Finance Committee on May 8th, 2018

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Callaghan. Yes, there is substantial money involved here, which is very much needed.

Mr. Bala.

[Prof. Nicholas Bala]

Could I just add that I think it's very good that your committee and the government are considering these issues, which certainly have very significant economic implications. Families that are going through divorce are experiencing significant economic difficulties and place a burden on social and other services, as well as legal services. So, improving access to justice will actually have a positive effect on the economy.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

We will turn now to Mr. Albas.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair.

I want to thank all of our committee witnesses for your expertise and for sharing with us a little about some of your concerns and some of your support for various aspects of the bill.

I'm going to start with Mr. Braid. Welcome back to Ottawa today, Mr. Braid.

I just want to start with some of the concerns. You said that there has been a historical separation between banking and insurance, and you say it's important to preserve that.

When I read this bill, again, a lot of it is basically Parliament delegating the authority, in this case, I believe, to the Governor in Council, to be able to put up regulations. Whether it's a minister or the Governor in Council, what that means oftentimes is that the actual meat on the bones, so to speak, comes out in regulation.

Are you and your association concerned that there is a fair bit of delegated authority here, and specifically when it comes to the following:

(i) the carrying on of any activity referred to in subsection 410(1) that is engaged in by a financial institution, by a permitted entity as defined in subsection 449(1), if that definition were read without reference....

It continues on, and there are a number of different things they can do under this in terms of sharing information.

Is there a concern that we're leaving a bit too much to the regulations to define who these permitted entities are and what they're allowed to share?

[Peter Braid]

As I mentioned in my presentation, the separation of the pillars of insurance and banking is very much a Canadian advantage. It has served Canadians well. It serves our communities and our constituents well. That's one of the reasons why our financial services sector did so well through the downturn a few years ago.

It's clear to us in the writing of the legislation that the drafters are ensuring that the new fintech provisions will continue to be subject to and safeguarded by section 416 of the Bank Act, which is the section that we're most concerned about. That said, we want to be doubly certain—the devil is in the details, and the proof is in the pudding—that those protections are carried through to the drafting of the regulations; that the important separation of the pillars of banking and insurance is equally reflected, not only in the legislation, but also in the regulations; and that in the regulations, banks must still not be allowed to sell insurance at the point of grants and credit.

We will continue to watch the unfolding of the drafting of the regulations closely to ensure that those protections are carried all the way through.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I'm glad to hear you say that you have confidence right now. I would hope that you would keep in connection with the committee as this process goes forward because a lot of these things, as we were saying in an earlier committee meeting today, end up going to the gazette process for comment and what not. Obviously, it would not be this committee that would be able to hear those concerns. However, I do believe it's good to continue to talk about these things.

I'll now move to the Canadian Credit Union Association.

Thank you for coming and talking a little bit about the certainty that credit unions need. Obviously, there have been a number of changes. For example, in Summerland, we have banks that have moved out, and often it's the credit union that is left to try to help out, such as the First West through its Valley First in Keremeos. Oftentimes, these rural communities only have access to that one financial institution.

As you said, there are different levels of protection. Obviously, every province has a slightly different regime when it comes to caisses populaires and credit unions. Is there a bigger value in having a voluntary code nationally where some provinces may not have gone through a process of figuring out what these codes should be, in saying, “Okay we're going to have one unified standard that all credit unions have to live up to”? Is that what you're proposing?

[Athana Mentzelopoulos]

That's our goal. I would point out that in Saskatchewan they have a voluntary code now, a consumer code. They have been utilizing that code for more than a decade. They have found it very beneficial, and our work is really using Saskatchewan as a starting point. However, I agree with everything that you've said. A voluntary national code will be a great benefit.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

With regard to the use of the banking terminology, this will give credit unions the safety to be able to continue to say, “We offer online banking services.” Is that correct?

[Athana Mentzelopoulos]

I'm sitting here reflecting on your characterization of regulations, the meat on the bones. That's what we're concerned about. As it stands now, yes, the wording of the legislation would allow them to do that. We don't think there need to be regulations to satisfy the disclosure requirements, but if it does come to a regulatory approach, what we want to do is ensure that we don't end up sort of back where we started on banking terminology.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Is that because of a governance function where you have.... Obviously, the Minister of Finance has brought this forward, but the Bank Act and many of its provisions end up being enforced by OSFI, the Office of the Superintendent of Financial Institutions. Are you worried that it may reinterpret certain parts of that differently from what the government has proposed here, or what we all think the government has proposed here?

[Athana Mentzelopoulos]

I think we are worried that there could be regulation that allows for that. What they want by disclosure is to make sure that the credit union sector is appropriately communicating to the public who regulates and who provides deposit insurance. There are myriad ways that credit unions do that now. It is entirely possible to standardize that through a voluntary approach and to avoid any more prescriptive approaches that could otherwise be taken.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Okay, so the CCUA is willing to do that and to work with OSFI and other people. That's good.

