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

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

Mr. Speaker, I would like the member to clarify that the purpose of the bill derives from the government having to review the statutes governing federally regulated financial institutions every five years and that the bill will ensure that Canada remains a global leader in financial services and will maintain the safety and soundness of the sector.

It is the government's commitment and need to look at the bill, particularly its implications and timing, which is important. I would like the member to recognize that the timing of the legislation is very important. It is not a time to review domestic policy as much as policy that makes us global leaders, so that the financial sector does indeed remain a stable sector globally and so that we do not confuse the debate with day-to-day regulations involving credit cards and financing.

I just want to see if the member really understands the legislation she is talking about today.

[Jinny Sims, NDP, Newton—North Delta, BC]

Mr. Speaker, I absolutely understand that this piece of legislation has a sunset clause of April 12. The government has known for five years that this legislation has a sunset clause, and since May 2, when this newly constituted Parliament was put in place, the government has had the opportunity to introduce this bill and discuss it in a thoughtful manner. However, once again the government has used bullying tactics to shut down debate, to push through a piece of legislation using the argument of the sunset clause to do so. I would argue that it is doing this so that we do not have time for a detailed debate.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, my colleague talked about the fact this bill was actually introduced in the Senate. Here, the question of transparency is something that we on this side of the House and members of the general public are always asking ourselves about. Was this important bill tabled in the House via the Senate because the Conservative government was trying to avoid transparency?

Even more, the Conservatives have tried to tell us that they had heard from plenty of witnesses on this. Instead, the government conducted online consultations and collected about 30 submissions, which it cannot make public because it did not acquire the necessary permissions. Of the 30 submissions, 27 respondents remained anonymous and only 3 identified themselves.

Could my colleague talk about the transparency aspect? How can we accept such testimony without being able to tell the public where we got it from?

[Jinny Sims, NDP, Newton—North Delta, BC]

Mr. Speaker, we hear a lot from the other side of the House about the need for transparency and accountability. When we look at the online consultation, I know that in this age of technology we think that everyone is online, but I would argue that they are not.

There were 30 submissions and we did not get permission to share them, not even with parliamentarians. That causes me concern. Out of those 30 submissions, 27 are anonymous. As far as I am concerned, these should be set aside, because no one should be able to have that kind of an input and be given that kind of weight when they are not willing to put their names to the submissions they are making. How can we hold people accountable for these?

Once again, this is an example of the lack of accountability and transparency by the government, and a real push by it to rush legislation through with the pretext of it having held consultations already. However, when we look underneath the layers, very little consultation has taken place.

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

Mr. Speaker, I would like to congratulate my colleague on her speech.

What does she think about the fact that the middle class has been forgotten once again? As she put it so well, a slight increase in the interest rate in Canada could have a disastrous impact on the middle class. The middle class has also been affected by the financial scandals of the past few years and, yet again, we are not talking about including these sorts of crimes or monitoring the banks. What does my colleague think about that?

[Jinny Sims, NDP, Newton—North Delta, BC]

Mr. Speaker, I think if I were not a parliamentarian today and were instead sitting at home in my riding listening to this debate and looking at the significant piece of legislation we are debating, I would be shaking my head and saying, these are the problems I am facing day to day.

We know that the ratio of consumer debt to disposable income is a critical factor in the stability of a nation's well-being, and we can see that is very high now. We can also look at the kinds of practices out there for granting mortgages, which are actually resulting in a play on the housing market, a market that has not slowed down at all. In this regard I would point out that most young people in my community cannot even afford to buy a house because house prices are so high.

When I look at all of these things, I keep thinking, why do my colleagues across the aisle not want to take the time to do a comprehensive and meaningful review but just deal with technicalities instead, and why do we not want to hold the banks more accountable for their actions?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, we recognize the importance of the legislation and how critically important it is that it pass by April. It is in the industry's best interests for that to occur. Just as the member stated in her comments, we expressed disappointment at the government taking so long to bring the bill forward and now at it bringing in time allocation.

However, I want to pick up on one of the points the member made, that being the other alternatives such as credit unions. I want to take the opportunity to at least acknowledge that in Winnipeg North, the Assiniboine Credit Union has really filled a significant need in the north end, in providing alternative banking opportunities for people. I think this industry has great potential in communities throughout Canada.

