Evidence of meeting #58 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was rules.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Trevor McGowan  Acting Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
James Greene  Director, Business Income Tax Division, Tax Policy Branch, Department of Finance
Pierre LeBlanc  Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
Pierre Mercille  Senior Legislative Chief, Sales Tax Division, Tax Policy Branch, Department of Finance
Annette Ryan  Director General, Employment Insurance Policy, Department of Employment and Social Development
Clerk of the Committee  Mr. Philippe Grenier-Michaud
Nathalie Martel  Director, Old Age Security Policy, Department of Employment and Social Development
Jessica Kerr  Director General, Canada Education Savings Program, Department of Employment and Social Development
Glenn Campbell  Director, Financial Institutions, Financial Sector Policy Branch, Department of Finance
Eleanor Ryan  Senior Chief, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Jean-François Girard  Chief, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
James van Raalte  Director General, Office for Disability Issues, Department of Human Resources and Skills Development
Nicolas Moreau  Director, Funds Management Division, Financial Sector Policy Branch, Department of Finance

5:40 p.m.

Director, Old Age Security Policy, Department of Employment and Social Development

Nathalie Martel

Absolutely.

5:40 p.m.

Liberal

The Chair Liberal Wayne Easter

Are there any further questions?

Let's turn to division 3, the Canadian Education Savings Act.

Ms. Kerr and Ms. Nagy, go ahead.

5:40 p.m.

Jessica Kerr Director General, Canada Education Savings Program, Department of Employment and Social Development

Canadians use RESPs, registered education savings plans, to save for the post-secondary education of their children. The RESP savings grow tax-free until the child is enrolled in a post-secondary education institution and can pay for part-time or full-time studies.

The Government of Canada administers two education savings incentives linked to RESPs.

There is the Canada education savings grant, which consists of a 20% grant on the first $2,500 in annual contributions and an additional grant amount of 10% or 20% for low- and middle-income families.

Then we have the Canada learning bond, which is available for children in low-income families who were born after 2004. It's a maximum of $2,000, with no personal contributions required.

Until June 2016, the CLB was payable for a beneficiary who receives the national child benefit supplement, the NCBS. The NCBS was based in part on the number of qualified children in a family and the adjusted family income. With the introduction of the CCB, the Canada child benefit, which replaced, among other benefits, the NCBS, an amendment to the eligibility requirement for the CLB is required.

The new eligibility requirements are very similar to those of the NCBS. More specifically, the new eligibility requirement is based also on the number of children in a qualified family as well as on the adjusted family income.

In support of this change, the Canada Education Savings Act is being amended to include the replacement of the term “child tax benefit” with “Canada child benefit”.

5:40 p.m.

Liberal

The Chair Liberal Wayne Easter

You're going a little fast. Can you slow down a wee bit?

5:40 p.m.

Director General, Canada Education Savings Program, Department of Employment and Social Development

Jessica Kerr

I could slow down, definitely.

The changes that are being proposed are to amend the Canada Education Savings Act to replace the term “child tax benefit” with “Canada child benefit”, as well as to change the definition of the primary caregiver, as well as to change the definition of national child benefit supplement and to incorporate the formula that was initially in the Income Tax Act for the NCBS into this other act. There is also a transitional measure for this benefit year until the formula comes into effect in 2017.

5:40 p.m.

Liberal

The Chair Liberal Wayne Easter

That is the explanation. Are there any questions?

Before we go to you, Robert, let me say that I understand those dealing with division 5 have a problem of time. If we get through this fairly quickly, we'll go to you next.

Go ahead, Mr. Ouellette.

5:40 p.m.

Liberal

Robert-Falcon Ouellette Liberal Winnipeg Centre, MB

I was just wondering how many families will be affected by the change.

5:40 p.m.

Director General, Canada Education Savings Program, Department of Employment and Social Development

Jessica Kerr

It's essentially exactly the status quo, as we have it now. There should not be any significant changes at all.

5:40 p.m.

Liberal

Robert-Falcon Ouellette Liberal Winnipeg Centre, MB

Thank you very much.

5:40 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you.

We'll go to division 5.

Mr. Campbell, Ms. Ryan, and Mr. Girard, if you could, give us the explanation, and then we'll see where we go.

November 17th, 2016 / 5:40 p.m.

Glenn Campbell Director, Financial Institutions, Financial Sector Policy Branch, Department of Finance

Thank you, Mr. Chair.

