Bill S-5 (Historical)

Financial System Review Act

An Act to amend the law governing financial institutions and to provide for related and consequential matters

This enactment amends a number of Acts governing financial institutions. It also amends legislation related to the regulation of financial institutions. Notable among the amendments are the following:
(a) amendments to the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act and the Trust and Loan Companies Act aimed at reinforcing stability and fine-tuning the consumer-protection framework; and
(b) technical amendments to the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, the Trust and Loan Companies Act, the Bank of Canada Act, the Canada Deposit Insurance Corporation Act, the Canadian Payments Act, the Winding-up and Restructuring Act, the Office of the Superintendent of Financial Institutions Act, the Payment Clearing and Settlement Act and the Financial Consumer Agency of Canada Act.

Financial System Review Act

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, I would just like to say that a gag order has been imposed once again, and that this bill originated in the Senate. The members of the House have not debated this bill. This once again demonstrates the Conservatives' lack of democracy and transparency. The changes that this bill proposes have not been tested by users or by the ombudsman's office.

Is there not a need to add regulations regarding the fees consumers must pay to use automatic teller machines, for example? These fees are excessive and are not in the interest of the public, consumers, the average Canadian or families.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, I would again point out that this legislation is mandatory and routine and it needs to be passed in this House by April 20. It really speaks to the unwillingness of the opposition to co-operate with the government in terms of even the most routine piece of legislation where we should be able to move it into committee in a relatively rapid fashion.

This is important legislation that is mandatory and routine, and the NDP continues to stall even the most routine of legislation from moving through this House in a timely way.

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

Mr. Speaker, I need to follow up on the parliamentary secretary's comments. It is absolutely absurd. In this House in the last few weeks we have seen closure moved, in some cases, after 14 minutes of debate. Fourteen minutes of debate and the Conservatives say that it is not in their talking notes, that they got it from the Prime Minister's Office. They cannot stand having too much information, so they close the whole thing down. That is what they do systematically.

We have been raising important points and we have been asking questions in the House but we have not received any responses from the PMO's talking points.

The parliamentary secretary should know better about the use of closure. Why is the government moving the complete and exclusive control that can happen to Canadian financial institutions with $12 billion of assets or less? It is a simple question but we have not been given an answer.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, we want to talk about the large bank ownerships and the thresholds. In 2001, we had a largely wide held bank requirement. In 2007, it was raised from $5 billion to $8 billion to reflect the growth in banks. Since then, the sector has continued to grow. Accordingly, the large bank threshold would be increased from $8 billion to $12 billion to reflect the growth in the sector.

Again, this is mandatory and routine legislation that needs to move forward. The member across the way is one of my colleagues on the finance committee, and we will have the opportunity to look into some of the details that he is wondering about.

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

Mr. Speaker, I would like to know why the Senate, an unelected chamber, was given the responsibility of examining and developing an extremely complex bill when 60% of Canadians voted against this government. We deserve answers and we deserve to be able to debate this extremely complex subject. This morning, we heard the Leader of the Government in the House of Commons refer to the chaos that would ensue if we do not examine this bill. It does not make any sense.

Why was this bill introduced in the Senate rather than in the House?

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, although the member is new to this House, I think he does recognize that legislation goes through the House into the Senate or from the Senate into the House. It is part of our Constitution, it is part of how we move legislation forward and it is how we make progress in terms of ensuring both Houses are kept focused on important legislation.

At this point, although new, I think the member should recognize how our Constitution works and how we move legislation through Parliament.

[Glenn Thibeault, NDP, Sudbury, ON]

Mr. Speaker, I will be splitting my time with the fine gentleman and MP for Burnaby—New Westminster, who does a fantastic job on this file and many others.

I rise today to speak to Bill S-5, which looks to update the legislation relating to banking and financial institutions in Canada. Anyone who follows my interventions in the House will know that these issues are very close to my heart as the NDP consumer protection critic. I think it is very important for parliamentarians to have an opportunity to review legislation that relates to the banking sector.

Banks are vital to the Canadian economy. Canadian banks directly employ a quarter of a million people across the country and pay almost $1 billion in payroll taxes each year. They also spend around $15 billion on services and goods within the economy, thereby indirectly supporting even more jobs. Moreover, banks and other financial institutions provide a vital service to the economy as a whole. They provide lending services for individuals to buy homes and for businesses to invest and expand.

It is important to ensure that Canada has a world-leading system of banking regulation to allow our banks to stay strong and support the economy as we continue through a time of global financial uncertainty. Therefore, I will be supporting the bill at second reading to ensure that this important legislation gets the attention it deserves at committee.

