takes to process financial transactions has come up repeatedly in committee. There is a reason for this. It is because our fellow citizens often mention it. In this modern age of the Internet and electronic transactions, people expect a little more instantaneousness—if I may use that word—in transactions performed by financial institutions.
More and more, the funds are frozen for a while when we deposit a cheque. The funds may be frozen even if the cheque is processed quickly. Furthermore, when we transfer funds from one account to another, the money can disappear from the first account for a few hours or a few days before it re-appears in the other account. People are wondering where that money went in the meantime.
I can give a rather interesting example from my personal experience. I told the committee about it when I was addressing my questions to the various bank representatives. I sold some shares and received a cheque from my stockbroker. I decided to invest this money in an RRSP. Thus, I wrote a cheque to my financial advisor. Both cheques were deposited on the same day, at the same time. What happened? The cheque I wrote to my financial advisor was withdrawn from my account immediately and I therefore had an overdraft. Since my account has overdraft protection, the money was taken from my line of credit. That same day, I had deposited a cheque from the broker who sold my shares, but that money was not immediately deposited to my account. I therefore found myself in the ridiculous situation of my line of credit being in the negative and my account showing a positive balance, but I could not transfer any money from one to the other because the funds were frozen.
At the time, I asked my banker what was happening and why I was being charged interest. He said that the money from my broker had not been deposited in my account yet. He did not have the money yet and was therefore holding the funds for a few days. I told him he still had not transferred my own money to the other account so why should he charge me interest? He was unable to give me a reason.
I made another attempt in committee. I asked why when I am expecting money it is held from me, but when my money is transferred elsewhere it is immediately debited. No one was able to give me a reason.
I have given this personal example because, obviously, I do not want to disclose the circumstances of the constituents who come to see me. The fact remains that people frequently tell us about this type of problem. Banks and financial institutions have to make major improvements when it comes to processing time or else we will have to consider regulating this matter, since it concerns so many people.
In closing, I would like to address two points, including a provision in the legislation on bank mergers. We are still very concerned about possible mergers between monstrous banks the size of giant hippopotamuses—truly gigantic ones—at the expense of the consumer. We are not completely satisfied with the provisions and we will keep a close eye on the bank merger file. We hope that if mergers occur, it will always be in the best interest of the consumer.
The last point, which is not directly related to the bill but is something we discussed a lot in committee, is the issue of income trusts. Once again, the Bloc Québécois did not think it was a good idea to provide a tax advantage to income trusts. If this structure, this approach to organizing companies, is appropriate in some cases, then it should be allowed, but we should not encourage companies to be structured this way just for the tax breaks. That said, we think it was completely irresponsible of the Conservative government to promise not to tax income trusts. Now it has broken its promise. We agree with taxing income trusts, but we condemn the way it was done.
Alan Tonks Liberal York South—Weston, ON
Mr. Speaker, I thank my colleague from the Bloc for a very comprehensive overview with respect to Bill C-37.
I understand that the committee travelled from coast to coast to coast in a very onerous and feverish exercise to gain advice and direction from the general community, notwithstanding the financial institutions community.
The member referred to an issue which is very top of mind with people not only in my community but communities across the country, and that is the issue of identity and mortgage fraud. It would appear to me that if Bill C-37 was an attempt to streamline the relationship between consumers and financial institutions, this particular area would have received more attention in terms of legislative changes and recommendations thereto.
I would like to ask the member what kind of discussion, if any, took place at the committee. Why, in his opinion, did the committee not come forward with recommendations as opposed to having to make amendments that were declared out of order? In fact, if they are out of order as has been declared, what is the follow-up the House could take in terms of dealing with a subject that is of extreme concern?
Not only do the banks share some responsibility, but I would suggest the legal profession shares a great deal of responsibility because innocent victims of this type of fraud could be anywhere in this country. It has happened in my riding and I am sure the member can give other examples.
Was there any discussion with respect to identity and mortgage fraud? What is the follow-up that he would recommend, or from his party's perspective, that would allow the House to address the matter?
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
Mr. Speaker, we talked about this quite a bit in committee after I proposed an amendment that was deemed inadmissible by my hon. colleague’s seatmate. I do not hold it against him, though, because we thought that would happen.
I still brought forward the amendment so that it could be discussed. People are worried about this. It was pointed out that there are ongoing discussions about identity theft in general at the Standing Committee on Access to Information, Privacy and Ethics. Surely this committee—and I imagine the same will be true of the Standing Committee on Justice and Human Rights at some point—can produce a specific proposal to make identity theft illegal and a criminal offence in all cases. A person cannot make use of someone else’s identity, regardless of the reason or whether there was fraud or not. It should be a punishable crime in itself just to try to steal someone else’s identity or collect information in order to use someone else’s identity.
I have been wondering how the financial institutions’ responsibility could be included in the current legislation on identity theft. The government has a certain power of initiative in this area and I encourage it to think about this problem and draw up regulations or work together with the banks, at least on a temporary basis, so that they assume their responsibilities on their own. Government and finance department officials, among others, placed considerable emphasis in committee on self-regulation, on how unnecessary it was to pass legislation on everything that arose, and on how they were going to work together with the banking industry so that it would adopt and implement its own rules.
The advantage of this approach is obviously that it is faster than the legislative route. I encourage the government, therefore, to put pressure on the financial institutions. I encourage these institutions to add voluntarily to their code of conduct that they will hold themselves responsible for any cases of identity theft or mortgage fraud that might arise as a result of such theft. That would make it unnecessary for us to legislate. It would show their sense of responsibility, make them accountable, and force them to be more careful at all times. Once someone is responsible for any future fraud, they pay more attention because they will have to pay. It is the same for the financial institutions.
Robert Bouchard Bloc Chicoutimi—Le Fjord, QC
Mr. Speaker, I would like to congratulate my colleague, the member for Jeanne-Le Ber, on his speech, which was easy to follow and very instructive. I am sure those listening understood what he had to say. Congratulations again.
