Thank you, Mr. Chair.
I would like to thank the committee for providing the opportunity for RBC to comment on the issue of allowing new competition into the mortgage insurance market. As the largest mortgage provider in Canada, and thus a large consumer of mortgage insurance, we clearly have a keen interest in this matter. From the outset, I would like to emphasize that we are strong supporters of government initiatives to reduce the overall regulatory burden and to promote competition in the financial services sector.
On the issue of mortgage insurance, it is our view that our clients would be better served if the committee were to support the government's proposal to ease the existing barriers to new competition in the mortgage insurance market. Economic analysis consistently shows that eliminating barriers to competition ultimately enhances the interest of consumers in terms of improved pricing, product innovation, and greater access and choice.
The regulatory barriers to competition under the current system effectively result in only two mortgage insurers' supplying of the market. This means that only two sets of relatively similar products are available at relatively similar prices. In other jurisdictions where broader competition is permitted, there have been more extensive product innovations and improved pricing, to the ultimate benefit of consumers. We believe that the same would occur in Canada if the government's proposals to promote competition were permitted to proceed.
In our view, the proposals you have heard to justify either further study or the need for additional regulation in the marketplace do not stand up to review. The conclusion that eliminating barriers to competition and allowing new entrants into the market would somehow increase prices and decrease access for consumers flies in the face of the most basic tenets of economic theory and practice, which hold that precisely the opposite is true. This has been repeatedly demonstrated in the financial services sector where banks' entry into mutual fund and mortgage markets has significantly improved competition in these markets.
We would also note that in the case of the financial services market there is already a vast array of financial regulation and oversight to ensure that any potential concerns with new entry can be addressed. There are quite literally hundreds of legislative and regulatory rules, OSFI prudential oversight, and extensive frameworks at both the federal and provincial levels to ensure that consumers are protected.
Beyond that, periodic parliamentary reviews are possible, such as the current review by the Senate, which is looking back on the last round of consumer reforms to see if they achieved their objective.
Based on all this, our strong view is that the starting point for the committee should be the one proposed by the government. Let the market work for the benefit of consumers and then assess down the road whether isolated concerns are raised, and respond with a targeted regulation to address those concerns.
As one of the largest consumers of mortgage insurance, we strongly believe that our customers will only stand to benefit from better pricing, new product options, and even greater access and entry into the housing market if the government's proposal proceeds. We believe that the committee should follow the government's proposal to open this market up to competition.
I thank the committee for its time.