Thank you very much, Mr. Chairman and committee members, for this opportunity to present on this important topic, which may seem like small change to some people. Certainly the banks try to make everybody think that it's just about small change. But it's actually a very important issue, not only of consumer protection but also of bank accountability.
I would like to thank the Committee for inviting me to make a presentation today.
I'm here representing the Canadian Community Reinvestment Coalition, which since early 1997 has been a force for increased bank accountability, consumer protection, community economic development, and the banks' role in service lending and investment across Canada. The coalition is made up of 100 citizen groups from across Canada in the areas of anti-poverty, community economic development, consumer, labour, youth, and women's groups, representing a total membership of more than three million Canadians.
The coalition has seen, through the last round of Bank Act changes, Bill C-8, with about 75% of its recommendations implemented, but unfortunately key gaps were left in every single area, including the area of service fees. As a result, the banks are still allowed to do pretty much whatever they want with Canadians' money and charge them whatever prices they want.
You've seen Mr. Raymond Protti, in his swan song presentation as head of the Canadian Bankers Association, present on March 26 these two documents to you. The problem with these documents is that while they provide lots of information, they withhold a couple of key pieces of information that are needed to determine whether the banks' prices are fair.
First of all, they withhold the key information of what it cost them to provide each service and product. Without the costs, you can't figure out what their profit margins are; and if you can't figure out their profit margins, you can't determine whether they're gouging.
Secondly, they withhold the savings that they have realized from withdrawing full-service banking by shutting down branches and firing thousands of staff in the past 15 years. As a result, we don't know how much that withdrawal of full-service banking has saved them and allowed them to become even more profitable.
Essentially, the federal government in the past 15 years has continued to allow gouging of all customers, but at the same time it has allowed a two-tiered banking system to be created where wealthy people receive full-service banking in branches, and less wealthy people are pushed to use bank machines or gouging cheque-cashing companies.
I'm going to examine briefly all the banks' arguments that are presented in these two documents. They can be easily summarized. There are lots of pages here, but actually mostly half-truths and many irrelevant claims.
First of all, the banks claim that their fees are fair. Again, this can only be proven if the banks disclose revenues and costs so that profit margin can be determined. The banks are refusing to disclose their exact revenues and costs, even though they have admitted in these documents that they know their exact costs. They do not cross-subsidize the cost of any division of their operation, so they must know their costs.
The banks claim that they only charge a so-called “convenience fee” to use another bank's machine or a non-owned bank machine. In fact, the banks have doubled the cost of using another bank's machine. They used to charge us the Interac fee. They've added the convenience fee post-2000. They've doubled the cost. Even if the convenience fee were eliminated, they would still be receiving revenue from the Interac fee.
The banks claim their fees are comparable to other countries. In fact, fees in eight countries, according to their own documents, are lower overall, including the Netherlands at 66% lower. The banks in the Netherlands also have a much lower interest spread. So they've been able to figure out how to have lower fees and a lower interest spread and still be profitable.
The banks claim that non-bank-owned machines are competitors. In fact, such machines are partners with the banks, not competitors, as they only facilitate customers accessing their bank account, and the banks save money because they pay no operating costs for these machines.
The banks claim that they are serving Canadians well. In fact, they've shut down full-service branches across the country.
They claim competition will work, so regulation is not needed. Regulation is definitely needed, because if competition worked, at least one of the banks would have lowered or cut the so-called convenience fee in the past six years, and none of them has.
The overall solution—