We have before us a bill to change the minimum down payment for a house from 25% to 20%. The consumer could then save on insurance costs. However, my question will not deal specifically with this subject.
At the beginning of his speech, my colleague mentioned the surpluses of the Canada Mortgage and Housing Corporation—surpluses which they keep. One quarter of these surpluses is in Quebec. In my riding, there are plans for a seniors' home. The people have asked for help from the Quebec Housing Corporation, and I would like the CMHC to also make a contribution.
My question is the following: Who might benefit from the surpluses of the Canada Mortgage and Housing Corporation if they were released to Quebec?
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
Mr. Speaker, I thank my colleague for his question. It allows me to continue to talk about the bill that the Bloc Québécois put forward to use the surpluses from the Canada Mortgage and Housing Corporation.
We have to understand that this money did not fall from the sky. Of course, this money is paid by people who receive mortgage loans to buy their house. These are people who have bought a house and whose situation—we hope— is favourable.
In the Bloc Québécois, we really saw this as a solidarity measure, that is taking the surpluses in the Canada Mortgage and Housing Corporation and continuing to invest them in housing to improve the quality of the rental housing stock, to build new housing units, that is low rental units, cooperatives, affordable housing and to have all kinds of housing programs. We wanted this money not to be left there indefinitely. Once again, there are no real reasons of caution that require that all these funds be left with the Canada Mortgage and Housing Corporation.
Of course, the provisions to respect the areas of jurisdiction of Quebec and the provinces provided that this money would be transferred to the Quebec government, which could use it for this purpose.
It is a little sad to see that Liberal and Conservative members opposed this measure. I believe that housing is still a huge concern for citizens everywhere in Quebec and in Canada.
In my riding, I know that there are many housing needs. I go door to door a lot. I meet people and they tell me often about this. I am surprised and I have a hard time believing that, in ridings represented by Liberal and Conservative members, people are not facing the same kind of problems. I was a little surprised not to receive their support concerning this important bill that we introduced in the House.
Penny Priddy NDP Surrey North, BC
Mr. Speaker, I am pleased to speak to what is an important issue for many people but not one that is part of their dinner table conversation every evening. Nevertheless, certainly in the constituency I represent, Surrey North, it is one that affects the lives of people daily.
Most people who are members of a family, be it a lone parent family or an extended family, are trying to make enough money simply to feed the children, maybe to get them new sneakers for school, maybe to pay for field trips, and to have a safe roof over their heads. Those people do not have the time or the opportunity, or perhaps the knowledge to read in any great depth the Bank Act, the regulations within it and how they might affect their family. Constituents count on their MPs to represent them and to be their voices in this Parliament. Some people have the time to sit down and work this through, but for those who may not have that opportunity, there are some questions that they would be asking us.
I represent Surrey North, which is one of five constituencies in Surrey. The city of Surrey has 400,000 people. The average three bedroom house is worth about $350,000. That is an average starter home, which for many people would be wonderful, but there are many young people who will not get into the housing market.
One of the recommendations made by the Consumers' Association of Canada had to do with the limitation on first mortgage funding. I realize there are some disadvantages to raising first mortgage funding from 75% to 95%, but I am not sure that the risks outweigh the benefits. There are many people, some of whom perhaps are our children or grandchildren, who, if they stay in urban areas like the B.C. lower mainland, Toronto, Montreal, Calgary or Edmonton, will never get into the housing market because they do not have $50,000 to $60,000 or more for a down payment. That recommendation made by the CAC should have been looked at very carefully. I recognize there are challenges with it, but I think that the benefits outweigh the challenges.
One of the things that my constituents will notice on a fairly regular basis has been talked about at some length lately, and that is the use of automated teller machines, ATMs, and not just the use of ATMs but the cost of using ATMs.
Some of my family have been living in Great Britain for the last three years. When I was visiting there, I discovered there was no charge for using a debit card. I was quite surprised, because I know what the charge is for using one here. People may not talk about the Bank Act at the dining room table, maybe because they are too busy trying to make sure there is enough food on it, but people do notice the charges when they use the ATMs.
Some people only take out very small amounts, maybe because that is all they have in the bank. They may be paying 25% on what they are taking out, and that is just to get the money out. They cannot get into the bank during what are called regular working hours, or their bank branch has closed and they cannot get to a bank of any kind. The ATM fees are ones that people notice with great regularity.
When folks pick up either a newspaper to which they have a subscription or pick up one of the free dailies out there and see a huge headline in big bold print that says, “Bank Profits $19 Billion”, they look at their bank statements.
I do not know whether everybody in the House looks rigorously at their bank statement every month, but people who do not have very much money look at their bank statements regularly. They are just cutting the line. The speaker from the Bloc, who would have much more money than some of the people I have talked about, said earlier that he ran into a difficulty with having money in the bank but not being able to access it. However, these folks pay attention to that part.
When they see bank profits of $19 billion, they do not know why they have to pay money to take their money out of the bank. Nobody wants the banks to suffer losses. People would expect the banks to make a profit. They invest their money. That is why people put money in banks. However, charging twice for the money they invest for us seems to my constituents to be a little beyond the realm of reason.
I do not happen to currently live in a rural area, but I have lived in a rural area in a small town of 1,600 people and the bank closed. The next bank was about 42 miles away. What is the responsibility of the banks when they close? Is it simply to pack up the boxes, lay off the staff and move out town?
I know motions were put forward to the committee on public accountability for bank closures or proposed bank closures. I know the motion was defeated. I do not know what we expect people to do. Perhaps people who have cars or trucks and can drive in every kind of weather et cetera, can get to that town 42 miles away. Otherwise, what does one do?
If people cannot get the cash from the bank, they might do the rest of their banking online, which is a presumption that everybody owns a computer and has Internet service. There are parts of provinces where Internet services are not available to them. Also some people do not have computers or if they have, they not have Internet service.
