Finance Committee on May 28th, 2018

[Lucie Tedesco]

If I may, Mr. Chair, I just want to comment on something Mr. Albas said when he talked about the control .

When you talk about the controls in call centres where you know they're perhaps more rigorous than in the branch, that's exactly what our review found. What we will be doing is working with the banks. One of the findings was that their controls need to be strengthened to mitigate that risk. Our employees listened to over 26 hours of calls in the call centres. You said they're very much on script. Yet sometimes they go off script, and you wouldn't believe that they go off script and some of the conversations that happen with consumers. But we did point out the heightened risk of not having the proper controls in place, whether it's with mobile mortgage specialists who aren't really attached to anything, or branch offices where the managers are essentially the trainer, the compliance officer, and the sales manager. They need to buttress their controls in those environments absolutely.

[The Chair, Liberal, Wayne Easter]

The last questioner will be Mr. Dusseault.

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

Thank you, Mr. Chair.

To start, I'd like to learn more about your organization. Where does your annual budget come from?

[Lucie Tedesco]

Our expenses are paid through assessments of the financial institutions.

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

So it's the financial institutions that cover your annual operating expenses.

[Lucie Tedesco]

Yes. They also do it for the Office of the Superintendent of Financial Institutions, OSFI.

It's essentially to shift the burden of paying for financial sector regulations to those who are being regulated. The fact that assessments are paid by the financial institutions is an international best practice as well.

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

Don't you think that, to have public confidence, it would be important to avoid any appearance of conflict of interest between your organization and financial institutions? Don't you see as a problem the fact that you are being financed by the banks and that, in return, you are responsible for asking them to respect the rules? Don't you see any problem with that?

[Richard Bilodeau]

I can say this: the banks have no choice. The act requires them to pay these amounts, which are established according to a certain calculation, detailed in the regulations. No matter what decision or decisions the commissioner may make in enforcement cases, financial institutions must still pay. They don't have time to say that it has no appeal to them anymore: they must pay.

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

Okay.

Another issue that has been raised is the fact that your report doesn't really use the word “recommendation”. We don't see the word “improvement” anymore, at least in French. We are talking about findings, conclusions and improvements. With regard to these areas for improvement—I count six on the last page of the report—who will be responsible for follow-up? Will there be a report on whether there has been progress? It is all very well to propose six improvements, but who will ensure their implementation if it is not the government or the Committee?

[Lucie Tedesco]

In fact, we will ensure that all recommendations are implemented, both the general recommendations and those specific to each financial institution. Our follow-up with financial institutions will therefore consist of a bulletin, if you wish, that we will give to them after our review. Then we will have to ensure that they implement the recommendations.

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

What will happen if one or more banks don't implement these improvements? Will we find out?

[Lucie Tedesco]

We haven't decided what we'll do. However, we will certainly advise our minister and ensure that this is included in our annual report.

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

I was wondering if consumers should be made aware when, for instance, the employee in front of them has a bonus or a performance bonus. You answered a little earlier. If it's a policy, can you generally say that it would be good for consumers to know more? If they can't get that information, it seems to me it would be nice if the employee at least disclosed to them that the employee is getting a bonus for what he or she is selling them.

[Lucie Tedesco]

We are all aiming for transparency, and I know that, for our part, we are trying to be more transparent. In my opinion, transparency in the market is always a good thing.

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

To do that would require a legislative change.

[Lucie Tedesco]

It has to be more political, yes.

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

This may require some additional disclosure when a product is sold to the customer. If you can't decide, the Committee can look into it.

That's good. Thank you.

[The Chair, Liberal, Wayne Easter]

With that, is there anything that you want to add, Mr. Bilodeau, or Ms. Tedesco?

Okay, all in, all done. Thank you very much for appearing and for your report, first of all, and for the discussion today. The committee will determine where it goes from here on this particular issue.

The meeting is adjourned.