Evidence of meeting #10 for Finance in the 39th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was consumers.
Conservative
The Chair Conservative Brian Pallister
Welcome, ladies and gentlemen, members of the committee. It's nice to see you.
Pursuant to Standing Order 108(2), we are here with regard to the annual report 2004-05 of the Financial Consumer Agency of Canada.
We will have about an hour and 10 minutes with our guests, and then we'll move to committee business before we conclude.
I believe Mr. Knight is going to present for the Financial Consumer Agency. We'll move to questions thereafter.
Thank you for being here, sir.
Bill Knight Commissioner, Financial Consumer Agency of Canada
Thank you, Mr. Chairman.
I want to begin by thanking you and your committee for the Financial Consumer Agency's first opportunity to come before the House finance committee--and to renew old friendships and to meet new people, in some cases.
We are very pleased to be here. I brought my deputy commissioner, Jim Callon, with me. From time to time he might jump in when the commissioner gets carried away. As well, Susan Murray is our director of consumer education and public affairs. She didn't want me to say this, but this is Susan Murray of the credit union system and Queen's University, not the CBC.
This is our first appearance. What I would like to do is talk about, just quickly, who we are and what we do.
We have provided you collectively with a briefing note. We invite visits to our websites, or just pick up the phone and we'll definitely share any basic information we have with members of the committee, or through the chair to the committee, whatever you deem appropriate.
What's the history, and why do we exist? In summary, in 1996 a major task force on financial services did an overview of financial services in Canada, in shorthand the MacKay task force, and in essence outlined that there was an imbalance between the concentration and the power in the banking system--which may be related to the big five, about 80% of the assets out there--and the rights and services to consumers. Out of that, several bills flowed that decided to address the fundamental issue of that imbalance.
Parliament, I may say, when it went to deal with the imbalance, was very clear about separating out, in what was then called Bill C-8, the enforcement of the law--that's me--and consumer redress--that's the “ombuds” network. So we're into regulatory business and consumer education. Redress is in the hands of the ombuds network as it relates to the banks in particular and to, indeed, insurance companies, etc.
Our mandate outlines and empowers us through legislation to supervise financial institutions, to determine whether they are in compliance with consumer provisions applicable to them; to promote, by the adoption by financial institutions, the policies and procedures to implement consumer provisions applicable to them, in other words a compliance framework; to monitor the implementation of financial institutions' publicly available voluntary codes of conducts, such as the code of conduct as it will relate to how they deal with small business; and to monitor and review those public commitments that the institutions make from time to time. A very important component is that we promote consumer awareness about the obligations of financial institutions under the consumer provisions applicable to them. Finally, and this is very important, we foster an understanding of financial services and issues relating to financial services in cooperation with any department, agency, or agency corporation of the Government of Canada or of a province, financial institutions, consumers, and other organizations.
In short, we protect and we inform consumers at the federal level when it comes to deposit-taking institutions. How do we go about it? When we find, in our processes of inquiries and obtaining complaints...through our call centres, e-mails, by mail, and second-level reporting of the institutions. We have a case-by-case function in which we seek to find if there is or isn't a violation. We can take action, with the tools and the authority given by Parliament, to do a number of approaches with the difficulties: enter into agreements with financial institutions to further comply with the law; issue notices of violation; impose monetary penalties; and, where necessary, name the financial institution that violated the law.
The impact of FSAC supervision is significant. A single compliance case can mean changes industry-wide and improvements for thousands, even millions, of Canadians.
That's part one of the mandate. Part two of the mandate is related to consumer education. There we provide a unique value to Canadians.
You will note some significant acknowledgment in the report just tabled in the other place yesterday by the banking committee of the innovative work we're doing in supplying Canadians with educational tools to make their choices in the financial marketplace.
When I took this spot, after having been in the credit union system, I targeted a number of approaches. To be quite clear with the committee, I wasn't sure how they would turn out. One of them was to ensure that we could put the tools and the materials before consumers so that they could make choices and inform themselves to be more effective and more confident in dealing with an individual financial institution.
Those interactive tools that help Canadians now are available to help choose a bank account, as there are low-cost bank accounts available; to choose between credit cards to meet the need and convenience of an individual consumer; to find a complaint-handling process for their particular financial institution; to find answers to the most frequently asked questions that we get in our call centres; to research branch closures in Canada in any area, including your constituencies; and to find the impacts that have happened. We have tools now that help calculate the monthly payments when it comes to mortgages.
In short, we're a third-party spot where people can come for what they believe--and rightly so--is objective information. We're finding that not just the consumer but others in the financial services business are using the material to ensure that customers and consumers can get that basic information. First-time homebuyers find the mortgage product very effective.
We're doing other outreach and innovative approaches. We're working with community groups, NGOs, across the country, whether it be the United Way or a group called SEDI. We are out there approaching in partnership for the delivery of the mandate. We offer, through many of those groups, “train the trainer” programs to assist with assisting consumers.
We're operating on an expenditure budget of about $7.25 million. I think that was 2004-05. Just to update you, 2005-06 is around $7.3 million.
In terms of the demand for services, last year we had requests for more than 400,000 publications that ended up going out to consumers. Our website visits--these are not hits, but visits--increased by at least 69% per year. Last year alone we had over 750,000 visits to the website.
Mr. Chairman, through you to the committee, we are following on the track of the two-tiered notion of our mandate--one, to enforce the law; and two, to ensure that consumers are aware of their rights in that marketplace.
Thank you very much. I look forward to questions.
Conservative
The Chair Conservative Brian Pallister
Thank you very much, Mr. Knight.
We'll begin with Mr. McCallum, seven minutes.
Liberal
John McCallum Liberal Markham—Unionville, ON
Thank you, Mr. Chair. I'll share my time with my colleague Mr. Savage.