The fact is there is no accountability for those people who have supported and counted on that bank. In a small town a different relationship is built with a bank than in a big city. It becomes part of the family, something that they count on, or some buddy to count on, the bank manager or others in the bank, and that is gone. Where does one go for advice? Where does one even go to take money out? An amendment to suggest that there be some accountability for that was defeated.
As I said, I live in an urban area. I do not consider that to be an issue for me, but it would be for many of the MPs who represent their constituents in the House.
One success is the member for Winnipeg North has put forward a motion to review ATM fees. I congratulate her for that. I hope, as I think others do, that the standing committee will look at banks and subsidiaries, other financial agents and networks that provide financial services to people. I hope everybody will come forward to testify so the results of the study will be comprehensive.
This is one of the things that constituents count on us to do. They cannot do this for themselves. They do not have the time nor the expertise. They expect us to do it. We have that responsibility.
We have heard a lot about accountability and transparency. I do not know if those words still mean anything, but we hear a lot of talk about transparency. I spent too many years teaching college, I guess, because for me transparency is a slide on top of an overhead. Nevertheless, the concept is important.
The motion to publicize the names of banks that violated the consumer provisions of the act was disallowed. The names of businesses that violate their business licence are published by the Better Business Bureau. The names of physicians or teachers who have been disciplined or have had their licences removed are published. The public has the right to know. The motion that we publish the names of banks that violated consumer provisions of the act was defeated.
Why should violations by institutions that make a $19 billion profit be disallowed when we hear a great outcry from the public, and often a very legitimate outcry? Constituents in my riding want to know if teaches, or physicians, or accountants or anybody for that matter have violated their professional code of ethics or their business licences. They want to know who these individuals are. Why should banks be somehow exempt from this? I am very puzzled and somewhat disappointed that the motion was defeated.
If we buy something at a store and we ask the price, we are told, for example, that it costs $7.99, just like it says on the tag. The store discloses the price. However, when we asked about the mandatory disclosure of ATM fees, which was another motion put forward, we were denied.
My bank provides a service to me. I do not provide a service to it. Yet I am not allowed to know what ATM fees are so I can make some comparisons, as anybody would if they were good consumers. Good consumers want to know how much something costs, no matter what they buy. Somehow the committee felt there could not be mandatory disclosure of ATM fees. Perhaps there is some extremely complex reason that I fail to understand as to why these fees cannot be disclosed.
Constituents in my riding do not think there is any reason why these fees cannot be disclosed. That is one thing they understand. They understand credit card interest and they understand their ATM machines and what they pay to use them. They do not have time for the rest. My constituents are raising families and trying to get their kids to soccer, read report cards, take part in school curricula. They do not have the time to look at this kind of information on a regular basis. The publication of this information would be a real service to people. It certainly would be a real service to people in my riding of Surrey North.
Earlier the member for the Bloc spoke about holding cheques. If people live below the poverty line and get a cheque, they do not have the luxury of waiting a week for somebody to clear it. They need that cheque for food. Maybe their child has a chance to participate in sports and they need to buy soccer boots to participate. They need to cash the cheque, not have it held for 24 hours.
I put a Government of Canada cheque in the bank the other day. From what I hear, its reputation is superb, but the cheque was held by the bank for 72 hours. For me it did not matter, but for those people who truly are living from dollar to dollar, to hold a cheque like that is not fair, it is not right and it is not just. It may prevent them from buying a prescription for penicillin, for which they did not budget, for a child who has a rip-roaring ear infection or for somebody else in the family who needs something that requires a medical fee. They need it then, not in a week when the medication will not work on that child who has laid in pain for the week. I am using a very simple example in that case, but in the lives of most people they are simple examples.
We have people who do not have an address. They live on the streets. None of us wish for this, and people are working at ways to correct that situation, but thousands and thousands of people still live on the streets. How do they bank because they do not have an address? There are all kinds of banks that discriminate against people because they do not have a home address. This is one of the issues that should have and could have been addressed, but it was not.
I have talked about the credit card fees and interest rates. We can say people should not run up their credit cards because they have such a high interest rates and the cards will never be paid off. How many of us have been in a position of having to make the decision to feed the kids, or fill a prescription?
We hear a lot in the news about pharming of identity information on the Internet and the fact that there is no public disclosure when there has been a breach of security. No one has a duty to notify me or any of us. Yet this has happened recently to stores and companies and people have been up in arms that they have not been notified. It is terrible that these companies have not notified these individuals, but what about the duty of banks to notify any of us. Maybe some of us if that happened would not have our rent cheque bounce. Companies do not have a duty to call and say their security systems have been breached, that there has been identity fraud and that individuals have been affected by this. The motion to include that was defeated as well.
There are many missed opportunities in this bill. The comments of the CAC have been very relevant about what could have been accomplished and was not.
With that I will close and say that while I know we have a duty to review the Bank Act every five years, I hope we will take it more seriously than a housekeeping measure.
Bank ActGovernment Orders
The Acting Speaker Royal Galipeau
Normally at this time I would announce to the House the subjects for the late show. The only announcement I have today is that there will be no late show.
Questions and comments, the hon. member for Winnipeg Centre.
Pat Martin NDP Winnipeg Centre, MB
Mr. Speaker, while I thank the hon. member from Surrey for her comments, I think I can glean from those comments that she shares some of my frustration, in that the population I represent does not feel well served by the banking system and, by extension, by the Bank Act that governs it.
I would like her to elaborate on one or two of the aspects of her speech. When the banks introduced ATMs, my recollection, and I have this on good authority from credible sources, is that there were no fees at all associated with ATM cards when they were first introduced. Banks were seeking to close branches, lay off tellers and save money by electronic e-commerce banking. It was to their great advantage that they weaned us from personal service from a bank teller at our local neighbourhood community bank to that machine, an impersonal cold machine that the banks do not pay wages or give pensions to.
However, I do not think that at the time the thought ever occurred to the banks that they could actually get away with charging us a fee for this privilege as well. That seemed to come later. Is it the member's recollection that there were no fees when banks first introduced these bank cards?