Perhaps the member might want to comment on how important our credit unions are to the population as a whole.

[Jinny Sims, NDP, Newton—North Delta, BC]

Mr. Speaker, when I look at the credit unions I have had experience in dealing with, as well as other credit unions in my riding and province, I am so impressed with the incredible amount of work they do in their communities. I call them the heart and soul of my community because of the way they support not only programs for seniors but also for youth by way of scholarships. They also give their members a real say in the operations of the credit union. I have looked at, for example, the Vancity Credit Union and the many others in my riding that do an amazing job.

We absolutely need to support credit unions right across the country.

[Costas Menegakis, Conservative, Richmond Hill, ON]

Mr. Speaker, I will be splitting my time with the hon. member for Yellowhead.

I stand today to speak in favour of Bill S-5, the financial system review act, at second reading. The bill, while largely technical in nature, is nonetheless a very important development as it is fundamental to ensuring the security and strength of the Canadian financial system. This is important not only because we depend on our financial system for day-to-day transactions like purchasing something from a store with a debit card or making a deposit in one's savings account, but because of the tremendous economic impact the financial sector has on the Canadian economy.

Indeed, Canada's financial sector is a key jobs driver providing employment to over 750,000 Canadians. This is especially important in my home province of Ontario and my riding of Richmond Hill where the financial services industry is a crucial part of the provincial economy.

The financial services sector employs nearly 400,000 people in Ontario directly. In addition, as noted by the Ontario minister of finance, the sector “supports an estimated 280,000 ancillary jobs, including in high-paying business service jobs, such as software design”. Its positive impact is especially important in the greater Toronto area where I live.

As stated by the Toronto Financial Services Alliance:

Toronto is the business and financial capital of Canada. It is the hub of Canadian commerce with a financial services infrastructure that has a reputation for safety, soundness and stability.

Toronto is home to the vast majority of Canada's largest financial services companies...and makes one of the largest contributions to the local economy.

In fact, according to Invest Toronto, the city's financial services sector contributes 13.2% directly and 7.9% indirectly to the GDP of the entire Toronto region. What is more, between 1999 and 2009 alone, the financial services sector added almost 70,000 jobs in the greater Toronto area, a cumulative growth rate of 42% or 4.2% per year on average.

Clearly, a strong and secure financial sector is vital to the economy and good, well-paying jobs in the greater Toronto area. The financial system review act would help to ensure the continued stability of the sector and the significant jobs and economic growth that depend on its health. It would accomplish this by undertaking a series of chiefly technical but very important modifications to the framework governing our already well-regulated financial system to further guarantee its stability.

I want to emphasize that these modifications and indeed this bill are the result of a mandatory process. Specifically, it is a direct product of Canada's long-established practice of undertaking mandatory five-year reviews of Canada's financial sector legislation. This review started in September 2010 when the finance minister initiated a public consultation process, open to all, where he sought the views of Canadians about our financial system. The regular review of the financial sector statutes allows the government to amend the framework so that the financial sector legislation and regulations continue to be as effective and efficient as possible.

Canada's practice of conducting such mandatory five-year examinations has been one of the key reasons we have maintained our reputation of having the safest and most secure financial system on the planet. Indeed, as we all recall, for four straight years the World Economic Forum has declared our country's banking system to be the soundest in the world. This has been a tremendous advantage for Canada and Canadians, especially during the recent global economic turbulence. While the United States, the United Kingdom and Europe has had to nationalize or bail out many of their banks, Canada's financial system has remained strong and secure.

Because of our resilience, Canada's financial system continues to be singled out as a model for other countries. As noted Toronto Sun columnist Peter Worthington remarked:

Canada's banking system is now widely recognized as arguably the world's best. No Canadians fear for their deposits as many Americans do.

This is what the Irish newspaper, The Independent, had to say:

[Ireland's] financial regulatory system is in line for a radical overhaul, with the Canadian system being held up as a model.

The Canadian system is undoubtedly an excellent model....

Even U.S. President Barack Obama has admitted that Canada's system is far superior, noting:

Canada has shown itself to be a pretty good manager of the financial system in the economy in ways that we haven't always been here in the United States.

Finally, this is what Great Britain's Prime Minister David Cameron declared when he addressed Parliament last year:

In the last few years, Canada has got every major decision right. Look at the facts. Not a single Canadian bank fell or faltered during the global economic crisis....Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.

