Finance Committee on March 15th, 2012

[The Chair, Conservative, James Rajotte]

I call this meeting to order, the 49th meeting of the Standing Committee on Finance. The orders of the day, pursuant to the order of reference of Tuesday, February 14, 2012, are Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters.

We're very pleased to have officials here from the Department of Finance. We have Ms. Diane Lafleur. We have Ms. Jane Pearse, Ms. Leah Anderson, Ms. Eleanor Ryan, Mr. Joseph de Pencier, and Mr. Khusro Saeedi. Thank you all for being with us. You're here obviously for any questions members may have.

Colleagues, we have nine amendments from the official opposition. The first amendment I have deals with clause 53, so we will go through clause-by-clause consideration, and as you know, pursuant to Standing Order 75.1, consideration of clause 1 is postponed. Therefore, the chair will call clause 2.

Now, I'd like to proceed.... Mr. Julian.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair.

Before you actually start the clause by clause, I believe Mr. Mai has a question around approvals, which isn't within any clause in the bill itself. Once you've explored how we go about tackling this in a quick way, we could perhaps—

[The Chair, Conservative, James Rajotte]

Is it a general question on it?

[Peter Julian, NDP, Burnaby—New Westminster, BC]

It will be a general question, but it may take a little bit of time to be answered.

[The Chair, Conservative, James Rajotte]

Okay. Do you want to address that now? Is this a question to the officials?

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

It's a question to the officials. Basically it's about trying to know how to move forward on that issue or just a clarification. So it's something that the officials may—

[The Chair, Conservative, James Rajotte]

And it doesn't relate to a clause in the bill?

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

It doesn't relate to a clause in the bill, but it relates to some of the information that we have regarding the briefing notes from the department.

[The Chair, Conservative, James Rajotte]

Okay. You can do it at the last clause, or you can do it now if you want.

When would you prefer to do it?

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

Can we do it now?

[The Chair, Conservative, James Rajotte]

You want to do it now? Okay.

Just pose your question then.

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

According to the information we received, the minister has 30 days to indicate his intention with respect to the acquisition, and if no decision is made in that time, the acquisition is automatically approved. If I understand that correctly, we are referring here to the Bank Act.

To give you some context, we're talking about acquisitions of foreign entities. So the question is to find out why ministerial approval is established in the case of certain acquisitions of foreign entities. Now, if the minister doesn't respond within 30 days, the acquisition is automatically approved. When Minister Menzies appeared before the committee, he said that an in-depth study on the foreign entities was required and that it was important for the consolidation of Canada's banks.

I would like to know how we could ensure that approval is not automatically given. The minister's authorization should really be required. We don't agree with that, but that's another story.

[Diane Lafleur, General Director, Financial Sector Policy Branch, Department of Finance]

The general practice is that the superintendent reviews the proposed transaction and sends a recommendation in writing to the minister. We, the department members, attach our recommendation to the superintendent's. Lastly, the minister approves or does not approve the transaction. In practice, approval happens. It's explicit.

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

Could we make sure that it isn't implicit, meaning that the acquisition isn't automatically approved if the minister doesn't respond within 30 days?

[Diane Lafleur]

In practice, the minister signs the transaction. So he does it explicitly. It's on paper; it's documented.

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

But as I understand it, there is no specific indication that the minister must give his approval in writing.

Is it possible to ask that this be the case, in this bill or otherwise, so that a lack of response from the minister doesn't automatically equal approval?

[Jane Pearse, Director, Financial Institutions Division, Department of Finance]

I think part of the reason that the time limit is in the legislation is to provide certainty to the private sector. When they are looking for an approval, they will receive it within a certain time limit. The time limit is really in the legislation to provide certainty. In practice, as Diane was saying, it is always the case that the minister explicitly looks at every approval that comes in, with the recommendation from the superintendent, and makes a decision.

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

My question is more technical in the sense of how we can make sure we have to have an approval from the minister.

[Diane Lafleur]

Are you asking how we could change the process?

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

Yes.

[Diane Lafleur]

As my colleague explained, we want to be able to offer some degree of certainty, meaning we want to ensure, one way or another, that the people who proposed the transaction will receive a response within a reasonable period of time.

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

We are saying here that they have 30 days and that an extension is also possible. Since we're talking here about a bill, there's no need to base this on practice. My question is purely technical.

How can we ensure that the minister is required to respond?

[Diane Lafleur]

What you're asking for is basically a change in the process. Legislative amendments would be needed. It would fundamentally change the process.

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

Couldn't this be done in Bill S-5? Would the Bank Act need to be amended?

[Diane Lafleur]

It's a standard process that appears in several places in the Bank Act, but also in other legislative documents dealing with financial institutions.