This is a large part of the act, so I had a rather lengthy statement. I will cut it down in the interests of time.

I'm going to cover part 4, division 5 of Bill C-29, which includes proposed amendments to the Bank Act with respect to the federal financial consumer protection framework for banking, covering clauses 117 to 135 of the bill, on pages 179 to 226.

The proposed amendments modernize and enhance the consumer provisions of the Bank Act. These amendments fall into four main categories: first, consolidating and modernizing the framework under a single part or chapter of the act; second, introducing guiding principles to help banks and consumers interpret the legislation; third, implementing targeted enhancements to strengthen specific consumer provisions; and fourth and finally, affirming exclusive federal jurisdiction over consumer protection rules for banks and banking.

I will now quickly cover each of the four categories of the amendments.

The first category is consolidating and modernizing the act. The existing provisions are currently spread across the Bank Act and two dozen regulations. Existing legislative and regulatory requirements are consolidated into a new part of the act. The intent is to combine provisions together, make the rules easier to understand, and demonstrate the comprehensive nature of the framework.

This will also allow for more consistent treatment across various banking products and services. Modernizing the framework would also allow the provisions to be more flexible and better able to accommodate future changes in the sector, such as the shift to a digital economy. For example, the rules would cover disclosure through paper as well as verbal, electronic, and mobile channels to keep up with changing industry and consumer preferences.

The second category is the introduction of new guiding principles. Consumers and stakeholders have long signalled the need to make the provisions easier to follow and to communicate. The five code-like principles align or map to each of the five elements of the legislation as structured. They are as follows.

First, basic banking services should be accessible. Second, disclosure should enable an institution's customers and the public to make informed financial decisions. Third, a bank's customers and the public should be treated fairly. Fourth, complaints processes should be impartial, transparent, and responsive. Fifth, a bank should act responsibly, considering its customers and the public as well as the efficiency of its business operations.

The third category consists of specific amendments to strengthen consumer protection in banking. These elements are categorized along the lines of access, business practices, disclosure, complaints, and accountability. I will cover only the new specific revisions, in the interests of time.

The new enhancements strengthen the rules by allowing consumers to choose from a more flexible list of personal identification documents regarding opening of accounts. Two pieces of identification will be required to open an account or to cash a government cheque. The new provisions will make it easier for Canadians to open basic deposit accounts, cash cheques, and use more available identification documents.

There are existing rules around business practices. There are several that I won't go into at length, but the new enhancements strengthen these by, for example, expanding the provision to capture undue pressure; clearly prohibiting banks from applying such pressure or coercing a person for any purpose; specifying that advertisements must be accurate, clear, and not misleading; and adding new cancellation periods for a wider range of products and services.

For example, cancellation periods would now apply to all deposits in savings accounts and, with a few exceptions, credit products. By and large, if consumers obtained a product in person or through a website, they would have three business days to cancel free of charge. For products obtained via telephone or mail, that cancellation period is 14 business days now.

Regarding disclosure, the new enhancements make disclosure more flexible and more consistent across a range of products and services. For example, the use of summary information boxes, which consumers have found useful, will be broadened across more bank products and services, such as deposit and savings accounts. Summary information boxes highlight key information about a product for customers in language they can understand to help them make choices that are right for them.

Regarding complaints handling, the existing consumer provisions set out a dedicated complaints handling system that is timely, efficient, and free for customers. The new enhancements would strengthen this by requiring banks and external complaints bodies to report on the nature of consumer complaints.

Enhanced reporting on complaints would provide greater transparency to the public and policy makers on consumers' concerns, becoming more important as this complex industry evolves. In turn, banks would have an even stronger incentive to focus and address those areas that would generate complaints. Banks and external complaint bodies now have to report on the number of complaints, and in the future they will have to expand that to deal with the nature of complaints as well.

Regarding corporate governance and accountability, new enhancements are proposed in these areas. A board of directors would be required to oversee a bank's operational procedures, put in place by management, to comply with all consumer provisions of the act. Banks would also have to report on what they do to address the challenges faced by vulnerable Canadians: consumers facing accessibility, linguistic, or literacy challenges.