Unfortunately, as has so often been the case since last year's election, the government is more interested in ramming through legislation than in the process of debate, which is the hallmark of Canadian democracy.

First, we again find ourselves limited in the amount of debate we can have on an issue before the House. By my understanding, the government has now shut down debate 16 times in just 80 sitting days and 4 times in the last 12 days. The bill would amend 13 pieces of existing legislation, including the Bank Act, all of which relate to the direct functioning of our economy, and yet the government is trying to push this review through without the dedicated analysis that these changes warrant.

Debate in this chamber is not just for show and it is not just some inconvenience for the government. It is fundamental to the proper functioning of our democracy. It allows various points of view representing the geographic, cultural, linguistic and social diversity of our great country. Being part of this legislative process is too important for us to continually have time allocation imposed.

Second, the bill was introduced in the Senate rather than here in the House of Commons before democratically elected representatives. Then, just as the case here, the bill was pushed through the Senate's legislative process without proper review. In fact, the whole process took just three weeks.

This is the second major economic issue the government has pushed to the Senate in order to marginalize the ability of democratically elected parliamentarians to take part in important debates. The other was the study of price differentials between the U.S. and Canada.

It also worries me that the government failed to widely consult on these changes before introducing this review. Given the important role of the banking sector in our economy, I find it disturbing that there were no coordinated national public consultations with consumer groups and small businesses to try to understand how the banking system could be improved from their perspective. In fact, the government's little publicized online review solicited only 30 submissions and 27 of those respondents opted to remain anonymous. While there may well be some important details to be drawn from these submissions, I find it highly doubtful that we can hope to understand the full range of opinions and debate on how to update our banking legislation from such a small sample size.

I will talk in detail about some of the issues addressed in this legislation, specifically those relating to my own area of focus, consumer protection.

As our consumer protection framework currently works, various government departments are responsible for consumer protection for specific issues. This makes it very difficult for consumers to know where to go when they are confronted with a consumer problem. Depending on the type of issue to be resolved, a consumer may be required to work with Industry Canada, Health Canada, or Transport Canada, or even with the Financial Consumer Agency of Canada, FCAC, if the issues relate directly to banks and financial institutions.

Ending this confusing framework would have gone a long way to ensuring that Canadians have more confidence in their day-to-day dealings with financial institutions. However, the government refuses to move in this direction, and so what is it offering consumers? First, this bill would extend the definition of consumer provisions in regard to financial institutions to include agents and affiliates of banks that offer financial products. This would extend the scope of entities that come under FCAC's consumer protection provisions, which I support. It would also increase the ability of the government to introduce regulations and deferred legislation, giving the government the opportunity to introduce further consumer protection measures in the financial sphere. Furthermore, the bill would increase the maximum fine that FCAC can levy on financial institutions from $200,000 to $500,000.

All of these changes should be welcomed, but with some caveats. The increased ability to introduce consumer regulation is only noteworthy if the government utilizes that ability; otherwise, it is simply a nice talking point. The same can be said for increasing the maximum fine the FCAC can levy. When this bill was first introduced in the Senate, various stakeholder pointed out that FCAC very rarely levied its current lower maximum penalty. Given this fact, increasing the maximum penalty seems to be somewhat of a toothless change. In effect, these changes, while welcome, seem much more powerful in theory than in practice.

This bill is missing a change that would have incurred no cost for the government and massively increased the clout of both the consumer and small business protection regimes in Canada, namely, mandating that banks must be part of the Ombudsman for Banking Services and Investments complaints resolution process. OBSI offers a fair method for consumers and small businesses to address complaints to banks that cannot be dealt with by a bank's in-house complaint mechanism.

However, under the government's watch, both RBC and TD have been allowed to leave the OBSI system and instead use a Bay Street law firm to settle complaints. That law firm has been hired by the banks, and as the banks' customer its first priority is to please its clients, not to offer a proper method of redress for consumers and small businesses. This is simply unacceptable and the government should step in and mandate that banks use an impartial investigative process.

Moreover, there is nothing in this bill to look at the fees and charges levied by banks. I have heard from hundreds, if not thousands, of Canadians regarding ATM fees, credit card interest rates and current account charges. Banks obviously need to make a profit and be viable, but when we compare this bill to, say, the amendments tabled by Illinois senator Dick Durbin in the U.S., we can see there is room for discussion and debate on these issues.

In terms consumer or non-consumer related issues, this bill has some changes requiring some vigorous debate. For example, this bill would require Canadian banks to gain ministerial approval if they wished to purchase foreign entities. It would also increase the value a bank must reach before it is required to have its shares widely held, and it would allow Canadian financial institutions to sell their shares to foreign institutions ultimately owned by foreign governments.

