Finance Committee on Feb. 20th, 2007

[The Vice-Chair, Liberal, Massimo Pacetti]

So what we were able to see is there are 135 violations from 29 federally regulated financial institutions.

Ms. Ablonczy and then Monsieur Thibault.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

I'll pass, Mr. Chair.

[The Vice-Chair, Liberal, Massimo Pacetti]

Monsieur Thibault and then Mr. McCallum.

[Robert Thibault, Liberal, West Nova, NS]

Thank you, Mr. Chairman.

I would like the officials from the department to explain the difference between a violation committed by a person and one committed by an institution.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

That is a tough one, Robert!

[Eleanor Ryan, Chief, Structural Issues, Financial Institutes Division, Financial Sector Policy Branch, Department of Finance]

The frameworks, whether they be administrative money penalty or criminal law, usually distinguish between natural persons and entities. They recognize a fine for a natural person would be much more significant than for a larger corporate entity. So you usually see a gradation of fines on that basis.

I don't know if that answers your question.

[Robert Thibault, Liberal, West Nova, NS]

I'm just thinking about the banking world. If my bank manager causes an infraction that does me harm, is he an individual or is he the institution?

[Eleanor Ryan]

It would depend—

[Robert Thibault, Liberal, West Nova, NS]

Or a loans officer, or an investment dealer, or—

[Eleanor Ryan]

Right. It would depend on what the finding of the court would be as to whether or not it was the person acting in their own accord or representing the organization.

[The Vice-Chair, Liberal, Massimo Pacetti]

Mr. McCallum.

[John McCallum, Liberal, Markham—Unionville, ON]

Much as this is unusual for me, I see no reason not to support Judy on this. I think that for the major banks it's not so much the money as the reputation that is important. Still, I think for one of the smaller banks $500,000 is not a terribly large sum. I don't see a reason not to support it.

But I'd like to ask the officials. Is there anything we're missing here? Can you think of a reason why we should not support this idea?

[Serge Dupont]

I guess the real issue is what the benchmark is and what other pieces of legislation, whether federal or provincial—for example, securities laws, and so forth—provide in administrative and monetary penalty regimes.

The $200,000 is bringing the Bank Act essentially to the level of other legislation, be it federal or provincial, while $500,000 puts us out of that ballpark. At the end of the day, of course, it's a number. But again, in terms of benchmarks, $200,000 is the norm.

[John McCallum, Liberal, Markham—Unionville, ON]

I will support this. I think banks are fairly large and can afford that sum.

[The Vice-Chair, Liberal, Massimo Pacetti]

We'll be able to see that when the vote comes.

Thank you.

Mr. Paquette, and then Mr. McKay.

[Pierre Paquette, Bloc, Joliette, QC]

It says here this is a maximum penalty. Therefore it is not a matter of imposing a $500,000 fine every time. I note that from October, 2001 to 2006, 120 violations were committed and that the total amount of penalties paid was $117,000.

This might be a message we are sending but in my opinion it will not have a major impact. However, we are going to vote for the amendment.

[The Vice-Chair, Liberal, Massimo Pacetti]

Mr. McKay.

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

I agree that this is pure symbolism; there's nothing of really any substance here. Apparently, according to the FCAC, the total number of violations found over five years was 120 violations, and the total sum of administrative monetary penalties was $117,000. So for those 120 violations, it looks as though it's about $1,000 a pop. It seems somewhat silly to be talking about an average monetary violation of $1,000 a pop when in fact you want to up the maximum to $500,000.

I think this is gratuitous bank-bashing, and I will not support it.

[The Vice-Chair, Liberal, Massimo Pacetti]

Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, sir.

I want to come at this from a slightly different angle. Whenever you put larger potential penalties in place, you run the risk of not being able to come to settlements on things. I think this could lead to litigation and unintended action on both sides, and I just don't see that it's necessary. A 100% increase in this amount to $200,000 is significant, and I'd just ask that members of the committee think about what they're pondering.

I concur with Mr. McKay that it's a bit of bashing and not much more than that.

[The Vice-Chair, Liberal, Massimo Pacetti]

Ms. Wasylycia-Leis, shall we conclude? Can we go to the question?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Let me just make a couple of concluding remarks. Obviously, when someone accuses me of gratuitous bank-bashing, I should respond to suggest—

[The Vice-Chair, Liberal, Massimo Pacetti]

No, you don't have to.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

—that in fact this amendment is well-intentioned. It is to deal with a growing, serious situation for many in our communities today. It is not to make the big banks apppear as the big villains over and over again. It is to say that something is not working, so how do you fix it? How do you make it better?

John mentions 126 violations according to the FCAC report. Those are violations that went the whole gamut from being identified right to not being able to be resolved. They are therefore then posted as violations. There are hundreds more violations that are settled after someone speaks up. And no one knows which bank branches do it. There is no information for consumers to actually make wise decisions.

So this is just a constructive suggestion to help improve the situation. I thank John McCallum for his support and I hope others will give theirs.

[The Vice-Chair, Liberal, Massimo Pacetti]

We're voting on amendment NDP-28.

(Amendment negatived) [See Minutes of Proceedings]

(Clauses 436 to 438 inclusive agreed to)

(On clause 439)