Finance Committee on March 13th, 2012

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Mr. Phillips, I have a slight problem. In your statement, you said that you are pleased to see the term “CPA director” mentioned.

The problem is that, once this bill was adopted by the Senate, somebody from this association sent a letter to the assistant deputy minister requesting that this term be clarified and that we revert to the former term, namely “participant”. Clause 213 of the bill does not contain the word “director” and uses the former term, “participant”.

You are supporting a bill that is not the one you were hoping for, if I understand your brief and your request.

Mr. Guy Legault, the CEO of the CPA, sent a letter to Mr. Jeremy Rudin, who is the assistant deputy minister at the Department of Finance. He requested that this ambiguity be clarified, an ambiguity that he did not really appreciate. Nevertheless, he did indicate that he was satisfied with the bill. Clearly, this ambiguity was corrected. The word “director” was withdrawn and replaced with the former word, “participant”.

[David Phillips]

I'm not familiar with the issue Mr. Legault has raised. I know Mr. Legault well and he hasn't raised it with me, so I'm simply going to have to take this off-line and take a look at that. It looks like a question of statutory interpretation. I hope it's not an issue.

I'm not aware that it is an issue, but it's obviously something. I appreciate you raising it, and we'll take a look at it.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Very well. I simply wanted to obtain some clarification.

[The Chair, Conservative, James Rajotte]

You have three minutes remaining.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Mr. Phillips, as far as cooperatives are concerned, theoretically this bill regulates the demutualization of insurance companies and potentially any cooperative at the federal level.

I did not notice any protection provided for the assets accumulated by former members in cooperatives. Could you explain what provisions you would like to see in order to protect these assets, which represent the wealth of all past cooperative members?

[David Phillips]

This legislation doesn't deal with demutualization. The demutualization issue is somewhat touched upon in the 2010 legislation that was passed. That legislation has not been proclaimed in force, and we expect to see some regulations dealing with this subject. It would only apply to federal credit unions, and we actually haven't any federal credit unions in place. So at this point it's pretty hypothetical.

I think the legislation that was passed in 2010 provides for safeguards around the whole demutualization process, to make sure everybody is fully informed and fully aware. The minister is only allowed to authorize the demutualization if the minister is convinced that it's in the best interests of the cooperative system, which is an important safeguard in the process.

The legislation that's in place is pretty well balanced on this. Again, we haven't had any experience with demutualizations of federal credit unions. I think it will be quite some time before that occurs, because the legislation hasn't been proclaimed and there are no federal credit unions in place. We understand it's an issue, but we'll have to wait a little longer before we actually see how one might transpire.

[The Chair, Conservative, James Rajotte]

You have 30 seconds remaining, Mr. Giguère.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

I would like to ask Mr. Melville a question.

Should Canadian banks become international organizations, what authority will the ombudsman have with respect to the regulation of the assets of a Canadian consumer who, on the advice of his or her Canadian bank, invested in a Panama branch?

[Douglas Melville]

First of all, to clarify, an ombudsman is not a regulator, but if a complaint were to arise with a Canadian consumer's problem with a bank in Panama, it would be outside of our jurisdiction and I would have to look to a counterpart, if one existed, in Panama to resolve that specific complaint.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Giguère.

I'm going to take the next round as the chair. I just wanted to clarify something, Mr. Melville, because you've raised issues that have been raised at the committee before. Can I clarify the time period that was actually used, in terms of concluding cases? You said 87% within 180 days. Is that a current record?

[Douglas Melville]

That is current for 2011. That's the most recent statistic for 2011—87% of the cases in 2011.

[The Chair, Conservative, James Rajotte]

That's for 2011.

Could you provide us, as parliamentarians, with as much information on that as possible?

Obviously, when this happened, one of the things I did was approach the banks in question and ask why they left. One of the issues they raised was they obviously have an interest in addressing complaints from their customers and they felt that their complaints were not addressed in a timely manner, and that's one reason why they made this decision. So if we could get as much information as possible from you and your organization, I'd appreciate that.

[Douglas Melville]

I will have it sent to your office right away.

[The Chair, Conservative, James Rajotte]

Now are you suggesting, though, that we amend Bill S-5 in any way?

