Finance Committee on Nov. 5th, 2014

[Rob Stewart]

We would say that the regulatory burden will shift but remain the same. It will shift toward the provinces in respect of the credit union centrals, which they already supervise. Then to the extent that, as the situation exists today, provincial credit unions are operating on the premise that the OSFI oversight—

[The Chair, Conservative, James Rajotte]

You have 30 seconds.

[Rob Stewart]

—of the centrals suffices, provinces may need to provide stronger regulation of provincial credit unions in their jurisdiction, but that will be offset by a reduction in OSFI's supervision.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

For the Conservatives on this, Mr. Saxton.

[Andrew Saxton, Conservative, North Vancouver, BC]

Chair, I do have a question on division 22. In economic action plan 2014 our government promised to support credit unions that wanted to become federally regulated. Can you describe how these measures implement this promise, and can you comment on how this will help these credit unions access some of the tools and benefits of being federally regulated?

[Rob Stewart]

Indeed, I'd be happy to comment.

The government announced previously that it would support federal credit unions and provided a legislative framework therefor. In this bill it provides two further actions to support the credit unions becoming federal. One is the amalgamation of power, or the opportunity to streamline amalgamations, which is essentially a series of votes that must be taken between two credit unions when they amalgamate. This bill will streamline that.

It also provides for continuation of something that provincial credit unions currently do, which is provide insurance through their members. In the federal regime, provision of insurance by federally regulated financial institutions is not allowed. We are facilitating a transition from the provincial regime where insurance networking is permitted to the federal regime where it is not.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you, Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Saxton.

Mr. Brison, please.

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

What consultations did the government have with credit unions prior to the measures announced in budget 2014?

[Rob Stewart]

I'll ask my colleague to speak to that issue.

[Margaret Tepczynska, Senior Economist, Financial Sector Policy Branch, Department of Finance]

The federal government has been engaging with the credit union industry since more or less 1996. The focus of the conversation has been on the structure of the system, given the evolution of the credit union system, and then we've moved on to the regulatory discussions.

The federal government has ongoing conversations with CUCC, the trade association—

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

The specific measures in budget 2014.

[Margaret Tepczynska]

We have consulted with—

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

Prior to the budget?

[Margaret Tepczynska]

Yes, but we talked in general terms about the changes that we are envisioning—

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

—but not the specific changes. They weren't—

[Margaret Tepczynska]

Not to the regulatory framework per se, but we talked about the need for clarity of mandates. In terms of amalgamations the changes you are seeing to the Bank Act related to amalgamations and continuance are based on discussions that we've had with credit unions. They've identified certain gaps in our legislation and we are now fixing that.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

Mr. Caron, go ahead.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Mr. Chair.

I am interested in the impact that the proposed changes will have on the Movement des caisses Desjardins in Quebec. Desjardins is also outside Quebec, particularly in Ontario, and I know that in other provinces, there are caisses connected to the group.

Based on their current status, these caisses are regulated by the province they are in. Is that correct?

[Rob Stewart]

That is correct.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Right now, Desjardins is still protected by the Superintendent of Financial Institutions, but that will no longer be the case afterwards. Is that correct?

[Rob Stewart]

No, OSFI does not oversee Desjardins.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Not at all?

[Rob Stewart]

No.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Okay.

I will now ask some very broad questions.

What will the impact be on Desjardins, which is still the largest credit union in Canada, given its current make-up and structure?