Evidence of meeting #184 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was proposed.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Manuel Dussault  Senior Director, Framework Policy, Financial Sector Policy Branch, Department of Finance
Justin Brown  Director, Financial Stability, Financial Sector Policy Branch, Department of Finance
Peter Fragiskatos  London North Centre, Lib.
Yuki Bourdeau  Senior Advisor, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
Eleanor Ryan  Director General, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Jean-François Girard  Director, Consumer Affairs, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Brigitte Goulard  Deputy Commissionner, Financial Consumer Agency of Canada
Kim Rudd  Northumberland—Peterborough South, Lib.
Mark Schaan  Director General, Marketplace Framework Policy Branch, Innovation, Science and Economic Development Canada
Ian Wright  Director, Financial Crimes Governance and Operations, Department of Finance
Darryl C. Patterson  Director, Corporate, Insolvency and Competition Policy Directorate, Marketplace Framework Policy Branch, Department of Industry
Martin Simard  Director, Copyright and Trademark Policy, Marketplace Framework Policy Branch, Department of Industry
Andrea Flewelling  Senior Policy Advisor, Marketplace Framework Policy Branch, Department of Industry
Patrick Blanar  Senior Policy Analyst, Patent Policy Directorate, Department of Industry
Dale MacMillan  Vice-President, Corporate Services and Chief Financial Officer, National Research Council of Canada
Christopher Johnstone  Director General, National Programs and Business Services, National Research Council of Canada
Eric Grant  Director, Community Lands Development, Lands and Environmental Management, Lands and Economic Development, Department of Indian Affairs and Northern Development
Leane Walsh  Director, Fiscal Policy and Investment Readiness, Economic Policy Development, Lands and Economic Development, Department of Indian Affairs and Northern Development
Susan Waters  Director General, Lands and Environmental Management Branch, Lands and Economic Development, Department of Indian Affairs and Northern Development
Michèle Govier  Senior Director, Trade Rules, International Trade and Finance Branch, Department of Finance
Katharine Funtek  Executive Director, Trade Controls Policy, Department of Foreign Affairs, Trade and Development
Bev Shipley  Lambton—Kent—Middlesex, CPC
Nicole Giles  Director, International Trade and Finance, Assistant Deputy Minister's Office, Department of Finance
Deirdre Kent  Director General, International Assistance Policy, Department of Foreign Affairs, Trade and Development
Mark Lusignan  Director General, Grants and contributions Management, Department of Foreign Affairs and International Trade (International Trade)
Michelle Kaminski  Director, Office of Innovative Finance, Grants and Contributions Management, Department of Foreign Affairs, Trade and Development
Chantal Larocque  Deputy Director, Development Finance, Grants and Contributions Financial Policy, Foreign Affairs Canada
Danielle Bélanger  Director, Gender-Based Analysis Plus and Strategic Policy, Policy and External Relations Directorate, Status of Women Canada
Alison McDermott  General Director, Economic and Fiscal Policy Branch, Department of Finance
Derek Armstrong  Executive Director, Results Division, Expenditure Management Sector, Treasury Board Secretariat
Lori Straznicky  Executive Director, Pay Equity Task Team, Strategic Policy, Analysis and Workplace Information, Labour Program, Department of Employment and Social Development
Don Graham  Senior Advisor to the Assistant Deputy Minister, Compensation and Labour Relations Sector, Treasury Board Secretariat
Bruce Kennedy  Manager, Pay Equity Task Team, Labour Program, Department of Employment and Social Development
Richard Stuart  Executive Director, Expenditure Analysis and Compensation Planning, Expenditure Management Sector, Treasury Board Secretariat
Colin Spencer James  Senior Director, Social Development Policy, Strategic and Service Policy Branch, Department of Employment and Social Development
Andrew Brown  Director General, Employment Insurance Policy Directorate, Skills and Employment Branch, Department of Employment and Social Development
Barbara Moran  Director General, Strategic Policy, Analysis and Workplace, Labour Program, Department of Employment and Social Development
Rutha Astravas  Director, Employment Insurance Policy, Special Benefits Policy, Department of Employment and Social Development
Charles Philippe Rochon  Senior Policy Analyst, Labour Standards and Wage Earner Protection Program, Workplace Directorate, Department of Employment and Social Development

4:25 p.m.

Director, Consumer Affairs, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance

Jean-François Girard

Currently there's no requirement on whistle-blowing in the Bank Act. The legislation is silent about it. The government decided to propose a specific protection on the one hand, and on the other hand ensure the banks have programs that cover the entirety of their operations.

Most banks that are publicly traded companies have to have a whistle-blower program under provincial securities law. But the scope of it with regard to issues such as audit doesn't extend to the entirety of the activities of the bank. By having this provision it extends it to all the retail activities in particular that started it.

I think your other question relates to external complaints bodies. Right now when the external complaints bodies hear a complaint, they make a recommendation to the parties involved, but there's no requirement to make public any portion of that recommendation. It has been brought to our attention that this was not providing sufficient transparency so that people could see the facts that were taken into account. The plan under these provisions would be that they would publish a summary of the recommendation and protect the person's identity, but the circumstances of what was taken into account would be described and would be available to anyone to look at.

4:25 p.m.

London North Centre, Lib.

Peter Fragiskatos

Thank you very much.

One last question on the requirement for banks to provide an electronic alert to help consumers manage fees. How would that work exactly in as basic and concise an answer as you can provide?

4:25 p.m.

