Finance Committee on Sept. 24th, 2012

[Ted Menzies, Conservative, Macleod, AB]

Thank you, Mr. Thibeault, for your question.

Certainly everyone will have their own personal definitions, if you will, of what financial literacy means. It certainly means something different to a six-year-old than it does to a 25-year-old who has just finished university, but overall it's the ability to understand what offerings are there for you, whether it's for saving or preparing for university or, as you get to my age, preparing for your retirement. Hopefully, before that, part of financial literacy is encouraging younger people to actually think, before they have grey hair, about what they want to do when they have grey hair, or white hair, or perhaps even blue hair, if that happens.

It's important for each individual to understand what's available so that they can make informed choices. The role of the leader, which is specifically what this piece of legislation is about, is to put in place a leader within the Financial Consumer Agency of Canada. The agency does great work, but it covers a number of different facets and fronts. We want to focus this leader on financial literacy within the Financial Consumer Agency of Canada. In my view, that's the number one recommendation. It is the number one issue that we need to deal with, and that financial literacy leader will perhaps lay out the agenda or plans for disseminating the policies they see. We have put funding in place for that leader with the FCAC because Ursula said she needed a little more help with that, so that money will go specifically to that leader to roll that out. The function of that leader will evolve. Once we have the legislation in place and have put this leader in place, that will evolve.

[Glenn Thibeault, NDP, Sudbury, ON]

Ultimately, the—

[The Chair, Conservative, James Rajotte]

You have one minute.

[Glenn Thibeault, NDP, Sudbury, ON]

Wow, that was quick.

What we have seen, then, is that Bill C-28 is more of a job posting than a bill, because we don't have any definition as to what financial literacy is all about. We're hoping—you used “perhaps”, and those were your words—that perhaps that will be laid out.

Second, the recommendations from the task force talked about bringing the advisory council along. That's not even there.

There is nothing about bilingualism. People who speak French need financial literacy as well, Minister, so this bill is more of a job posting and really doesn't address the motion that was presented in the House that we all voted in favour of about a month earlier. This bill needs a lot more work, and I hope we can work on that together with some amendments.

[The Chair, Conservative, James Rajotte]

Please give just a brief response, Minister.

[Ted Menzies, Conservative, Macleod, AB]

The ability to speak both official languages and to disseminate the information in both official languages will be mandatory.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Thibeault.

Mr. Jean, go ahead, please, for your round.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair, and congratulations.

Thank you, Minister, for appearing today.

This is a very important issue. Consumers obviously are Canadians, and they deserve the protection of the government. They deserve transparency and accountability in their government, and also in their dealings, because financial dealings are quite complex from time to time.

I'd like to deal specifically with the consumer protection framework, and not only with what we've done over the last few years, in particular some of the things, like banning negative option billing for financial products. In 2009 we did quite a few things for consumers, particularly in sections 52, 53, and 74 of the Competition Act. There were some things that I thought were already in place but weren't, such as deceptive notices of winning a prize. People get mail saying they have won a prize, and it's not the truth. We took steps on that. We took steps in relation to telemarketers making false or misleading statements, and we took steps in relation to prohibiting false and misleading advertisements of regular-price items being on sale. People often label things as being on sale, but the reality is they're just the same, regular price.

Minister, could you comment generally on some of the other steps we have taken on consumer protection legislation, and why we have done that in particular?

[Ted Menzies, Conservative, Macleod, AB]

Thank you, Mr. Jean.

As members of Parliament, we've certainly all heard from our constituents when they feel they've been slighted or ill advised, and we look at what government can do. We try our best to put in regulations that protect against these things that upset people and in fact cost them money.

One that we moved on recently is the banning of unsolicited credit card checks. This refers very much to the lack of understanding of how these actually work. People thought there wasn't a charge when they utilized a credit card check, but there was.

That was simple and straightforward: banning the unsolicited. People hadn't asked for these. They just arrived in the mail. A lot of seniors didn't realize the cost that went along with them. So we banned those.

You referred to the banned negative option billing for financial products. We don't take kindly to that in any other business, so why should we accept that in dealing with our financial institutions?

Greater disclosures on mortgage prepayment charges is another. Many people who have mortgages have no comprehension of this. When they signed that mortgage—those are large documents and this is probably the largest investment that most Canadians will make—they didn't realize what the rules were around paying down more than their ordinary payment if they were in a position where they could pay more. So we suggested that it be mandatory that these prepayment charges, if you will, or penalties, be disclosed to individuals.