The other thing I would ask her to comment on is this idea of what may be a failed opportunity with the Bank Act. I crashed the shareholders meeting of two major banks a few years ago, the Royal Bank and the Bank of Montreal. I went there with some proxy shares with a member from the Bloc, a man named Yves Michaud, a great activist on banking rights.
We moved motions at that meeting. One was to make sure that the boards of directors of those banks had gender parity: 50% men and 50% women. The vote was 49.4% in favour and 50.6% opposed, which is the exact same ratio as the last Quebec referendum. Yves Michaud's vote on gender parity for the banking institutions was exactly the same, 49.4% to 50.6%, but we almost did it. They almost fell off their chairs because this one lone activist from Quebec, Monsieur Michaud, with me there to second his motions, almost toppled that shareholders meeting.
The other motion, which sadly did not succeed, was a motion to limit the salaries of the CEO to 20 times that of the average worker of the bank. Currently that is at about 150 times; it is at $7 million, $8 million, $9 million or $10 million. That motion would have limited it to $50,000 times 20.
Does the member concur that these shareholders rights activists' initiatives are necessary and worthwhile? Does she remember, in her recollection of ATM charges, that there were no bank fee charges for using an ATM in the old days? Some young turk got a promotion because he came up with this idea and said, “Hey, I bet we can charge for this and they'd still use the ATMs”. He probably built a career around that one.
Penny Priddy NDP Surrey North, BC
Mr. Speaker, I am sure it was a young turk, not a young turkess.
I do not remember that there were fees when ATMs started. What I remember next was that there was a fee for one's own ATM but there was not a fee for using one's card at another bank's ATM. That was sort of stage two, if I recall correctly, and I certainly stand to be corrected.
Norman Doyle Conservative St. John's East, NL
It's the other way around. There wasn't any fee for your own bank.
Penny Priddy NDP Surrey North, BC
It is the other way around, my Conservative colleague tells me. There was a fee for another bank and now there is for both, so we have not only one but two fees that people manage to get from this.
One of the things that I think is important about this is something my colleague has alluded to. I would say this anyway, but International Women's Day is next week, March 8, and we will not be here, so I cannot say it then. I will say it now. Most of the staff who were laid off were women. They were tellers and support staff. They did not always have an opportunity to move with the bank and did not have other opportunities in their own towns. Therefore, women were disadvantaged disproportionately when those banks closed.
As for what I think about activism, of course I think any activism is always necessary. We are all shareholders, whether or not we hold shares in banks. A lot of people hold shares in something. They watch their shares and they check them and they may read the paper in the morning, but they never go to a shareholders meeting to actually ask questions and try to make a difference. That kind of activism is always important, as is any kind of activism.
What I saw was an irony in the fact that the major banks at that time were working very hard to increase the number of women in management positions, because they were doing this, by the way, and they actually had programs to do it. They actually were quite successful at it, but at the same time they were closing banks and disadvantaging primarily women. There seemed to me to be a certain irony in that.
Garth Turner Conservative Halton, ON
Mr. Speaker, I have a question for the member. I listened closely to her comments about mortgages. She seemed to indicate that her preference would be to have a higher mortgage amount or, in other words, 95% financing extended to purchasers.
I am wondering if I could ask the member to comment, because it strikes me that allowing 95% financing across the board, presumably as we do it today and even getting into what is called the sub-prime market where borrowers can actually borrow an amount greater than the value of the house, just increases indebtedness. Is that not an indenture on those very lower income people the member is speaking in favour of? In other words, increasing the amount of interest that is paid back to the financial institution over the life of the mortgage actually puts the homeowner more at risk, particularly in markets where the real estate housing market may have exceeded its true value.
Again, I am thinking of the lower mainland, where the 2010 Olympics are going to take place and we see housing prices that have risen to a new high. As for people buying into that market with 95% financing, I am a little curious as to how the member justifies the transfer of wealth from the individual homeowner to the financial institution based on that. It does not seem to make any sense from her philosophical point of view. Perhaps she might be able to enlighten us.
Penny Priddy NDP Surrey North, BC
Mr. Speaker, I did say at the time, and actually this was also a recommendation from the Consumers' Association of Canada about mortgages, that generally CMHC serves people fairly well in terms of second mortgages. There are downsides. I agree. I know that we have seen people get into the market, then the interest rates go up and, the member is right, they end up paying the bank a larger amount.
What we are not doing, and I am talking about this as it pertains to the Bank Act, in any place that I live in or see is building homes that are in any way affordable or off market. It is one of the ways to do this. Maybe we do not do it across the board. Maybe we have to do very careful assessments, as we would with any mortgage. I am not saying that I think this is full of advantages and that there are no disadvantages. I take my colleague's point. There are downsides and there are risks in this as well, but at 75%, we are really the first generation in history whose children or grandchildren, depending on our age, will be less well off than we are. So for--
Bank ActGovernment Orders
An hon. member
He said, “How does she know?”
Penny Priddy NDP Surrey North, BC
Perhaps he should read more.
For young people to get into the housing market, this is one way that I would hope people at least would look at and assess. I take the member's point. There are both advantages and disadvantages to this. I do not argue that at all.
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Mr. Speaker, I am pleased to speak to Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters or, in other words, the bill that represents a statutory five year review of the Bank Act.
I would like to state that during the finance committee's deliberations or hearings on Bill C-37, I had the pleasure of chairing the committee because of the problem with the chairman having to excuse himself. I would like to take two minutes to thank all the members who were quite understanding that this important piece of legislation with over 450 clauses had to be passed in a relatively short period of time.
I would like to thank the witnesses who appeared before the finance committee on short notice and gave us pretty detailed presentations. I would also like to thank those people who participated in the deliberations.
I would like to talk about the current session of Parliament where the Standing Committee on Finance, of which I am the vice-chair, has seen its share of contentious issues and serious studies.