Director, Consumer Affairs, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance

Jean-François Girard

As a customer, you would have the option of setting these thresholds. If you have a deposit account, and you want to be notified when your balance goes to $500 or $200 or $50, you would be able to set that. Once the threshold is reached, you would get a notice by the electronic means of your choice. That would tell you the threshold has been met or exceeded, that you may incur fees and the steps you could take to avoid such fees going forward.

4:25 p.m.

London North Centre, Lib.

Peter Fragiskatos

That's very positive. Thank you very much.

4:25 p.m.

Liberal

The Chair Liberal Wayne Easter

We'll have Mr. Sorbara, and then Mr. Kmiec.

4:30 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Thank you, Mr. Chair.

We're seeing a lot of questions in this section from my colleagues. We did a study on bank sales practices in the early part of the year, and then followed up. The FCAC came out with their report. I think it's great that we're seeing a number of what I think are good recommendations for banks to follow sound banking practices. It's great to have that in the BIA legislation.

I have a couple of clarification questions.

The penalties of up to $10 million per violation for banks that commit serious breaches of legal obligations, it says now the banks will be publicly identified. Is that a change in the policy from what was before?

4:30 p.m.

Director General, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance

Eleanor Ryan

Yes. The current legislation provides the commissioner with discretion to name. This proposed legislation would require the naming if there is a violation and a penalty.

4:30 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Thank you.

In reference to something a little more technical, this is proposed subsection 627.1(1) on cancellation periods for a product. Sometimes you hear from consumers that they'll enter into a product or service or sign an agreement for a product or service and then not have any recourse if they didn't understand or feel they've been misled. Can you clarify that in terms of, first, the recourse the consumer has, and second. the obligations of the institution?

4:30 p.m.

Director General, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance

Eleanor Ryan

Under the rights of the consumer, the consumer would be able to cancel the agreement. We set out two circumstances in which that could occur. If the agreement is done over the phone or by mail, the consumer would have 14 days to cancel. If the contract was signed in person, the consumer would have three days.

The consumer has to notify—advise—the institution, as indicated here, in writing and without delay. Then the institution itself has to notify the consumer and without delay refund to the person any amount that might be outstanding. This might occur, for instance, when the customer has paid an amount and there would be a partial refund because the product is not being fully used.

4:30 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Is this something new?

4:30 p.m.

Director General, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance

Eleanor Ryan

Yes, it is.

4:30 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Giving enhanced resources to FCAC falls within this clause as well, doesn't it?

4:30 p.m.

Director General, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance

Eleanor Ryan

It is not set out in the legislation.

Perhaps I could ask Ms. Goulard to cover this, as it was covered in their business plan.

4:30 p.m.

Deputy Commissionner, Financial Consumer Agency of Canada

Brigitte Goulard

Yes, that's correct. In the business plan for this year that we submitted to the Department of Finance, we provided a plan to increase our staffing by 60% over the next three fiscal years. The vast majority of that staffing increase will be in our supervision and enforcement team. There are obviously some additional staffing requirements in financial literacy and consumer education, because we will need more education to advise consumers of their rights under the legislation.

We are already in the process of increasing our staff and hope to have all of them on board over the next three years.

4:30 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

That is wonderful to hear, because I think when we as a committee undertook the study of bank sales practices, one concern that was raised, about which we as a committee had questions at the time, was whether the FCAC had sufficient resources, first, to continue doing what they were mandated to do, and second, to conduct an investigation thoroughly into bank sales practices. My understanding was that the financial institutions in Canada had provided a vast array of documentation to FCAC on that front.

This is a section I've read a few times. There's a lot of technical stuff, so I don't want to get into the weeds and will thus take a step back. Concerning the obligation for each of the financial institutions to report yearly what I will call an audit of their sales practices or obligations to customers, will there be a format showing what they'll have to submit? Will there be a document developed from you folks? How will that work?

4:35 p.m.

Director, Consumer Affairs, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance

Jean-François Girard

Do you have the section number for this?

4:35 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

I'm speaking of designating a committee, a board of directors to oversee banks' obligations towards their customers.

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

You're on the other one.

4:35 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

I think I've become lost in the numbers, to be honest with you. I usually don't get lost in the numbers.

4:35 p.m.

Deputy Commissionner, Financial Consumer Agency of Canada

Brigitte Goulard

I may be able to help with that question.

Each of the banks has a different way of operating. They each have different committees. What we are looking for is the right outcome: making sure that the boards of directors of the banks receive the necessary information and that we receive the information. It's not going to be a standard format whereby paragraph 1 says this and paragraph 2 says that, but we will advise the banks, and as a result of our sales review have already advised them, of the type of improvement we hope to see in their governance, including the type of report they need to provide to their boards and as a result provide to us.

It's not, then, a standard format, but the outcome will be very similar for all the banks to ensure that they meet their obligations when dealing with their staff and their customers.

4:35 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

May I ask one last question, on proposed section 627.31, renewal of mortgages?

Can you, in layman's terms, explain that proposed section, please?

4:35 p.m.

Director General, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance

Eleanor Ryan

This is simply to provide the customer with certainty that when they have signed a mortgage arrangement and there is a period of time where they plan to do a renewal, the bank cannot unilaterally change any of the conditions until the consumer has renewed it and agreed to that renewal.

4:35 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Is that a change in the existing language?

4:35 p.m.

Director General, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance

Eleanor Ryan

It's in the current legislation.

4:35 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Thank you.