[Douglas Melville]

Not necessarily.... I think a statement from this committee as to the preferable structure of dispute resolution in the sector would go a long way to sending the appropriate signal, not just to what government policy should be, but also conduct within the marketplace right now. We have four major banks that have stuck it out with us because they think this is the right structure, notwithstanding the other actions.

[The Chair, Conservative, James Rajotte]

I appreciate that, and Mr. Phillips, I appreciate your brief and your presentation.

You support Bill S-5 going forward, but you'd obviously like to see the review. You're heartened by the comments from the finance department and from the Senate committee. Now in your responses to some of the members' questions, my understanding is this could be the start of the review and the next five-year Bank Act review, or would you like it addressed before that?

[David Phillips]

Mr. Chair, I think the government has indicated that it's prepared to move sooner than five years where needed, and we would hope that this could be done sooner than five years, but as I say, we respect that this is a technical bill. But we think this really needs to be looked at, especially with a government that's interested in removing red tape and unnecessary duplication in cost.

We think this is an area where there is unnecessary duplication in cost—the cost to the federal government—and we think it needs to be looked at closely. There are issues of transition if these provisions are to be repealed, but yes, we support the enactment of this bill, but a message from this committee suggesting that 427 should be looked at would be very constructive and helpful.

[The Chair, Conservative, James Rajotte]

I appreciate that.

I wanted to finish up with our two other guests.

I've heard some concerns in terms of what you feel is perhaps not adequate in your view in the current system. I would like to perhaps put you on the spot. I think Mr. Jean did as well, in the sense that a lot of the measures have been enacted—the minimum 21-day grace period, the code of conduct that resulted from the committee hearings we held at Finance and Industry, banning negative option billing for financial products, unsolicited credit card cheques. The fact that I can actually now read information from my credit card company, that was a change brought in by this government, as were the measures announced by the parliamentary secretary and the Minister of State for Finance on March 4 with respect to the cheques that people get in the mail from credit cards. A number of substantive changes have been made, in my view, to protect consumers, and I appreciate them as a consumer, frankly.

I think Options consommateurs has spoken in favour of a lot of these measures, so I just wanted to get Mr. Sommers and Monsieur Vinet on the record. Do you support these measures that have been put in place?

Monsieur Vinet.

[Jean-François Vinet]

We wrote memos on many measures that were introduced. You touched on the credit card cheques, and the reduced period of access to your money. That's a very good step forward for Canadian consumers, of course. The amount of money that Canadian consumers can access is also a good step forward. I'll say that what was put forward by government in terms of protection could have been better in many ways, but it was, in many ways, a good step forward.

At the same time, there's a major part, which is the complaint resolution process. You have people who have problems with their mortgages. It's not about $100, that they want to have access to $100. We are talking with people who have major payments to make. They encounter problems with these payments, and because there are millions of consumers who have mortgages with TD and the Royal Bank, many of these consumers don't have access to a neutral—

[The Chair, Conservative, James Rajotte]

Mr. Vinet.

[Jean-François Vinet]

That's the main thing.

I can use my time for five minutes to say what was good, but I'm here to say this big part unfortunately is not there.

[The Chair, Conservative, James Rajotte]

Unfortunately, Mr. Sommers, Mr. Vinet took your time. I'm out of time and I cut other members off, so I'll cut myself off.

We'll go to Mr. Mai, s'il vous plaît.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

I'll let Mr. Sommers respond to your question.

[Tyler Sommers]

I'll do so as quickly as I can.

These are small steps forward, yes. Our issue is that none of the proposals do anything to prevent gouging. They don't decrease the already excessive credit card interest rates, and as has been mentioned, interest rates are at an all-time low and yet credit card rates are extremely high. Nor do they deal with the extra interest rates and the fee hikes that banks and other companies have unilaterally imposed in the last few years, or the overcharging for various credit card and other banking services. So these are small steps forward but much more can be done.

Directly in relation to this bill, we're of the opinion that the $500,000 is not nearly enough to serve as a deterrence for banks who posted a $7 billion, 5.3%, increase in this fiscal year.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

To follow up, you talked about interest rates and also the bank fees, and what would you recommend? What is your recommendation or suggestion?