First, committee members undertook the long, cross-country prebudget consultation with Canadians that spanned over months, eight provinces and one territory.
Thanks in part to the diligence of the Liberal members, the finance committee also reviewed the finance minister's astounding decision to tax income trusts. This unbelievable policy reversal has taken $25 billion from the pockets of hard-working Canadians and billions of dollars in income taxes that would have been collected on the capital gains to pay for some of the requirements that will be needed by the government in its next budget.
The committee has not tabled its report, just in case anybody in the House is unaware. We will table that tomorrow. This controversy is probably the most contentious piece of legislation related to tax legislation that I have seen since I have been here in the House.
The committee is also not adverse to controversy and is now studying the tax implications on the oil sands sector, an initiative that was also supported by the Liberals. The committee, with the support of the Liberals, is also once again studying how ATM fees are charged by the banks, their subsidiaries, other financial agents, and other networks that provide these financial service organizations, and any other things related to these communications services outlets.
To this I am hoping to add as well that the whole issue of the timeliness and charges that relate to electronic payments also get addressed during the study in finance committee.
With all these issues before us during the last few months, it is understandable that the finance committee members breathe a small sigh of relief when a straightforward bill like Bill C-37 comes before us.
Bill C-37 represents legislation that is likely to receive support from all parties. Recently, I heard the Prime Minister complain about the difficulties of receiving the will of Parliament to pass legislation, but with Bill C-37, it seems that the Conservative Party has finally discovered the secret to obtaining unanimous support for one of its bills, and that secret is easy. All the Conservatives have to do is introduce Liberal bills.
The Conservative government has presented a bill that mostly follows Liberal policy. Just to give a little bit of history, in 2005 the Liberal government commissioned a white paper to make recommendations for the review of the Bank Act, which is what we are discussing today. I am pleased that the Conservatives have seen the wisdom in these recommendations and have adopted most of them. They have ended up in what we are seeing today, Bill C-37.
The purpose of the bill is to ensure that Canada continues to be a world leader in financial services and I believe that the current bill takes important steps toward that end. As technologies related to financial institutions evolve, it is important that Parliament keeps our country's laws in step. We, as parliamentarians or legislators, must continue to keep our laws up to date as we did during the past 13 years of Liberal government in an ever changing global economy where Canada will quickly fall behind other more proactive nations if the Conservative government does not follow Liberal policy.
Bill C-37 amends a number of acts governing financial institutions as well as legislation related to the regulation of financial institutions. These amendments are essentially designed with three objectives in mind.
The first one is to improve service to consumers. For example, and I will speak a little bit more on it later, it is to harmonize online and in-branch disclosure requirements. We are looking at decreasing the hold periods for cheques from ten days to seven days and we hope it will get down to four days.
The second objective is to increase legislative and regulatory efficiency in the Canadian banking system. This basically means to allow foreign entities and allow more competition to come into the markets, and have what we call these near banks or entities that provide banking type services to be regulated on a national level as well.
The third objective of this bill is to give our financial institutions the ability and flexibility to adapt to changing trends and technologies in the industry, which also means allowing for cheque imaging and providing the financial institutions with the ability to process cheques at a quicker pace so that there is less of a hold period on these cheques.
One of the innovative items in this bill is the writing of electronic cheque imaging into law. We finally got it in this bill. It will require the banks to use new technologies to better serve the needs of Canadians. As it stands right now, the maximum hold period on a deposit cheque is 10 business days.
That can be an excessively long time for some Canadians, especially as we have heard from low income Canadians who need access to these funds much quicker in order to pay their bills, buy food, and whatever else they deem a necessity. Bill C-37 will immediately lower this hold period to seven days, allowing Canadians faster access to their own money.
This can be done even faster. I am speaking specifically to electronic cheque imaging which Canada's banks have already begun to implement. By adopting electronic cheque imaging, banks will no longer need to physically exchange copies of cashed cheques with other institutions. Instead, a captured electronic image of the cheque can be sent instantaneously to other financial institutions.
While we were discussing imaging we heard that banks easily clear about 20 million to 30 million transactions a day. We heard of the logistics involved of having to transport a cheque from one part of the country to another part of the country and having to criss-cross and decide which cheques go to which institution. Now with this ability to electronically image a copy of the cheque, we should be able to speed up the process. Hopefully, we will cut down the holding period to a matter of one or two days, instead of the seven days that is in the legislation, and the four days which the finance minister has promised us will be the norm of financial institutions.
A second aspect of Bill C-37 that I approve of is the provision for an increased disclosure regime which will provide Canadian consumers and businesses alike with the information that they need in order to make the most informed investment decision possible.
Bill C-37 will ensure that the savings product disclosure regime is just as effective for the millions of online bankers as it is for in-branch customers. We have spoken about this before. I think it makes sense to have that in the bill.
Strong competition and information disclosure are two of the best tools available to ensure that the needs of Canadian customers 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 complaints process that financial institutions use.
I imagine that many Canadians are not very familiar with the complaints process that they have at their local bank or anywhere actually. It should be legislated. By legislating the complaints process, it would have been readily available and a good idea. I can guarantee that there are not too many Canadians who even know that there is an ombudsman for banking services and that they can use those avenues when the opportunity arises.
The Canadian banking ombudsman and his office do fine work from what I understand. It is a question of knowing that it actually exists. I would have liked to have seen a requirement for information about its services being made readily available and more money being spent so that its services are actually put on websites so that people know about its services.
Canada's mortgage loan insurance threshold will also be changed by this bill. Currently, any homebuyer who provides less than a 25% deposit is required by law to ensure a mortgage through the Canada Mortgage and Housing Corporation or similar private sector providers.
Bill C-37 will reduce this minimum required from 25% to 20%, allowing more Canadians to secure a home mortgage without having to pay for the additional cost 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 uncontrolled inflation, it was far more than sensible. It was both prudent and necessary. After a decade of strong Liberal leadership, however, this country is enjoying both low inflation and record low unemployment. As a result, I think it is more than reasonable to reduce the minimum deposit that Canadians must have in order to secure a mortgage without insurance.
