Evidence of meeting #62 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was clause.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Trevor McGowan  Acting Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
Glenn Campbell  Director, Financial Institutions, Financial Sector Policy Branch, Department of Finance
Jean-François Girard  Senior Project Leader, Financial Sector Policy Branch, Department of Finance
Eleanor Ryan  Senior Chief, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Clerk of the Committee  Ms. Suzie Cadieux

5:25 p.m.

Liberal

The Chair Liberal Wayne Easter

We have a question from Mr. MacKinnon, and then the officials can provide their opinion to you as well.

Mr. MacKinnon.

5:25 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

Are we at the discussion stage or the clarification stage?

5:25 p.m.

Liberal

The Chair Liberal Wayne Easter

Yes, we are.

5:25 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

Both?

5:25 p.m.

Liberal

The Chair Liberal Wayne Easter

No, the amendment is on the floor, but you had a question for the officials on it, I believe. We're doing both.

5:25 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

Okay.

Thank you for being here, ladies and gentlemen.

As I said at a meeting in the spring, when the committee considered amendments to the first budget bill, you had the daunting task of amending the Bank Act. The same is true of this second budget bill. I want to thank you for all the great work you've done.

My first question is this. Is the Canadian Constitution unclear when it comes to jurisdiction over the regulation of banks?

5:25 p.m.

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

Thank you for the question.

From a policy point of view, not being a lawyer speaking for Justice, no, there is no lack of clarity. Even the court has ruled that Parliament and the Government of Canada have jurisdiction over banks and banking, and therefore all the regulation that follows suit.

5:25 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

And it's been that way since Confederation.

5:25 p.m.

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

Glenn Campbell

That is correct.

5:25 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

My colleague brought up the Marcotte decision. Describe for us, if you would, what the case is about.

5:25 p.m.

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

Glenn Campbell

Yes, I can. There was a Supreme Court decision, commonly referred to as the Marcotte decision, that ruled in a specific set of facts about foreign exchange fees and conversion fees, and whether those fees were portrayed in an appropriate way under both federal and provincial laws. That's a summary by a non-lawyer, a policy person. Following that, in part of that decision, the Supreme Court indicated that in certain circumstances provincial rules may apply, where they may not conflict with federal rules, and that the Parliament of Canada, the Government of Canada, should clarify the circumstances and the intent under which it expects its chartered banks to follow its regime.

5:25 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

More specifically, is there anything in the proposed amendments that might negatively affect the recourse available to consumers under Quebec's consumer protection regime or that of another territory or province?

5:25 p.m.

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

Glenn Campbell

The amendments proposed in this bill pertain only to federal regulation and federal legislation. They do not touch directly upon provincial regulation or legislation. Provincial rules will continue to apply where they apply and where they are appropriate. The amendments included herein stipulate that the banks that are subject to these provisions should follow this comprehensive set of rules nationally to ensure that consumers have a consistent, comprehensive framework of rights from coast to coast to coast.

5:30 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

If there were 13 different consumer protection regimes, or even 14, if we include the federal regime, what effect do you think it would have?

5:30 p.m.

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

Glenn Campbell

Without question, it would be operationally challenging and very costly, even if it was possible—because it is not clear whether it would even be possible for an entity to be subject to multiple rules for the same issue across the country—and it certainly wouldn't be in the consumers' interest, either in a province or nationally, not to know what rules apply to them in a specific circumstance. There is no question that it would be difficult.

It's clearly not what the policy intent is. The policy intent from Parliament, historically, has been for banks that are subject to its charter and regulation to follow a certain set of rules and regulations and have a dedicated regulator, as such, and for Canadians, no matter where they are, from coast to coast to coast, to have the same protections that pertain to these issues.

Let me be clear. There are many provincial rules and legislation that fall outside of the scope of this legislation, for example, contract law that doesn't pertain to consumer issues, or business practices that don't pertain to consumers. All those will still apply. All those remedies will still apply, and other provincial legislation will still apply.

5:30 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

What we are doing, then, is setting a fairly strong minimum threshold around the regulation of banks in a global context, are we not?

5:30 p.m.

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

Glenn Campbell

I am not sure if it's a minimum context. I would say that this is one comprehensive federal standard so that all Canadians, no matter where they reside, travel, or work, can expect that the banks will be held to account to ensure they have the same rights no matter where they go. It is a comprehensive and high standard in its own right.

5:30 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

My colleague mentioned the banking ombudsman. Banks are required to pay the cost of providing a consumer protection mechanism, as they should. It shouldn't be up to taxpayers. Do you honestly think that banks could somehow interfere with the work of the ombudsman under this bill?

5:30 p.m.

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

Glenn Campbell

Let me step back and explain that the complaints handling process that exists now and is being enhanced under the amendments of this bill is strong, is convenient, is cost-effective in that there's no cost to a consumer, is timely, and it works well. The first step is clearly, like any organization, that it's a bank internal process and complaints handling system, and then there is a time limit to which the bank has to respond and if it's not to the satisfaction of the customer, they can then go to an external complaints handling body, of which there are only two in Canada that are now regulated by the federal regulator.

The fact that a bank would pay for that funding—the banks now pay for OSFI and bank supervision—that's a standard world practice, that the institutions that are subject to regulation often will cover the cost of that regulation, and it's internalized. In this case, the two entities follow the same standard of handling bank complaints and then, thereafter, you still have the dedicated federal regulator that sits on top of both the external complaints bodies and the banks.

Let me draw your attention to amendments in this bill that further enhance the obligations on both the external complaints bodies and the banks to publish all their details, the nature of those complaints, and to make the boards under corporate governance rules, the boards of directors, even accountable for ensuring that they comply with the external complaints handling and publicizing and the public accountability statements, all of that information, to hold them to account.

5:30 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

What I gather, then, is that it would be false to say that interference was possible because we were asking the banks to pay the cost of protecting their customers, through independent mechanisms. It would be false to claim that bank management or executives could influence the process.

5:35 p.m.

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

Glenn Campbell

That would be false. The way complaints handling works, even inside the bank and with the external complaints body, and to often manage what sometimes are information asymmetries, more clarity, or in certain cases if restitution is required, often that requires somebody to help the customer interact with the bank. In certain circumstances, the external complaints body may engage with the bank on behalf of a customer to help them address their interests. I wouldn't say that's the bank interfering. If anything, that's expediting the process to the satisfaction of resolving in a timely way whatever issue the consumer has.

5:35 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

In a nutshell, there is absolutely no doubt as to jurisdiction, but the court has clearly asked Parliament to pass legislation on the issue. There is no risk of infringing upon provincial jurisdiction or that of Quebec.

This, of course, deals with federally chartered banks.

5:35 p.m.

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

Glenn Campbell

That would be any bank that is regulated under the Bank Act, regulated by the Financial Consumer Agency of Canada, or the banking regulator. There's a whole suite of banks, as well as that one new federal credit union.

5:35 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

So it wouldn't apply to the Caisse Desjardins.

5:35 p.m.

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

Glenn Campbell

Not at all.