Indeed, the financial system review act would build on and further reinforce Canada's sound and safe financial system with a range of important modifications. Specifically, the legislation would: modernize financial institution legislation to further assure financial stability and ensure that Canada's institutions continue to operate in a competitive, efficient and stable environment; provide important protection to consumers by boosting the powers of the Financial Consumer Agency of Canada; improve effectiveness both by cutting down on duplicative administrative red tape burdens on financial institutions and adding much needed regulatory flexibility.

The financial system review act contains numerous important measures that would make our financial system stronger which I would like to briefly highlight. They include: improving the ability of regulators to share information efficiently with international counterparts while respecting the privacy of Canadians; ensuring that Canadians, especially those who may be disadvantaged, are able to cash government cheques under $1,500 free of charge at any bank in Canada; promoting competition and innovation by enabling co-operative credit associations to provide technology services to a broader market; reducing the administrative burden for federally regulated insurance companies; and, offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements.

In summary, the financial system review act would further strengthen our already world-leading financial system by reinforcing stability in the financial sector, fine-tuning the consumer protection framework and modernizing the regulatory framework to adapt to new developments.

As I mentioned earlier, the financial services sector is of critical importance to the economic health and jobs in the greater Toronto area and indeed for all of Canada. That is why I strongly urge all members of the House from all parties to vote in favour of this bill, in favour of a strong financial sector, and in favour of the jobs it supports for Canadians.

I have appreciated the opportunity to speak to an issue important to my riding and to the economic well-being of all Canadians.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, I listened intently to my colleague who spoke about the importance this will have for jobs, but the government is actually reducing jobs at Service Canada, the department that helps Canadians who find themselves unemployed at this time.

We have known for quite some time about the sunset clause, so why is it that the government took so long to send this bill to committee? Why did the government send it to the Senate as opposed to the House of Commons committee, where it should have been? There was only a three-week window of opportunity for the Senate to study this, and the Senate also said it was not enough time.

Why is the government in such a rush to pass a piece of legislation without really taking into consideration the impact it will have and without further debate on the issue?

[Costas Menegakis, Conservative, Richmond Hill, ON]

Mr. Speaker, I would like to remind the hon. member that this review is mandated by law. It is legislation that we need to do. It must be renewed by April 20, 2012 to allow the financial institutions to carry on business.

Indeed, the consultation process began in 2010. The government invited the views of all Canadians on to how to improve our financial system. Approximately 30 submissions were received from a wide range of stakeholders. The proposed bill takes into account the concerns of major interest groups, including consumer groups, stakeholders, policyholder groups and financial industry associations.

I would urge the hon. member to consider how important it is to have a strong financial system in our country. By supporting this bill—

[The Acting Speaker, Bruce Stanton]

Order. There may be other hon. members who wish to put a question. The hon. member for Winnipeg North.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, there has been a great deal of concern in terms of the government's management of this particular file and why it has chosen to bring in time allocation. I understand that the deadline is April 20 of this year. That is when the legislation has to have passed.

Given the member's background and what he has commented on, why is it that the government waited so long before bringing forward this legislation? In fact, with respect to many of the points the member referred to, we probably could have better legislation had the government been more co-operative in bringing forward the legislation, thereby allowing for more input and debate inside the House, as opposed to it being brought forward at the last minute.

Why did the government wait so long before it brought the legislation to the House?

[Costas Menegakis, Conservative, Richmond Hill, ON]

Mr. Speaker, I would like to thank the hon. member for the good work he does on the committee. I certainly appreciate his input.

The government wanted to allow enough time for the consultation process to take place. In fact, today we are debating the bill at second reading. Once this bill is passed, and I hope it will be passed unanimously by this House later today, it will go to committee for further study. There will be plenty of opportunity for the bill to be studied further in committee.

It is very important that we understand our role as parliamentarians. We must put partisan politics aside and support important legislation like this that keeps our financial system and our financial sector strong and stable for Canadians.

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

Mr. Speaker, I would just like clarification. Some of the questions the opposition is asking I believe are outside the scope of the bill. I understand that the statutes that govern the financial sector are reviewed every five years. It appears that some of the opposition to this bill is outside the scope of the bill.

I wonder if the member would clarify that for the benefit of those listening.