Finance Committee on Nov. 28th, 2016

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

I'm going there, but it's just to explain where we stand.

We will therefore be voting against the clause strictly speaking. With respect to the amendment, the issue is whether the clause, as it is currently worded, satisfies the Supreme Court's decision.

We have three experts in front of us confirming that it satisfies the Supreme Court's decision on all counts. Yet one of our colleagues has reservations, and on the surface, they appear to be valid and relevant. Nevertheless, according to the experts, the clause is fine and the proposed amendment is not necessary because the current language of the clause satisfies the Supreme Court's decision.

It will never be possible to prevent a lawyer from mounting a legal challenge; nor will it ever be possible to prevent a province from doing so. That's what you're telling us. On a broader level, we should recognize that, while the experts who drafted the bill confirm that the clause in question satisfies the requirements set out by the Supreme Court, a legal challenge is still possible.

[The Chair, Liberal, Wayne Easter]

Thank you for that comment.

Mr. Caron.

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

Thank you.

Once again, welcome to the witnesses. I always enjoy discussing the Bank Act with you.

I have just one question, provided your answer doesn't give rise to another. You said, and rightfully so, that you weren't a lawyer but that you could speak to policy issues.

I'd like to know whether the Department of Justice was consulted and whether it issued an opinion on the constitutionality of this bill with due regard to the division of powers.

If so, I realize that you can't tell me what that opinion was. At the very least, though, I'd like to know whether an opinion was provided.

[Jean-François Girard, Senior Project Leader, Financial Sector Policy Branch, Department of Finance]

Yes. Generally speaking, all legislation is drafted by the people at the Department of Justice. All bills are subject to an approval and verification process, through which the Department of Justice has an opportunity to review every clause in order to determine whether it raises any questions.

That means that a verification process is carried out. That process includes examining whether Parliament has the authority to legislate on the matter in question.

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

I'm not sure whether that answers my question. For instance, when certain controversial measures are drafted, they may be subjected to a test to ensure respect for the Canadian Charter of Rights and Freedoms. Through the test, it's possible to determine whether the legislation is compatible with or satisfies the charter.

I would think a similar principle applies with respect to the Canadian Constitution. Am I wrong?

[Jean-François Girard]

I'm not sure I understand your question.

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

I can be more specific.

It's a matter of jurisdiction. Jurisdictional powers are enshrined in the Canadian Constitution, which spells out the areas of activity for which each level of government is responsible.

Here we have one element that appears to be controversial from a jurisdictional standpoint. I would think that, if the Department of Justice subjected proposed legislation to a charter compliance test, as part of the drafting process, it would also have a test for constitutional compliance.

[Jean-François Girard]

There again, not being a constitutional expert, I'm reluctant to comment. That said, the Constitution expressly lays out banks and banking as an area of federal jurisdiction.

It is that test, then, that is administered. Perhaps in other cases, there is more ambiguity. Perhaps the courts have developed different tests. In this case, though, Parliament's constitutional authority is clear.

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

However, consumer protection has not necessarily been identified as falling exclusively within the federal domain.

The other thing to keep in mind is that that very reasoning led to the Supreme Court challenge involving the Investment Industry Regulatory Organization of Canada. There, too, a dispute arose over what some provinces wanted control of, specifically, Quebec and Alberta. They considered the matter to be their responsibility, but the federal government was of the view that it could have some involvement, and that's what it argued before the Supreme Court.

Ultimately, the Supreme Court ruled, siding, on the one hand, with Ottawa with respect to systemic risk monitoring and, on the other hand, with the provinces regarding everything else. In this case, we are dealing with banks, which are indeed under federal jurisdiction, and consumer protection, which is under provincial jurisdiction. A dispute could therefore arise.

I think I agree with Mr. Deltell. A representative of the Quebec government or someone else will no doubt raise the issue.

That's why I wanted to know whether the Department of Justice had done at least one analysis from that standpoint before including the measure in Bill C-29. I realize that you can't tell me what the Department of Justice's opinion was.

[Glenn Campbell]

We can safely assume that the Department of Justice, in its service to the Department of Finance in helping to draft this legislation for the government, has exhausted all of the necessary reviews before putting this legislation before Parliament. We're here to refer to the specific provisions and the policy intent—and we can talk about that—but I think we can safely assume that vetting has been done. We can't speak to all the processes, though.

With respect to the paramountcy provision stipulating that the rules here have greater weight than those of the province in this narrow area, let's try to be clear: this is the regulation of banking, and the regulation of banking as expressed through these provisions that apply to the consumer and dealings with the public. Often, in most provinces, they have laws of general application that apply to consumer issues, and in this case there is a comprehensive, dedicated set of rules that apply holistically to banks in their dealings with their customers.

Many other areas outside the scope of what is covered in this part still apply, and there's no interference in an individual's right to seek redress and remedies over breaches of contract or other issues. That remains intact. This is about the narrow provisions that apply to this particular part of the regulation of banks and banking.

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Caron.

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

Thank you.

Mr. Campbell, I'm not sure I agree with you on this matter. I think it's something we may find out for ourselves in the future.

