Evidence of meeting #76 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.

On the agenda

MPs speaking

Also speaking

Nadia Massoud  Assistant Professor, Finance and Economics, University of Alberta, As an Individual
Clerk of the Committee  Ms. Elizabeth Kingston
Duff Conacher  Chairperson, Canadian Community Reinvestment Coalition
John Lawford  Counsel, Canadian Consumer Initiative
Andrew Douglas  Asset Building Program Manager, Alternative Financial Services Coalition, Supporting Employment & Economic Development (SEED) Winnipeg Inc.
Mark O'Connell  President and Chief Executive Officer, Interac Association
Jerry Buckland  Professor, International Development Studies, Menno Simons College
Jeremy Trigg  President, The Exchange Network (FICANEX)
Mel Fruitman  Vice-President, Consumers Association of Canada
Bruce Cran  President, Consumers' Association of Canada

1:15 p.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

Thank you very much.

1:15 p.m.

Conservative

The Chair Conservative Brian Pallister

Thank you, Mr. McCallum.

We now move to Mr. Dykstra, for five minutes.

1:15 p.m.

Conservative

Rick Dykstra Conservative St. Catharines, ON

Thank you, Mr. Chair.

I have a couple of questions, and one is just out of interest.

Mr. Douglas, you mentioned the fact that once you left the confines of your beautiful community, you came here with the understanding that you would pay some ATM fees if you determined that you didn't want to take cash with you in your pocket. Is the only choice in your community the credit union? Is there no other option?

1:15 p.m.

Asset Building Program Manager, Alternative Financial Services Coalition, Supporting Employment & Economic Development (SEED) Winnipeg Inc.

Andrew Douglas

In my community?

1:15 p.m.

Conservative

Rick Dykstra Conservative St. Catharines, ON

In your greater community, is the only banking institution a credit union?

1:15 p.m.

Asset Building Program Manager, Alternative Financial Services Coalition, Supporting Employment & Economic Development (SEED) Winnipeg Inc.

1:15 p.m.

Conservative

Rick Dykstra Conservative St. Catharines, ON

I see. So prior to coming to Ottawa, you made the personal determination that the credit union would serve you better than a commercial bank in your community.

1:20 p.m.

Asset Building Program Manager, Alternative Financial Services Coalition, Supporting Employment & Economic Development (SEED) Winnipeg Inc.

Andrew Douglas

Yes, when looking at all of the variables.

1:20 p.m.

Conservative

Rick Dykstra Conservative St. Catharines, ON

That's perfect, because it will actually lead into my next point.

A number of variables made you decide to deal with the credit union versus a commercial bank. I would assume those variables were benefits versus costs.

1:20 p.m.

Asset Building Program Manager, Alternative Financial Services Coalition, Supporting Employment & Economic Development (SEED) Winnipeg Inc.

Andrew Douglas

In some cases, yes, with the main one being the work that Assiniboine Credit Union does in communities like the north end of Winnipeg. I was willing to give up higher interest rates on savings for that return.

1:20 p.m.

Conservative

Rick Dykstra Conservative St. Catharines, ON

It's just that you raised it as a personal issue, so I asked it in that fashion. You knowingly made the decision to deal with the credit union versus dealing with the bank, knowing full well that when you chose to go outside of your own community, you would be paying an ATM fee if you decided not to take cash. You did that with full knowledge.

1:20 p.m.

Asset Building Program Manager, Alternative Financial Services Coalition, Supporting Employment & Economic Development (SEED) Winnipeg Inc.

Andrew Douglas

That's correct.

1:20 p.m.

Conservative

Rick Dykstra Conservative St. Catharines, ON

Thanks. I just wanted to be clear on that.

Mr. Buckland, we had a couple of previous presentations, and a fellow named Michel Arnold, the executive director of a company, mentioned that governments should be focused on regulating white label ATMs versus dealing with the banks on that. Based on your presentation, do you agree or disagree with that statement?

1:20 p.m.

Professor, International Development Studies, Menno Simons College

Jerry Buckland

It's a real challenge. On the one hand, high fees mean that there are going to be more white label or other ATMs; but on the other hand, in inner-city neighbourhoods low-income people end up paying much more for limited-quality services compared to non-low-income people.