In conclusion, 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 that 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.
Pat Martin NDP Winnipeg Centre, MB
Mr. Speaker, I listened to my colleague's remarks regarding the Bank Act and I share some of the frustration and concern that I heard him express. In the inner city riding that I represent, the banks abandoned, systematically over the last decade, 15 bank branches. My colleague from Winnipeg North experienced something similar. I believe she counted 13 bank branches that folded up their tents and took off from that inner city community.
The point I am trying to make is that the banks were given the exclusive monopoly on some very lucrative financial services in exchange for the duty and the obligation to provide basic financial services to all Canadians whether it is small town rural Manitoba or the inner city core areas of Surrey, Vancouver or Toronto.
They broke that compact. They tore that agreement up and threw it out the window, yet we still call them charter banks. They still enjoy the exclusive monopoly on these very lucrative financial transactions, yet they broke their end of the deal.
The point I am making is that when they fled the inner city, they left a financial services void, a vacuum that was filled very rapidly with what I call fringe bankers, the payday lenders that sprouted up like mushrooms, like a scourge on the inner city.
They offend the sensibility of every Canadian when they charge 10,000% interest on a basic loan. People think I am making that figure up. A study done by the University of Winnipeg studied fringe banking. It ranged from 1,000% at the low end to 10,000% interest. A person cannot make that kind of money selling cocaine.
It is organized crime that is behind a lot of these payday lenders. I say that with no hesitation and no fear of being sued. We know that for a fact. There is nothing else that can be done in this country to make the kind of financial return as payday lenders receive with their loan-sharking practices.
My concern and what I wanted to raise with my colleague, whom I know probably faces similar issues in the Montreal riding that he represents, is that the banks are not serving us well. We have one opportunity every five years or so to have a statutory review of the Bank Act and we fail to address some of these fundamental issues.
Why do we not force the banks to live up to their obligation to provide basic services? Why do we let them close bank branches that are still profitable, they are just not profitable enough, or they are not as profitable as their branch out in the suburbs?
Why do we let them put up ATMs that mystify and baffle people like my mother who has banked at the same street corner of Grosvenor and Stafford since 1948 until that bank branch closed? Now there is this nameless, faceless, cold ATM that she is supposed to try to figure out how to use, and then to add insult to injury, they start charging these exorbitant banking fees just to access her bank account.
Really, when we add up all these things, the banks have been raking it in making record profits. Every quarter they set new records. There are not many industries, not many sectors, that have set record profits every single quarter, year after year after year. Why can we not rein these guys in?
Why did this committee not have the guts to take the banks on and tell them they are not living up to their end of the deal with their charters, and to start doing it or we are going to tear up their charters?
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Mr. Speaker, the member made a lot of comments and I am not sure how many questions he asked but I will try to answer him as best I can.
If the hon. member had asked me the question about bank closures a couple of years ago I would have agreed with him. I am not about to defend banks but in the last couple of years there has actually been an increase in bank openings in my riding. They have actually increased the number of hours.
We have Caisse Populaires in Quebec. Credit unions would be the equivalent. The Caisse Populaires have put together a great network of banking systems which have enabled them to compete against banks. This has the banks worried. We are receiving a lot of services in my riding.
I have gotten to know some of the regional managers in my area and when I hear a complaint I tell them about it and tell them that I do not like what I am hearing. We have had problems with some of the banks in terms of banking with individuals and businesses and we have been able to rectify those problems. We also have a very competitive BDC bank that is doing a lot of good work in my riding. I disagree with the member in that aspect.
We do not have payday lenders in my riding but a lot of cash-chequing services are sprouting up, and that worries me a bit. We do not have pawnshops but we have something similar and I do not like what I am seeing. The problems and issues are there.
We addressed that issue in the finance committee during our deliberations on Bill C-37. I want to remind the member that we were just looking at the statutory five year review of the Bank Act so it did not really fit in. We tried to fit in certain amendments to address bank closures. We requested the banking association to provide us with an analysis of the different branches and banks that closed during the year. We asked for this by geographical location and the reasons behind the closure. We hope to get that information. If not, we can always bring bank officials back before committee. They will be appearing before committee for ATM fees and the way the whole system works for electronic payment services.
Pat Martin NDP Winnipeg Centre, MB
Mr. Speaker, I forgot to ask my colleague's views on something that is important to me, which is the issue that we are dealing with at the privacy committee under PIPEDA. We are thinking of changing the personal information protection legislation to include the duty to notify. Thirty-four U.S. states have an absolute duty to notify individuals if their personal information has been compromised or if there has been a breach of identity.
Does the member agree that there should be a mandatory duty for the banks to notify people, even if they suffered no injury and even if the bank corrected the mistake before any material loss was suffered, so people will know how the bank is handling their personal information?
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Mr. Speaker, customers should know about any type of information banks have on them. It is a big problem. We know that sometimes financial institutions do trade information but they tell us that they do not. I would be in favour of any type of disclosure that banks could provide the consumers on what is in their file so they could at least make comments if that information is not accurate. That was not an issue in the committee but we did have issues regarding criminality and theft and identity theft, but again that did not seem to be within the scope of the bill.
I am all in favour of better protecting the privacy of Canadians.
Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC
Mr. Speaker, I am pleased to speak on behalf of the Bloc Québécois about Bill C-37.
The Bloc recognizes that this bill has some merits. The Bloc also has some concerns about this bill. Bill C-37 will not address some issues. We have heard many speeches in this House. There are aberrations. There are excesses on the banks' part. This bill will not correct these excesses or aberrations. By aberrations, I mean the interest rates on credit cards issued by the major banks, among other things.
I have been a member of the House of Commons since 2000. Believe it or not, although the Bank of Canada rate has occasionally gone down, it has risen slightly in the past few years. Still, it has never gone above the level it reached in 2000.