I could go on and on about the importance of this subject and the debate that we need to continue to have, but I know my time is running out. In summary, if the government refuses to listen to these groups and insists on passing this bill in its current form, then at best this bill will have little positive change and, at worst, could end up doing more damage than good.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, earlier today we had a motion limiting discussion on this particular legislation. We have observed how the Conservatives are controlling their own MPs, and now they are attempting to control other MPs in the House, which is unfortunate.

Does the member think that the review was broad enough? Did it take in enough? If not, there should probably be further commentary coming forward in this place on it, but that is going to be restricted now.

[Glenn Thibeault, NDP, Sudbury, ON]

Mr. Speaker, I thank my colleague for all the great work he has been doing on pensions, a very important subject in my riding of Sudbury and right across the country.

As for the time allocation motion, the limiting of debate on such an important subject is truly worrisome because so many groups out there will be affected, from small businesses to consumer groups to consumers in general. They need to have their voices expressed in the House. That is our job as the opposition. We are here to make sure that the government is held accountable for its legislation and to make sure that businesses and consumers' voices are heard. Their online survey of 30 respondents, 27 of whom were anonymous, is just one aspect on how time allocation on this bill is wrong.

We need to ensure that we have debate. I would like to see the government allow us that.

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I would like to ask my colleague a question about an issue that worries me. This bill does not address one element that is very important to the creation of a more stable economy: regulation of financial speculation and derivatives. I would like to know what my hon. colleague thinks about the billions of dollars that are regularly gambled on the stock markets. These transactions destabilize the economy and do not benefit the people at all.

Why is the Conservative government preventing us from talking about issues that would make for an interesting debate today?

[Glenn Thibeault, NDP, Sudbury, ON]

Mr. Speaker, that is the thing that makes me scratch my head.

We here in the House have the opportunity and duty to discuss important subjects like the member mentioned, including the costs that would affect Canadians, including businesses; and what this legislation would do, how it would protect them and how it would continue to spur our development. Unfortunately, the door is continually being slammed shut on the voices of Canadians.

Imagine the individuals who need protection, who look to us to express their voices in the House. Unfortunately, not everyone who has the opportunity to speak in the House can speak because of time allocation. Simply put, it is very bad if a member cannot speak on behalf of his or her constituents because of time allocation. We need to ensure that all voices are heard.

[Lynne Yelich, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, I would like to ask the member how the legislation would affect consumers of financial products and services. The government is making a number of changes to financial institutions that would enhance the protection of consumers. Could the member expand on how this legislation would affect consumers of financial products?

[Glenn Thibeault, NDP, Sudbury, ON]

Mr. Speaker, I find it interesting when I hear the government claim that it knows best and then puts time allocation on the bill and does not allow debate on this subject. The Conservatives did not even speak to consumer groups but they will make the necessary changes they think are best without letting the members opposite comment on them or without letting the public speak to them.

I find the question ridiculous in the sense that the government is making changes even without speaking to those groups.

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

Mr. Speaker, I would like to begin by talking about the farcical process that the Conservatives have set up. After a long wait, they finally introduced this bill a few days ago. After a day and a half of debate, the government says that it does not want to hear anything more from members, it does not want any more discussion, and it is invoking closure. That is out-and-out contempt of Parliament. Given the importance of this bill and all of the other bills, invoking closure time after time indicates a total lack of respect for Parliament.

Members of the Conservative Party will say that this is routine. That is what they have been saying over the last day and a half and the last few hours of debate. They have been saying that it is a routine bill and not to worry about it, that there is no need to examine it, just pass it. Given that Conservative members of Parliament routinely read from speaking notes handed out by the Prime Minister's Office, I simply feel that is not doing the required due diligence to look at legislation, particularly legislation as profound as the legislation before us.

As the member for Sudbury mentioned a few minutes ago, we are talking about legislation that amends 14 different pieces of current law. The legislation is 105 pages in length and has an impact on our banking system. Yet the government says that we are not going to have a debate on this legislation. It is not going to listen to concerns that have been raised about this; it is just going to impose closure for the 16th time, the 5th time in a matter of a few weeks, because it wants to get the legislation through.

The problem is that the government has not done its due diligence. There has not been due process. This is when problems occur. We have seen it before with the Conservative government. We saw it with the prisons agenda. We saw a bloated bill of $19 billion because there was no homework or due diligence done. We see that as well with the pensions and the concerns that so many Canadians have because due diligence has not been done. The government is just throwing out ideas to cut into pensions.

There all these problems that have occurred with government legislation because due diligence was not performed. For the government to say there is nothing to see in the 105 pages, nothing to debate, that it is not concerned about this bill and to just ram it through, particularly in light of the process which the government has adopted on this legislation, is something that the NDP, the official opposition, simply cannot accept.