I don't think it's a simple answer of having a cap on ATM fees. It goes back to the broader question of how to promote financial inclusion. How do we boost the benefits and reduce the costs to get into the banking system for low-income people? That has to do with setting up pilots like the Community Financial Service Centre in Winnipeg, Pigeon Park Savings in Vancouver, and the Royal Bank's cash and save projects in Toronto. Those kinds of pilots are ways to experiment and learn how to bring low-income people back into the banking sector.

1:20 p.m.

Conservative

Rick Dykstra Conservative St. Catharines, ON

We also had a presentation from Raymond Protti, the president and chief executive officer of the Canadian Bankers Association. Perhaps Mr. O'Connell could comment, and if time allows, Mr. Cran could also comment.

He said that ATMs have been great for Canada, and the only issue that continues to arise occurs when a user of one particular financial institution goes to another financial institution's ATM machine and is charged a fee. That seems to be the issue we are continually dealing with.

Would you agree with that?

1:20 p.m.

President and Chief Executive Officer, Interac Association

Mark O'Connell

You're referring to the surcharge fee.

1:20 p.m.

Conservative

Rick Dykstra Conservative St. Catharines, ON

Right. As long as you use your own banking institution you don't pay a fee, but if you go somewhere else you do. That seems to be the issue we're dealing with.

1:20 p.m.

President and Chief Executive Officer, Interac Association

Mark O'Connell

Correct. My belief--and I think the market is playing it out--is that the fee introduced a business model that has led to more choice and convenience for Canadians across the country. We can see that in the way the industry has exploded from 1996 to today.

1:20 p.m.

Conservative

The Chair Conservative Brian Pallister

We will move on now to Mr. St-Cyr.

1:20 p.m.

Bloc

Thierry St-Cyr Bloc Jeanne-Le Ber, QC

Thank you, Mr. Chairman.

Mr. Lawford, in the recommendations that appear in your brief at the very end, you say:(3) The Committee should recommend that the House consider broadening the Competition Bureau's powers in order to enable it to investigate serious market conduct issues even when the law has not been infringed;

I think it would be worthwhile looking at that recommendation. The Bloc Québécois made similar recommendations with respect to the oil companies.

You are fortunate to be appearing before a parliamentary committee, and thus to be able to tell us frankly what you think, without fear of reprisals, legal or otherwise, and my question for you is whether, in your opinion, some people are infringing the law at this time. If not, is the purpose of your recommendation to broaden those powers to the point where they would go beyond just the strict enforcement of the legislation? In that case, would it be to make recommendations or confer additional powers?

1:25 p.m.

Counsel, Canadian Consumer Initiative

John Lawford

Yes, the idea is to ask the banks to justify these fees. At the present time, we have no useful information on that. No one knows how much it costs them to provide service at another financial institution's ATM. If the Tribunal or the Competition Bureau had the necessary powers, we could have that kind of debate. A government organization with these kinds of powers could move this issue forward.

1:25 p.m.

Bloc

Thierry St-Cyr Bloc Jeanne-Le Ber, QC

I would just like to address the matter of costs, a subject that constituents frequently raise with me. When dealing with financial institutions and making specific transactions, it is not possible to establish a connection between the service provided and the cost of that service. I am no expert, but it seems to me that most of the costs associated with owning an ATM are fixed costs, such as rent and electricity, as well as the purchase of equipment, software and communication lines. I don't see how there could be much variation other than that, whether there are 10 or 10,000 transactions a day, except perhaps in terms of keeping the machines stocked with cash.

First of all, I would like someone to tell me whether I am wrong and my estimate is incorrect. Then, if I am right, I would like an explanation of why people making seven weekly 20 $ withdrawals pay a lot more in transaction fees than people making only one 140 $ withdrawal a week. It seems to me that it is costing the bank basically the same amount. Perhaps Mr. O'Connell would care to answer my question.

1:25 p.m.

President and Chief Executive Officer, Interac Association

Mark O'Connell

So is your question specifically whether the costs are all fixed versus variable?

1:25 p.m.

Bloc

Thierry St-Cyr Bloc Jeanne-Le Ber, QC

Are they mostly fixed?

1:25 p.m.

President and Chief Executive Officer, Interac Association

Mark O'Connell

I can speak to the costs that are within the purview of Interac. In my previous life, coming from a technology company that provided outsource services, certainly no. A number of those itinerant costs are data processing ones. Every time you pass a message through the telecommunications infrastructure, hit a switch, or go through a different element in the network chain, there is a cost associated with that.

But I can't get into the details of my specific members' costs.