Finance Committee on Feb. 19th, 2007

[John Lawford]

Little. Certainly the limits and timeframes they would pick would be ones that would be the least they could get away with, or the.... What I'm trying to say is that they would stretch it out as long as they could. There's interest involved, so that's obvious.

We've found that with the voluntary codes as well, the front-line staff don't know there's even a rule. So it's difficult for someone to get action on that. The CPA payments code, for example, doesn't bind third parties, so that's another problem.

[Dean Del Mastro, Conservative, Peterborough, ON]

In your opinion, what is a reasonable amount of time to have an electronic transfer posted to an account once it has been transferred from another account?

[John Lawford]

If it's a cheque clearance item, I have to agree with Mr. Conacher that it's done overnight in most cases, so 24 hours would be appear to be reasonable. For other postings, I know that when you pay—this came up in the committee—a credit card bill from an account it seems to take longer. I would like to know from Visa why it takes longer. It seems to me it could be done within 24 hours, but there may be some reason why they can't do that.

In any case, we're looking at much shorter times. Banks are benefiting from the efficiencies of electronic commerce, so we would expect some of those to be passed on.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you very much.

Mr. Zinatelli, you mentioned that the Canadian Life and Health Insurance Association is very supportive of the bill. You touched on three areas--enhancing the interests of consumers, increasing the legislative efficiency, and resetting the sunset date. Specifically on the last point, you touched on the need for prompt passage of the bill.

I believe it sunsets sometime in March.

[Frank Zinatelli]

It's April 24, I think.

[Dean Del Mastro, Conservative, Peterborough, ON]

Will we essentially be operating with no regulations if we don't get this done in time?

[Frank Zinatelli]

The companies would effectively not have the power to carry on business, so it would create a lot of uncertainty about the validity of their contracts and all kinds of issues.

[Dean Del Mastro, Conservative, Peterborough, ON]

In your business, uncertainty is never a good thing, is it?

[Frank Zinatelli]

It never is.

[Dean Del Mastro, Conservative, Peterborough, ON]

We'll do our very best to keep everybody moving here on the finance committee.

Thank you.

[The Vice-Chair, Liberal, Massimo Pacetti]

We have Mr. McKay, and then we have Mr. Wallace.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I feel so greatly relieved that Mr. Del Mastro is going to keep our feet to the fire.

[Dean Del Mastro, Conservative, Peterborough, ON]

I'm going to make you work, John.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Yes, yes, if that were only true.

Mr. Conacher, I keep receiving a remarkable number of similar e-mails, all of which seem to make the same points that you're making. The one that seems to be four-square within the parameters of this bill is the ten days down to four days down to one day. I think we're going to get testimony from the payments folks who say that they're clearing five million paper cheques per day, $185 billion per day, over 20 million items.

I'm trying to anticipate what the argument might be as to why they can't clear that number of items within a 24-hour period. Help me here. Is it a physical impossibility or is it a structural impossibility? What's the argument from their side?

[Duff Conacher]

You mean from the banks' side?

[John McKay, Liberal, Scarborough—Guildwood, ON]

Yes.

[Duff Conacher]

You're asking me to argue in favour--

[John McKay, Liberal, Scarborough—Guildwood, ON]

I mean, it's the payment clearing association. There's no sense floating these things unless they're realistic.

[Duff Conacher]

This is really putting me on the spot.

There is no argument: 98% of things clear overnight. It was left in Bill C-8 as the one barrier the banks could still have in place that would mean that nobody with a low income, no one on social assistance, would open a bank account. It was a loophole left, on purpose, to give the banks an excuse to say that doing so was legal. All the other means that the banks were using for turning people with low incomes away--you have to be employed, you have to have a minimum balance in your account at all times, you have to produce five, six, seven pieces of ID--were made illegal under Bill C-8.

This one was left so the banks could continue to facilitate, as the federal government has, the growth of a two-tier banking system, in which the banks don't want to deal with people unless they have money, something to invest. Everybody else can go to the cheque-cashing outlet and get gouged even worse than they would at the bank. This loophole was left open so the banks could still turn people away.

[John McKay, Liberal, Scarborough—Guildwood, ON]

You're speaking to an issue of motivation, and the issue here is whether this is practically possible.

[Duff Conacher]

It is possible. It clears overnight.

[John McKay, Liberal, Scarborough—Guildwood, ON]

You're saying 98% clear overnight. But when you're dealing with five million items, 2% is a lot of items. Presumably, that's 2% that didn't clear overnight.

[Duff Conacher]

That may come from a credit union from another province, for example.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Okay, well, that's good.

[Duff Conacher]

But within the bank system, as far as we know, it's clearing.