Evidence of meeting #67 for Finance in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was banks.
A recording is available from Parliament.
6:15 p.m.
Liberal
6:15 p.m.
President and Chief Executive Officer, Canadian Payments Association
We don't cover credit card transactions, per se. The only thing we cover is the settlement they do at the end of the day through our large-value transfer system.
Paying a bill is part of our account, but a credit card payment is considered to be like any other bill payment.
6:15 p.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
Mr. McKay is not talking about when you purchase something and you get the goods in return. He's talking about when he pays his credit card online. That's still part of your mandate.
6:15 p.m.
President and Chief Executive Officer, Canadian Payments Association
But again, we don't cover in-house transactions. If you're talking about the same institution, we don't cover that part. A credit card payment, for clearing purposes, is considered to be the same as any other bill payment. You still have to go through those four steps I explained earlier.
6:15 p.m.
Liberal
6:15 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
It's like taxes and all the rest of the stuff. I think it's a very strange way of doing business.
6:15 p.m.
Conservative
Dean Del Mastro Conservative Peterborough, ON
Thank you.
I'll come back to Mr. Callon with my earlier question.
I'm concerned, but I want to preface my comments by saying I'm not attempting to beat up on the banks. I think we have a very good, stable banking system in Canada. But I think you could make the case that maybe what we're seeing is a little bit of market skimming; in places where there isn't as much money to be made, services aren't being offered.
I'd hate to think that was the case. Are we seeing some skimming in Canada?
6:15 p.m.
Acting Commissioner, Financial Consumer Agency of Canada
I won't respond to the question of skimming. I'll respond to the issue of branch closures, to follow up on a comment by one of your colleagues.
The statistics you have here don't include those branches that have been opened. There's no requirement for the banks to file information with us on those branches, so there isn't a net effect here. This is all the branches that have been closed, but there are also branches that have been opened. You mentioned that they closed five branches but then opened three, and so there's a net effect that's occurring.
I think what you're seeing in the industry is not unlike what has happened in other industries, where you are looking at economies of scale. In terms of three small branches, you could have one large branch.
No doubt economics plays a part in banking, but for me to comment on that, I'm not....
6:20 p.m.
Conservative
Dean Del Mastro Conservative Peterborough, ON
If we were to lose, say, a number of branches in Winnipeg and gain a few branches in Scarborough, even to do a ledger on those and say that these branches have closed but you've had this many open, it could be quite misleading without some kind of geographical appendix to it. We could have giant geographical regions in the country that have no service.
6:20 p.m.
Acting Commissioner, Financial Consumer Agency of Canada
From an educational point of view, one of the things we wanted to do was to put, on a geographical map on our website, the ability to find out exactly where those branches are closing across the country. Those who have an interest in terms of where those closures are occurring would be able to use our website to find out.
6:20 p.m.
Conservative
Dean Del Mastro Conservative Peterborough, ON
It would actually be of interest to all members of the committee if we were able to track that over time geographically. That might also be of assistance so that we can see if there is a trend that may require some attention.
6:20 p.m.
Acting Commissioner, Financial Consumer Agency of Canada
That tool is available.
6:20 p.m.
Conservative
Dean Del Mastro Conservative Peterborough, ON
Thank you.
This is the other thing I wanted to ask you about. You mentioned that you also defend clients in cases of coercive tied selling. Tied selling, as we know, has been basically outlawed in virtually every industry I'm aware of.
I come from the car business. Manufacturers used to call us up and offer us a car that we knew we could sell if we took a number of cars we knew we would be stuck with. That obviously was outlawed. Do we see this in the banking industry?
6:20 p.m.
Acting Commissioner, Financial Consumer Agency of Canada
That was a provision that got strengthened in the last review in terms of the use of coercive tied selling. We have received complaints, but it's not a major issue. Where it has been, the banks have been very quick to provide redress.
6:20 p.m.
Conservative
Dean Del Mastro Conservative Peterborough, ON
So it may be on an individual basis, but it's not something the banks are doing.
6:20 p.m.
Acting Commissioner, Financial Consumer Agency of Canada
From a policy perspective within an institution, it is not. We may find the odd loan officer who is very aggressive, but once they are informed clearly on what the limits are, apologies are given.
6:20 p.m.
Conservative
Dean Del Mastro Conservative Peterborough, ON
I have experienced some individuals with more motivation than others, and they sometimes embark on what may be termed tied selling.
Mr. Legault, just to follow up on Mr. McKay's point, how do we speed this up? It is a major point of frustration to folks, especially when they see the money leave their accounts and not get credited sometimes for days. I actually don't see an incentive on the part of the banks to clear it up, particularly when money may be taken from an interest-bearing account to be paid on another interest-bearing account. Dragging their feet actually makes the banks an awful lot of money. By not clearing this very quickly, they're no longer paying interest on the savings account and they're still making interest on the credit card account. They're making it on both ends, and I don't see any encouragement for them to clear it up.
What's a reasonable period of time?
6:20 p.m.
President and Chief Executive Officer, Canadian Payments Association
I mentioned that our consultation is due to be started in March, subject to our board's approval. We usually go for a 60- to 90-day period for public comment, and we do the analysis after that. We then have to go back to our board of directors to see if we need something else.
Rule H6, which I mentioned before, does in fact create an obligation on the part of the biller to provide credit to the account of the customer on the date that the payment is made. As I mentioned, though, it's being used by only 20% of the billers.
Our consultation is due to start within the next month, and it sometimes depends on the number of comments that we receive and on the complexity of trying to address the comments and get an agreement with the industry.
6:20 p.m.
Conservative
6:20 p.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
No, but thank you, Mr. Del Mastro.
In answer to your question, not only can the Financial Consumer Agency reply, but perhaps the Canadian Bankers Association can too. They would probably have the statistics more readily available. Perhaps we can write a letter to them. They can probably provide us with the information. The only problem is that we won't have the statistics for the caisses or the credit unions.
Ms. Judy Wasylycia-Leis, do you have one question, quickly, in two minutes?
6:20 p.m.
NDP
Judy Wasylycia-Leis NDP Winnipeg North, MB
I have a couple of questions, but I'll be very quick.
On the issue that you've just mentioned about geography, it's probably not so much how many banks are closing and opening, but what areas have been left without any service. That's the case for many inner city, older neighbourhoods and rural communities. If it weren't for the credit unions, in some of those areas we might not have anything.
My question is for you, Mr. Callon, on violations by the banks. Could you tell us how many banks and bank branches have violated the Bank Act?
6:25 p.m.
Acting Commissioner, Financial Consumer Agency of Canada
I don't have the exact figure, but I can provide that figure to you very shortly.
6:25 p.m.
NDP
Judy Wasylycia-Leis NDP Winnipeg North, MB
That would be very helpful.
I would assume that if you just surveyed 1,600 in one year and found 800 bank branches in violation, the numbers are probably in the many thousands.