The interest rate on credit cards issued by the major banks and other financial institutions has risen by 6% since 2000. Obviously, people who pay their credit card bills before the deadline do not have to pay these significant charges. But people who, for various reasons, are having trouble making ends meet and do not make their payments by the deadline will have to pay interest.
Costs are going up in Quebec. The Charest government has raised hydro rates. It was cold in February, so people will notice an increase on their next bill. They will see how much their rates have gone up in the past two years—nearly 15%. Sometimes, we see sharp increases. I say “sharp increases”, because in the past two years, we have enjoyed relatively mild weather in January and February, but this year has been cold.
Citizens will see on their next bill, which will arrive in March, probably a little before the election date, the real increases in charges and costs that the Charest government will have had added on to their hydro bill. Then they may have to use their credit cards to pay their hydro bill. It is hard, especially when the rates charged by the credit cards issued by the big banks are getting close to 20%, with rates such as 19.9%, 18.9%. Not to mention the department stores whose interest rates may be as high as 24% or 25%.
Bill C-37 will not fix these aberrations, no more than it will fix the high bank fees for ATMs.
For some time now, when someone is the client of a bank and they use one of its ATMs, no fees have been charged. But if someone uses another financial institution’s ATM, there is a fee charged. The ATM that took your request charged you a fee, but the financial institution did not. For the past few years, when someone uses a competitor’s ATM, they are charged fees by their own bank for using a competitor’s ATM.
In the late 1990s and early 2000s, the banks streamlined their service centres. So today we are paying for the closures of points of service. Well established banks closed their client services saying that ATMs would replace them. On top of their being replaced, fewer services are offered and fees have been added.
Banks have disappeared from certain areas. In rural areas, in some communities, branches have been closed and moved to a neighbouring town. This is what happened in my community. We have an independent ATM, one that belongs to an independent company.
The bank that used to offer services to the population now charges us fees on top of those taken by the competitor’s ATM. In some communities, points of service have closed their doors. The institutions suggested that their clients use the ATM, claiming it would not cost them anything and would be cheaper. In addition to saving themselves money, they take our money away from us. Such is the banking reality. This is not something that will be fixed by Bill C-37.
Bill C-37 takes a somewhat broader approach, that is, it looks at broader banking strategy. Among other things, it will reduce the regulatory burden on foreign banks, credit unions and insurance companies, thereby making the regulatory approval regime more efficient. Furthermore, the government would increase the equity threshold from $1 billion to $2 billion, thereby making it possible for a single shareholder to wholly own a bank, thus encouraging new competitors on the market.
Once again, this is not targeted at small investors, as I was saying earlier. Bill C-37 is targeted more at bank administration. Although the Bloc Québécois supports the principle of Bill C-37, that is, to open the market to greater competition, we believe that it may allow for more service centres and therefore possibly fewer fees. However, we must ask ourselves some important questions. This is what my colleagues of the Bloc Québécois will do within the committee that is tasked with examining this bill. We will make certain that any changes to the regulations do not allow the kind of uncontrolled mergers and acquisitions we have seen before in the banking sector.
We will try to ensure that the purpose of Bill C-37, which is to promote competition and not concentration among the banks, is respected. The Bloc Québécois' goal is not to support legislation whose purpose is to ensure fewer banks. Indeed, what we want to ensure is greater competition. We want to open up the market and allow more major players in the field, in order to have more competition and more services. We do not want to see the opposite.
We hope that our colleagues in the other parties will understand the position taken by the Bloc Québécois. We want a more open system. We do not want concentration or the kind of uncontrolled mergers and acquisitions we saw in the early years of this century. At that time, the banks were determined to become major global players, to the point that ultimately the public was no longer getting service. For the big banks, this was not a problem as long as they were able to go and do business with the big players all over the world and finance the big capitalists of the world. It is easier to do business with one than with one million. Obviously, I can understand the bank president. I hope that he will understand me. Me, I work for the people. I am sorry but what I want is for the people to have service. If the bank president only wants to have to buy one dinner, that is his problem. I hope that one day he will have to buy a million dinners to do business with every member of the public, as we do, as the Bloc Québécois members of this House do, when we go out to meet with the public in the street. I hope that the bank president is going to come down from his tower from time to time and go and see what the people have to endure and live with.
So it is with that goal, that objective in mind that the Bloc Québécois will support this bill. It will support the bill on the condition that there be more service to the public, not less.
You have gathered that Bloc Québécois members will be following Bill C-37. We will be in committee to propose amendments so that we have more players in the banking game, hoping that with this bill we will succeed in reducing fees and making services more accessible to the public, at a better price. Too often, the public has to endure increases, as is the case in Quebec at present with the rise in electricity rates that is coming in March because of the Charest government.
We hope that we will be able to offer a little salve for their wounds by trying to reduce banking fees.
Pat Martin NDP Winnipeg Centre, MB
Mr. Speaker, I had the interesting opportunity to attend the shareholders meetings of two of the major Canadian chartered banks, the Bank of Montreal and the Royal Bank. I was accompanied by a colleague from Quebec, Mr. Yves Michaud. Mr. Michaud is a well-known shareholder activist who is seeking to change the way banks conduct themselves, to add an element of democracy into the shareholders movement, to mobilize shareholders through a shareholders' rights movement to where we can actually effect change in corporate Canada. Seeing as corporate Canada is outside the jurisdiction of Parliament and seems to operate as an entity unto its own, we wanted to introduce some elements of democracy.
One of the motions that we moved at the shareholders meeting of the Royal Bank was to require gender parity on the board of directors of the Royal Bank. I thought this was an exciting idea. The motion was moved by Mr. Michaud and was seconded by me. There were 1,300 people at the shareholders meeting and the only motions moved at that meeting by any shareholder were those moved by Mr. Michaud and seconded by me. None of the other shareholders seemed motivated at all into shareholder rights activism that we were seeking to achieve.
