Thank you, Mr. Chair, for inviting me, and to members for having me speak here today.
I'm representing the Canadian Community Reinvestment Coalition, which was established in 1997 and is made up of over 100 citizens' organizations across Canada. Our membership is approximately three million Canadian citizens.
Recently, we called on the federal finance minister, Jim Flaherty, to work with opposition parties to create effective banking and financial institutions by requiring banks to prove, through an independent audit, that their credit card and other consumer and small to medium-sized business loan interest rates do not amount to gouging; and, through empowering the Competition Bureau, to evaluate and publicly report on the number of business loans applied for, approved, and rejected. We also called for specific categories of business borrowers, and an investigation into the level of competition throughout the country.
Canada's big six banks have reported new record first-quarter profits totalling over $7 billion, which is up 5.3% compared to 2011, and have done this while raising bank fees and cutting jobs in the sector, from approximately 305,000 in June 2010 to approximately 296,000 in September 2011. Canada's wage gap is also growing to the highest it has been in 30 years.
Canada's big banks also reported a total of more than $16 billion in losses and writedowns in 2008, primarily because of risky investments. Changes are needed now more than ever to ensure that banks don't increase their rates and fees to recoup their self-inflicted losses. We're also asking for increased accountability in return for the almost $200 billion in support the federal government provided to them from 2008 to 2009.
We're of the opinion that no corporation has the right to gouge or unjustifiably cut services, especially when providing an essential service, which banking is. To help Canadians overall and to ensure that big banks serve everyone fairly, at fair prices, we're asking the government to facilitate the creation of a national financial consumer watchdog group, and to require independent audits to determine if banks are reaping excessive profits through gouging interest rates, fees, and arbitrarily cutting credit services and services for some customers and communities.
To ensure effective ongoing industry accountability, the government can require banks to prove their loan investment interest rates are fair, which I have previously elaborated on, by auditing the lending and competition levels, which was recommended by the 1998 MacKay task force and the House and Senate committees as well; and by requiring financial investment companies to distribute a pamphlet in their mailings, which invites customers and investors to join a citizen watchdog group to watch over the financial industry and the federal government.
The recommendations the CCRC has with regard to regulating Canada's banks and investment companies are: to require banks to refund customers if the FCAC shows, through their investigation into gouging, that there has been gouging in the past decade; to either require banks to open branches or subsidize the opening of credit unions, if the Competition Bureau shows a lack of competition in any area; and to require banks to provide detailed information on loans and investments to customers, and to require corrective action and deny any mergers if the takeovers are not meeting the customers' needs, which is what currently occurs in the U.S.
We also recommend that the government award money-handling and credit card business to the banks that best serve the people, as every government in Canada contracts to banks; facilitate the creation of a financial consumer organization and individual investor organization through, as I mentioned, a pamphlet in their mailings; and require banks to give customers access to their money as soon as the cheque clears—in Canada, we have about a 98% clear rate in a day.
In addition, we recommend the government increase the maximum penalty for violating the Bank Act to about $50 million. Currently, the maximum penalty is $200,000, and we believe that the government proposal to increase it to $500,000 is still much too low to serve as a deterrent. We also recommend that they require the FCAC to disclose the name of violators in every case. Currently it's only if they prosecute, and that doesn't happen very often.
Finally, we recommend they ensure that all federally regulated banks are required to use the Ombudsman for Banking Services and Investments to ensure consistency and independence in the resolution of customer complaints.
That's all I have. Thanks very much.