There's one other thing. We know that all financial institutions try to do their best, but if there are violations and they're found at fault in those violations, we've actually doubled the fines that can be levied against them—up to $1 million.

We think protecting consumers and providing information is our role.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Minister, wouldn't you agree that these are all moves by our government towards dealing with some of the issues regarding low savings by Canadians and, generally, the security of most Canadians? You mentioned mortgages in particular, these being the largest purchase that most Canadians will ever make, and just making sure that they're not taken advantage of is really our government's motive.

I understand that we've heard from consumer groups and consumers generally across the country, and we're responding to them in relation to accountability and transparency, and just making sure we protect Canadians through knowledge-based information. Is that fair to say?

[Ted Menzies, Conservative, Macleod, AB]

That sounds very simple, and it is that simple. If people have the information to make informed decisions, the least we can do is make sure that the financial institutions are honest and forthright before they're providing a product, whether it's a credit card, a mortgage, or any sort of loan provided to individuals.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Does that include increased competition and making sure that the competition is fair and fair-minded?

[Ted Menzies, Conservative, Macleod, AB]

Yes, absolutely, and providing all the competition, so that there is some self-policing amongst the financial institutions themselves.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Brison, please.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you, Chair.

Welcome back, Minister.

Minister, you've said that part of the objective will be to ensure that there's informed financial advice and the ability to understand what offerings are there for you. Will part of the mandate be to help Canadian financial advisers, not just the general public, and help ensure that the financial advice being given will reflect the needs of Canadian investors? Will that be part of the mandate?

[Ted Menzies, Conservative, Macleod, AB]

I would certainly see that, because we're looking for more information. We're looking for where the information starts and at what age we start being involved in the education system. I would defer to the leader, whoever he or she may be, to make those final decisions. We have regulations in place, but certainly the education of those advisers, I would suggest, would help.

I don't know, Ursula, if you have any comment you'd like to add to that.

[Ursula Menke, Commissioner, Financial Consumer Agency of Canada]

I think we've spent quite a bit of time already—and we plan to spend a whole lot more time—on these issues related to trying to give consumers the information they need around investments. We're trying to work with multiple relationships with various other regulatory agencies to bolster the information we have for them.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you.

The recent C.D. Howe Institute report on PRPPs said that “many low- to middle-income Canadians should avoid this new retirement saving vehicle”. One of the recommendations was that “[i]f PRPP tax rules are amended to allow tax-free accounts, PRPP administrators should be required to develop screening and education profiles to help members select” the right sort of account and to avoid having low- and middle-income Canadians, for instance, investing in the PRPPs.

Would you agree that it ought to be part of the recommendations to the financial industry that low- and middle-income Canadians ought not to invest in PRPPs?

[Ted Menzies, Conservative, Macleod, AB]

Well, frankly, that wouldn't be my recommendation. I think you know that I have a fair amount of interest invested in pooled registered pension plans.

C.D. Howe came out with a very narrow-minded view of pooled registered pension plans, especially considering the fact that over 60% of Canadians have no workplace pension plan whatsoever. For this group to suggest that people shouldn't invest in an optional savings tool—

[Scott Brison, Liberal, Kings—Hants, NS]

But the issue is—

[Ted Menzies, Conservative, Macleod, AB]

I find it a little disingenuous, quite frankly. No one is mandating this at this point, or certainly federally we're not mandating this, but it's another option for individuals to save through. I don't see that as a negative in any way.

[Scott Brison, Liberal, Kings—Hants, NS]

But if they end up being worse off because they will pay taxes and have government benefit clawbacks on withdrawals in retirement, wouldn't it be consistent with financial literacy to advise some low-income Canadians not to...? I'm not saying for everybody, but for some low-income Canadians, wouldn't it be the right advice to help their financial literacy to tell them not to invest in a PRPP?

[The Chair, Conservative, James Rajotte]

You have about one minute.

[Ted Menzies, Conservative, Macleod, AB]

Because the PRPPs are treated the same as registered retirement savings plans, then I guess the C.D. Howe Institute should have told people to stop buying RRSPs.

[Scott Brison, Liberal, Kings—Hants, NS]

Well, it depends on whether—