Fourth and finally, Mr. Chair, is the category of amendments. In the affirmation, the Bank Act sets out a comprehensive and exclusive regime in relation to banks' dealings with customers and the public. These amendments are proposed to clarify the scope of federal jurisdiction. Amendments to the preamble to the act are to ensure consistency with the new part, a new purpose clause states the objective of exclusive federal regulation, and a new paramountcy clause expresses the intent that the new part be paramount to provincial consumer protection laws and regulations.

Together these proposed amendments will provide that the Bank Act is the exclusive set of rules that protects consumers when they deal with their banks. This is intended for consumers to have clear, comprehensive, and uniform protections when dealing with their banks, no matter where they live, work, or travel in the country.

An exclusive federal regime would be intended to avoid the overlap of federal and provincial laws, which can be confusing and not in the consumer's interest. It would create clear rules that Canadians can follow and to which the government can hold banks accountable.

I'm done.

5:50 p.m.

Liberal

The Chair Liberal Wayne Easter

Oh, you're done? Okay. The bells are ringing.

It is a 30-minute bell. We need unanimous consent if you want to stay for an additional 15 minutes to question this group.

Are we okay with that?

5:50 p.m.

Some hon. members

Agreed.

5:50 p.m.

Liberal

The Chair Liberal Wayne Easter

Okay, we have unanimous consent.

Who wants to go first?

Mr. Sorbara is first, and then Mr. Ouellette.

5:50 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

I'll try to make this as quick as possible.

How will the Financial Consumer Agency of Canada interact with other existing regulatory bodies that we have in Canada, including OSFI?

5:50 p.m.

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

Glenn Campbell

The Financial Consumer Agency of Canada is the dedicated federal regulator charged with ensuring compliance with all of the consumer provisions that are included, both in the existing provisions of the act and in the new provisions. However, the FCAC works closely with the prudential regulator—OSFI, the Office of the Superintendent of Financial Institutions—and they work collaboratively on elements that may overlap.

5:50 p.m.

Liberal

The Chair Liberal Wayne Easter

Is that it?

5:50 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

I'm done.

5:50 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Ouellette is next.

5:50 p.m.

Liberal

Robert-Falcon Ouellette Liberal Winnipeg Centre, MB

Thank you very much, Mr. Chair.

Could you tell me a little bit about the no-cost or low-cost accounts? There was already a 2014 commitment by the banks to enhance those. Why would you put this regulation in there, if they haven't done it?

5:50 p.m.

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

Glenn Campbell

Actually, it's a very good question. The provision was in regulation; now it is being put into legislation, just to confirm it.

Perhaps Ms. Ryan wants to provide details.

5:50 p.m.

Eleanor Ryan Senior Chief, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance

Yes, indeed.

As you said, the banks did make a commitment to offer both low-cost and no-cost accounts. Putting it in the legislation just confirms that this is an important requirement. The government could, if it should wish in future, write regulations actually putting into regulations those low-cost and no-cost accounts. Right now it's simply an affirmation of the importance of that objective, and secondly a regulation-making authority.

5:50 p.m.

Liberal

Robert-Falcon Ouellette Liberal Winnipeg Centre, MB

I have one very short final question.

I'm a little concerned about the expiry dates on prepaid or preloaded non-promotional products, or actually about the imposing of maintenance fees on prepaid or preloaded non-promotional products unless the product is reloadable—meaning that people can still charge a maintenance fee. On almost all the cards—you're talking, for instance, about Toys “R” Us cards or things like that—they'll still be able to charge a fee every year of $5, and eventually kids don't have their birthday money anymore.

5:50 p.m.

Senior Chief, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance

Eleanor Ryan

Perhaps I could address that.

First of all, this would apply only to prepaid cards that are offered by institutions, so in the case of Toys “R” Us those are cards that are covered by provincial authority. Nevertheless, the point you're making is equally valid still.

The legislation ensures that a prepaid card would not be subject to maintenance fees during the first year. Most consumers buy prepaid cards to use them right away, or perhaps over a period of months, and they would be protected by this bill by not having maintenance fees during the first year.

Second, going back to your point on expiry, it ensures the funds in prepaid cards issued by institutions do not expire.

5:50 p.m.

Liberal

Robert-Falcon Ouellette Liberal Winnipeg Centre, MB

My quick problem with that is you always forget you have these cards. They end up in your wallet for a year or two years, and then you think you would actually like to use it, but if you go there and there are all these maintenance fees, you might not have very much money left on the card, so I would encourage the department to rethink that regulation in the long term.