I want to take this moment to thank Mr. Sorbara as well as Alexandre Boulerice for their continued support of the all-party credit union caucus. I just received a letter from the Minister of Finance today, Mr. Chair, outlining that this bill would provide the certainty that's necessary. It's nice to hear it, not just from the government, but from those who would be affected the most by it. We certainly appreciate your ongoing work to ensure that credit unions are strong and stable, and also available right across the country.

[The Chair, Liberal, Wayne Easter]

Thank you. We're always happy when you're happy with a letter from the Minister of Finance, Dan.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

It doesn't happen all the time, but today I was happy.

[The Chair, Liberal, Wayne Easter]

No. That's true. Thank you for that.

Turning then to Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

Thank you for being here with us today.

My question is addressed to Ms. Wilson and is about health care and the application of the Canada Health Act. Witnesses we heard earlier—they were officials from Health Canada and Finance Canada, if memory serves—told us that the bill authorizes the provinces to be reimbursed for funds that were withheld. However, we now hear that that was already being done. You described a scenario that demonstrated that.

Could you remind the committee about when this happened? I'm wondering why we are studying this procedure if it is already being applied. If you could describe a specific case, I would appreciate that.

[Amanda Wilson]

From our understanding, it happened recently with Quebec. I think it was in 2016. There was around $9 million withheld from the transfer. Following the introduction of legislation to disallow user fees, Quebec was reimbursed that money.

If you look at Health Canada data going back the past 15 years, there are a few other individual cases where much smaller amounts have been reimbursed. Whether or not it's something that's been informally within the purview of Health Canada—with this legislation being an attempt to formalize that and provide consistency across the board—you would have to ask Health Canada if there is a need to formalize a practice that's already happening on an informal basis. Certainly we see this as a positive step, if provinces or territories are not complying. Once they have already crossed that line, it gives them an added incentive to come back into the fold. There have been some cases where the money has already been reimbursed.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Perhaps we can get back to it. It's rather curious because the Health Canada representative—I've forgotten her name, but we can check it in the committee “blues”—seemed to say that it was impossible.

As you pointed out, it's good that we have a Canada Health Act, but it needs to be applied. However, that does not seem to be the case in all situations.

In your opinion, is this an issue that is not dealt with correctly in the current bill, but needs to be?

In all cases and situations, the law needs to be applied. Do you think there are at this time situations where it is not being enforced?

[Amanda Wilson]

Yes. I think there are two parts to that. Part of it is that this bill relates to the budget. There are probably other provisions that would relate to Health Canada on non-budgetary matters.

I think part of the challenge is that Health Canada is relying on the provinces and the territories to give them information about non-compliance. They are supposed to report the dollar amount of user fees or extra billing that has been occurring in their province. Oftentimes that information isn't as detailed perhaps as we would like. There are figures that are not available, or sometimes there are questions as to whether or not that's an adequate picture of what's happening across the provinces and territories.

Health Canada, according to existing policy, does have the ability to make its own estimates. If they don't think that's an adequate picture, they are allowed to do their own estimate and impose that. But, again, to what degree that's happening every time....

Part of it is that there is a delay. Provinces are reporting on data from the previous two years, so there's a bit of a delay. Right now we see concerns around the practices in Saskatchewan, but those won't be reported until next year. There's a bit of a lag between the practices we see on the ground and the ability of Health Canada to respond.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I thank you, that was very interesting.

I would now like to talk about credit unions and the possibility of using the term « banking ». In your opinion, is the communication regulation too strict? Did you expect a rule to be instigated forcing you to use the terms “bank” and “banking”, whereas elsewhere in your documents, it states that you are not a bank? Did you expect that? Is that acceptable in your eyes?

[Athana Mentzelopoulos]

First, it's important to say that we actually value the difference between credit unions and banks. We have not been asking to use “bank” as a proper noun. In general, the provisions in the legislation are very acceptable to us. We are happy, and I would underline that we would not have achieved what we have without the support of parliamentarians, especially in the all-party caucus.

Marc-André, do you want to add anything to that?

[Marc-André Pigeon, Director, Financial Sector Policy, Canadian Credit Union Association]

Not necessarily, but I'd like to point out that we mention what we are in several places.

When you become a member of a credit union, you purchase a share. That is already an indication that you are not dealing with a bank. You provide $10 or $25, which does not happen at a bank.

We already have ways of letting people know that we are not banks. We simply want to make sure that what will be in our code will respect the measures that are in place.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

If I understood the proposed regulations, whenever you use the word “banking” in a document or prospectus, you will have to specify in the same document that you are not a bank, even if the word “banking” is used.

[Marc-André Pigeon]

That will come later. It will be in the regulations that will be brought in later. We would like a more voluntary approach. We would prefer to take voluntary measures ourselves rather than having rules imposed on us in the future. In the act as such, there are no indications as to communication methods.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

So, you would prefer to put your own communication rules in place in order to inform clients properly.