The other motion that we moved would have limited the salaries of the CEOs of those banks to 20 times that of the average employee. In other words, if the average employee made $50,000 a year--and I do not think that they do in the banks; the figure is probably less than that--it would be 20 times that and in round figures it would be $1 million a year.
That year John Cleghorn made $11.2 million. We figured that was 130 times the salary of the average employee. The average CEO in Japan makes 13 times that of the average employee.
Does my colleague agree with this kind of shareholder activism? If we have failed to include things in the Bank Act to make sure that the banks are serving the needs of Canadians, whether they live in Quebec or the rest of Canada, does he agree that we need to take that activism to the streets, to the shareholders meetings? Does he agree that we need to exercise the power that we have as shareholders to make sure that we are getting good service from our banks as per their obligations under the Bank Act?
Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC
Mr. Speaker, I thank my colleague for his question. Yves Michaud is very well known in Quebec. He is a great social democrat. We know that he has the advantage of being a recognized sovereigntist, a member of the Parti Québécois and of the Bloc Québécois. He is obviously a man who has the interests of the people at heart.
It is a well known fact that Mr. Michaud's suggestions to the boards of directors of big banks have always been in the interests of the people, who are once again having their property taken away from them. When we see bank fees go from $1.50 to $2.50, we know that part of the increase is being used to raise the salary of the bank's CEO.
I think that the idea that the remuneration of a bank CEO should be 20 times that of the average salary of employees should be considered. The government should show that it has a little backbone but the Minister of Industry has none and never will have. We will never see that, but the government could nonetheless show a little firmness and tell the banks that enough is enough and that they must change their ways.
People work to pay the salary of the CEO, whose only aim is to increase the bank's profits to get a bigger bonus at the end of the year. Not only does the CEO's salary increase but he or she also gets a bonus for reaching the objectives of the current year and exceeding those of the following year. It is not surprising then that the good folks who pay transaction fees at ATMs see those fees increase. On the one hand, it ups the CEO's estimates and, on the other hand, it increases his or her salary at the end of the year. The CEO is very happy to get a raise but that leaves less money in people's pockets. You can understand then that the Bloc will support any request or any legislation change that the government could introduce to call the banks to order.
Robert Bouchard Bloc Chicoutimi—Le Fjord, QC
Mr. Speaker, I want to congratulate my colleague for his speech on the bill on bank regulation.
He talked briefly about the main objective of the Bloc Québécois concerning this bill, which is intended to promote competition. When there is more competition, there is necessarily a better service provided to the citizens. Competition is also essential to provide services at low costs.
As he said, the Bloc Québécois supports this bill. I would like to hear him on the following question. Could he tell us about the protection that citizens would have, through this bill, against the hungry banks that charge fees on all banking transactions?
Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC
Mr. Speaker, I would like to thank my colleague from Chicoutimi—Le Fjord for his question. I see that the member is and always has been an ardent defender of the people. That explains why he has been re-elected time after time. I understand.
We can create that better balance right here in this House. That is the Bloc Québécois' goal with respect to Bill C-37. We want to see more services and we want to encourage competition. That is why we are ardent defenders of our fellow citizens.
The proposed bank mergers were unrestricted. The banks wanted to get bigger and bigger as fast as possible to take over the world market. They did not care about serving people and were ready to charge citizens as much as possible. We will oppose that.
An entire section of this bill deals with fee disclosure and forcing banks to be transparent. Even members of this House do not find out about fee increases until we go to a bank machine.
We must ensure that the population is aware of the facts so that they can pressure boards of directors. That is happening. Shareholders must be informed and encouraged to take action. Action must be taken with respect to cooperative financial institutions. Quebec must be given the tools to look after its own affairs. We must ensure that citizens see costs go down rather than up because bank profits are skyrocketing. Everyone knows those profits come from people's pockets. We want to ensure that the banks take as little as possible from them.
Pat Martin NDP Winnipeg Centre, MB
Mr. Speaker, I am not sure Canadians know their banking rights. I am not sure that they insist on having their rights respected in the context of banking. For instance, some of the payday loan companies, those rip-off outfits that have taken the place of banks in the inner city, are charging people 2%, 3%, 4%, even 5% to cash a cheque, even a government cheque. It is against the law to charge a fee to cash a government cheque and yet they do.
Also, one of the reasons people have to go to these rip-off alternate banking companies is that they do not have an account with an established bank. Banks have to open accounts for people, even if they have no money. In the trade we made with the chartered banks, we granted them the exclusive monopoly privileges on certain very lucrative financial services in exchange for providing basic needs to Canadians. One of those things is they have to open a bank account for people. All people have to do is show some ID, even if they have no money, and then they have a relationship which enables them to cash cheques.
Does the member share my concern that perhaps we have not informed Canadians of their banking rights so that they know enough to demand their rights and that they be respected in the context of banking?
Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC
Mr. Speaker, my colleague is absolutely right.
The interest rate established by law is 60%. This rate is already unreasonable. The government allows this. It allows interest rates of 60%. To go higher than this rate is a crime.
First, I believe that we must do something about this. We must do so because 60% is already a crime, in my opinion. That is the reality. When a bank charges 3% or 4% to cash a cheque, we can calculate it in this way: 4% a day, over 365 days, comes to more than 1,200% a year. Thus, it is a crime.
The member is absolutely right. We must be able to make all these things public. People must stop being exploited and they should file criminal complaints against people who do these things. That is the reality.
Once again, we had a Liberal government and we now have a Conservative government that continues to support all this movement of credit that enriches the wealthiest and makes the people poorer. That is what the Bloc Québécois will try to fight against.
Bank ActGovernment Orders
Bank ActGovernment Orders
The Deputy Speaker Bill Blaikie
The vote is on the motion. Is it the pleasure of the House to adopt the motion?
Bank ActGovernment Orders
The Deputy Speaker Bill Blaikie
I declare the motion carried on division.
(Motion agreed to, bill read the third time and passed)