Mr. Knight, it's good to see you again. We worked together in different times.
Liberal
John McCallum Liberal Markham—Unionville, ON
Well, different times--perhaps happier, as my colleague suggests.
I have just two questions. I may have known this in earlier times, but I can't remember. In terms of helping consumers with these publications, such as Credit Cards and You and Cost of Banking Guide, I see that the approval rates are very positive. Do you actually go through individual bank credit cards and interest rates offered so that consumers know what the Bank of Montreal is doing relative to the Royal Bank?
Commissioner, Financial Consumer Agency of Canada
Yes, we do. We actually have a comparison product on our website that allows consumers to go through what their requirements are and work through which card would best suit their needs. We allow a cost comparison. Needless to say, the competitive players all want to be in on the action and try to prove they have the best product.
Liberal
John McCallum Liberal Markham—Unionville, ON
I would imagine, having worked for one.
I'm impressed that the response is so good and that you go into each individual bank or company's individual credit cards or deposit rates and so on. Consumers can get all of that through you, right?
Liberal
John McCallum Liberal Markham—Unionville, ON
Okay.
My last question is on the distinction between your role and the ombudsman's role. Anything to do with an individual complaint is not your domain but their domain, right?
Liberal
John McCallum Liberal Markham—Unionville, ON
I wonder if that very explicit division of labour works. I forget; are the ombudsmen all bank or private sector centred, or do we also have a government one?
Commissioner, Financial Consumer Agency of Canada
Mr. Chairman, we do not have a government one. What happened at the time of the last legislative package was that from a policy point of view, the administration at the time responded to the industry in terms of the industry setting up their own self-reporting, self-regulatory ombuds network. That's what's in place today with banks, insurance companies, and others.
Quite frankly, we work very well with them from the standpoint of our call centres. If I were back in the private sector, my call centre would be flipping the calls in 30- to 60-second turnovers in sales. But when you are responding to individuals with a problem or an issue from around the country, it's about a two- to three-minute function.
We are determined...and so far it's been very successful. We go out and do customer satisfaction tests. We have been able to get that consumer to where they need to be. Often it's a straight redress issue, not a legislative regulatory issue--i.e., “I think they're off $20 on this, and they don't think they are.” We get them into the ombuds network, where a lot of that gets resolved.
Liberal
John McCallum Liberal Markham—Unionville, ON
My last, last question.
Having been there for a number of years and having observed this private sector ombuds network working, are you satisfied that it serves the consumer well, or do you think it would be better if there were a government-owned or government-sponsored ombudsperson as well?
Commissioner, Financial Consumer Agency of Canada
I'm going to really try a yes-no answer; it's my western roots, you know--yes, no, or whatever.
That really is in the policy realm of finance. There are a couple of factors. I think the ombuds network is evolving, as is this agency. It's hitting year four, five. If we move forward on the finance department side of that, with a white paper, etc., it would become part of those discussions, but clearly, from my vantage point, we have done all the referrals.
I am empowered to review the complaint-handling processes at some point, so I may be able to better answer that question then, but at this stage the cooperation is very good.
Conservative
The Chair Conservative Brian Pallister
Mr. Savage, you have a couple of minutes, but perhaps I can interject.
Therefore, with the private ombudsman you referred to, you have the ability to ascertain exactly what number of complaints they are dealing with, the nature of those complaints, and so on and so forth?
Commissioner, Financial Consumer Agency of Canada
Yes. At a certain point, I think, I could review their complaint-handling mechanisms. I should quit using the word “network”, because the network of ombudsmen disappeared. It's the OBSI, the bank ombudsman network. It starts with individual banks and then it works up to one key ombudsman for the whole system. It's like the courts.
Conservative
The Chair Conservative Brian Pallister
Just to be clear, then, with banks or the insurance industry, you're able to evaluate the nature of the complaints they're dealing with and report back in respect of that? If the committee wished, we would be able to get a handle on the nature of the ombudsman's work in these private sector industries as well?
Commissioner, Financial Consumer Agency of Canada
They each provide an annual report. They outline the number of complaints and cases. All of that is available. They certainly could meet with you as to where their standing is. What I'm allowed to do under the law is to review their complaint-handling process, to make sure the process is in order. The substance of the cases, I don't get into.
Conservative
Liberal
Michael Savage Liberal Dartmouth—Cole Harbour, NS
Whenever I share time with Mr. McCallum, I end up with very little time. I've made a note never to share a pizza with him in the future.
I notice that in your annual report you talked about continuing to work with international colleagues and sharing best practices as regulators of the financial services industry. I wonder if you would give us a sense of how we're doing internationally. How does Canada do? Is there a world leader in terms of financial services, consumer protection? Have we modelled against anybody? You've been going since 1996 or whenever that was.
Just how do we do with our protection of consumers in Canada versus other nations?
Conservative
Commissioner, Financial Consumer Agency of Canada
Mr. Chairman, we do very well. The reason we do very well is that, in wonderfully Canadian fashion, we combine a little bit of everything into the mix. We oversee codes, but we have always been empowered to change codes to regulations if required. If not required, we don't do it. Other countries just have a code.
Then we have a regulatory regime, but it's not burdensome in comparison with some other market economies within the world.
Thirdly, we have investigative powers that we would use in terms of market conduct. Three years ago we called a meeting of market conduct regulators from other countries. We had eight or ten show up. In the last meeting there were 55.
We have an exciting world economy in terms of globalization, growing at the point that now you will see in those emerging market economies, where they look to some of our models, particularly on the consumer education side, the codes and the regulations, as models to go forward. Some of them face, in aggregate, between 75 million and 150 million new consumers a year in their markets.
Conservative