The bill was introduced in the Senate. The Senate paid lip service to providing due diligence. There was, as the member for Sudbury mentioned, a secretive little website announcement to say there was legislation coming and looked for a few replies from stakeholders and interested parties. In the Senate, there was no due regard for consumer protection, which is fundamental. There was no due regard for the changes and limitations around control of the banking institutions. There was no due diligence at all. It was brought to the House where, finally, light could be shone on these 105 pages and what each clause and paragraph would mean for ordinary Canadian families. The government says no, it simply will ram it through. That is absolutely unacceptable.

I think Canadians can see what is happening very clearly and systematically is the government is not doing its homework. It is not doing its due diligence. It is relying on its parliamentary majority to ram through often what is very problematic legislation. It is Canadian families that pay the cost of that.

What is in the bill? The government has said it will only allow a few more hours of debate. The member for Sudbury had to cut in half his declarations around consumer protection. Every other speaker will have to do the same. There are many members on this side of the House who want to speak to this 105-page bill but who will not get a chance to do so.

There are components in the legislation that we support. As the member for Sudbury mentioned earlier, the FCAC component, broadening the supervisory enforcement powers, is a component that we do support. We also support some of the changes that have been brought in. However, the reality is, the devil is in the details, and the government has not responded on some of the key components that we raised already in the House in the first few hours of debate.

One example is the increase in the maximum fine from $200,000 to $500,000. Increasing that fine only works if the regulatory powers are actually being exercised. We have been raising concerns about the fact that the FCAC has not been using the existing supervisory powers. It has not been using the powers it has already to raise those minimums in terms of fines. To raise that amount means nothing if we are still having regulatory problems with how consumers are being protected.

The other components that the member for Sudbury mentioned are important to note. Other speakers from the NDP have noted those as well. What we are not seeing is the kind of protection Canadians want to see built into the acts that cover our financial institutions.

For example, we look at clauses 446 and 447 and the whole concern about user fees and bank charges, something our former leader, Jack Layton, and the NDP caucus raised repeatedly over the last few years. Consumers are being gouged by financial institutions. There is little or no oversight over the scale and scope of those user fees and transaction fees that are imposed on Canadians. Often Canadians pay hundreds of dollars a year because there is not that oversight. Yet there is no regulatory authority that actually allows in some way for consumers' concerns around transaction fees and user fees to be addressed.

In fact, all that clauses 446 and 447 say is that the banks can increase and add those charges, but they only have to disclose the charges. That is not consumer protection. All that is doing is saying to consumers that they have to accept whatever the banks push on them. The banks just have to disclose that they are doing it. They are gouging consumers, but the banks have to tell consumers they are gouging them. For the Conservatives that is the solution. On this side of the House it surely is not.

Another concern we have raised repeatedly is the threshold provisions around complete control. Clause 883 says:

No person shall, without the approval of the Minister, acquire control, within the meaning of paragraph 3(1)(d), of a bank holding company with equity of less than twelve billion dollars.

That puts in the hands of the minister a blank cheque to approve any control over what are medium-size banks. Twelve billion dollars is a lot of assets. To our minds that raises concerns about how that amount was arrived at and why we have seen over the last few years a more than doubling of the threshold to allow more and more banks to be under that potential cloud of a takeover.

On this side of the House we have steadfastly, since our foundation, the previous CCF and the NDP, said very clearly and repeatedly that we do not believe having total control in one person is in any way helping to support our financial institutions and our banking industry.

We know the importance of the banking industry to the country. The member for Sudbury said it has a quarter of a million employees, and about $15 billion in purchases of goods and services in Canada. We are talking about a very important industry.

However, the government has not responded on the raising of that threshold and why it has done it twice now in the space of a few years and what the consequences are.

We wanted to raise these issues in the House. We believe firmly that this process has been completely the opposite of what is required for the due diligence on a bill that is so extensive in nature and has such an impact over so many pieces of legislation that govern our financial institutions and our banks.

That is what we have raised in the House. What we have been told by the government is that it does not want any debate. It does not want to have due diligence. It does not want to do its homework. It just wants to ram the whole damned thing through.

On this side of the House we say no to that. We believe there should be due diligence on a piece of legislation of this nature.

[Lynne Yelich, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, I wonder if the member would like to expand on how he would suggest the bank threshold be increased.

In 2001 the government established a large, widely held bank requirement, and then in 2007, it was increased from $5 billion to $8 billion to reflect growth in large banks and continues with the sector and its continued growth.

I wonder if the member has a solution as to how he would have the threshold increased.