My second question concerns the Bank Act. We know at least one caisse populaire is now federally chartered.

Would the act also apply to future federally chartered caisses populaires or credit unions? I assume the act doesn't apply to provincially regulated caisses populaires or credit unions.

[Glenn Campbell]

I had answered this question earlier, but to be clear, this applies to banks and any current or future federally chartered credit unions.

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

Thank you.

Therefore, in the same province, there could be federally regulated caisses populaires or credit unions governed by a certain set of consumer regulations, and others governed by another set of regulations. Couldn't this give rise to conflicts?

[Glenn Campbell]

That's a very good question. We went through this test recently with the caisse populaire in New Brunswick, which is now UNI Coopération financière. Similar to other federal provisions, for example, deposit insurance, they've had to go to their customers, their members, and stipulate that the regime is changing and that the rules under which they are operating are changing for deposit insurance, including consumer protection.

The FCAC, the federal regulator, has worked with that entity to ensure they had all the documentation necessary to inform those members and those customers and clients about the differences that may exist between the federal regime and the provincial regime in New Brunswick. So the onus is on that entity to make sure it clearly explains to its members where there may be changes or differences in the rules that may apply to them.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

Mr. Ouellette.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Thank you, Mr. Chair.

My question is more general. I want to properly understand the subject. For example, if a consumer files a complaint against a bank in Quebec, then compares the federal regulations to the provincial regulations and finds that the provincial regulations are more beneficial to him, would the rules apply?

[Glenn Campbell]

In this case, if they're a resident of that province and a customer of that particular institution, then under this regime the federal rules would apply and they would approach that institution...and everything that follows suit. If they just had a general complaint about something, they could go to the federal regulator and lodge a complaint. There are many ways in which they could still register a complaint if they had an issue.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

I was wondering if you knew how the two laws differed in relation to banks.

[Glenn Campbell]

There can be extensive differences between the provincial regimes. I'm not an expert in all provincial regimes, given the different provinces that—

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

I don't assume that you are an expert in everything, but I was wondering about it. In my reading of the federal law, I think it is fairly comprehensive for an ombudsman. The ombudsmen do have a greater level of independence. They're not completely chosen by the banks. They can issue rulings in order to force the banks.... Obviously, the banks would like to see some rulings in their favour, but the ombudsmen are also guided by a code of ethics and conduct, and it's their job to look out.

Ombudsmen work for the federal government. They're hired and appointed by, I believe, the Privy Council, but they still criticize us, and that's good.

In a general way, for instance, I remember living in Quebec, where if at the supermarket you were overcharged by accident.... If the ticket price said $12.99 and you got to the cashier and they scanned it as $15, you would actually get the $12.99 minus $10, so really, the object would only cost you $2.99. It was a very advantageous type of consumer protection law.

I was wondering what the differences were in this instance, because I don't know myself. It's just a question of curiosity. There's no right or wrong answer, by the way.

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

No. Understood.

To go back to the objective, first of all, the bill is intended first to have a very clear statement of intent by the federal government about having high standards to protect consumers. Second, it contains additional high standards that are being set in the bill. Part of that process is actually enhancing the standard for complaint handling bodies.

What we do with a complaint handling body is that they actually apply to the FCAC, the federal consumer regulator. They apply and submit applications according to expectations that this consumer regulator has set, and it is the consumer regulator that actually assesses whether they've met the standard. Indeed, after the assessment, they follow up as well, in order to continue to maintain that standing to be a complaint handling body.

As an example of where the standards are constantly reviewed by the FCAC to ensure they are being met, I'm using the complaint handling example. It isn't just that they are set, but that they are actually followed up on as well. The FCAC is very active in their supervision of banks to ensure they're meeting the standards.

In your example, sure, you could do that. You could go back and seek redress, if you wish, from the bank. You could say to the bank that you were overcharged, and you could ask to use the internal process. You could go to a bank and you could use their internal ombudsman process and say that they overcharged you.

In regard to that, I looked at some stats today in the case of one bank in particular. For example, 98% of the cases that were brought to the attention of that bank's ombudsman were resolved to the satisfaction of the customer. That compares to the example you gave, which is that 98% of customers get satisfaction right away.

In addition, the FCAC is sitting on top of that and watching to make sure that consumers are protected. Every consumer has a helping hand here. They don't have to do this by themselves. They actually have a federal regulator that is making sure the rules are protecting them.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Is there also a potential that these two laws could be complementary?

[Glenn Campbell]

It's very hard to say that they would be complementary when you have the potential for multiple jurisdictions. It's incongruous to have a national banking standard where banks and related entities design all their products and services for a national scope and then, in many respects, meet varying provincial requirements.

In many cases, going back to your initial question, in many provinces there are no rules that apply to banks. They haven't been doing so. They've been referring them to the federal regulator. They refer them to the Government of Canada to be addressed, so it's not even easy to answer how they would apply. Other provinces, when there's a complaint or an issue, try to have another provincial rule potentially apply to the bank where it may not be appropriate.