Finance Committee on June 5th, 2017

[Richard Bilodeau]

I cannot tell you exactly. In certain cases, there are not necessarily financial losses, while there might be in other cases. I cannot tell exactly how many cases.

I can tell you, however, that this affected approximately 1.5 million accounts. I am not talking about individuals, but about accounts.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Ms. Tedesco, your agency is not a tribunal, but in the review you are beginning and in the investigations you will conduct, could you also impose fines or other penalties, on banks in particular?

According to a CBC report from two or three days ago, there were at least 130 cases of falsified signatures. It seems that this number is greatly underestimated.

Ms. Tedesco, without trying to be clever, I would like to know how much Tabasco you could add to the sauce to spice things up.

[Lucie Tedesco]

We will conduct our review and, should we find a breach of the law, we will investigate and take the necessary steps. That includes imposing penalties on the financial institutions. That is my decision as commissioner.

The team will conduct an investigation, submit its report to the deputy commissioner, who will in turn issue a statement of wrongdoing. She will then inform the bank that she has reasonable grounds to believe that there has been wrongdoing and, if appropriate, will suggest a penalty.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

When do you think you will be able to publish the report? Will it be published?

[Lucie Tedesco]

The report will be published towards the end of the year.

As our investigation progresses, if we find there has been wrongdoing, we will immediately launch investigations.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

The report will then be made public, is that correct?

[Lucie Tedesco]

The investigations will be made public in accordance with our publications rules.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you.

If I may, I will now turn to Mr. Hannah.

Unlike the NDP members, I have no objection to banks making money. I am a businessman myself. It is inevitable that people in business want to make money in order to reinvest it.

It could be a problem, however, if the banks are too greedy, if they want too much, and go so far as to be willing to falsify signatures. I consider it a serious problem if sales coordinators ask employees to falsify signatures in order to collect fees from clients, since it is obvious that banks make money from fees.

As to your presentation today, as in Mr. Dusseault's case, you do not seem to recognize how serious a problem this is. The investigation will continue; the people who have conducted the investigations thus far will not leave you alone. I expect you do take that seriously.

In Canada, we cannot let the banks ruin everything. You have an impact not only on yourselves as Canadian banks, but on the Canadian banking system as a whole. Personally, I hope your employees take the bull by the horns and make sure this does not happen again. It is unacceptable.

What do you have to say to that?

[Darren Hannah]

Let me be clear. Banks take any allegations of the type that you've described extremely seriously, clearly want to investigate them, and indeed welcome the review by the FCAC, because we do not believe that what has been articulated is consistent with either the culture or the practice that the institutions have in place. Certainly, any allegation of that type is something that they're going to take very seriously.

[The Chair, Liberal, Wayne Easter]

Thanks to both of you.

On this point of falsifying signatures—because I had a former bank manager write me this morning—what is the penalty for falsifying signatures in most of the banks? I expect that it would be the same in all of them. Is it firing?

[Darren Hannah]

I'm sorry. That's something you'd have to ask each of the institutions, but clearly it's going to be incredibly serious.

[The Chair, Liberal, Wayne Easter]

Yes, it was for this fellow anyway, because he fired a few people over it.

Just as a point of clarification, on the number of accounts that were affected, we were having a discussion as to whether you said “1.5 million” or “1.5 thousand”.

[Richard Bilodeau]

It was approximately 1.5 million.

[The Chair, Liberal, Wayne Easter]

It was 1.5 million. Thank you. That clears that up.

Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair.

Welcome, everybody.

I'll try to keep this as short as possible. My first question is on the literacy part, which I think is a very big component of FCAC. I believe the month of November is financial literacy month, but I think it should be year-round.... Is FCAC working with my province, Ontario? It was announced in March that starting in the fall of 2018, all high school students will have to take financial literacy in school. Are there any synergies? Are you working with the Province of Ontario on that?

[Lucie Tedesco]

Prior to the naming of the financial literacy leader, I approached the Province of Ontario, and I know that Jane Rooney, our financial literacy leader, has spent much time, effort, and energy in working with the Government of Ontario. I'd like to think that we have had an influence on the government's making financial education compulsory.

We've worked with all the provinces, and we've certainly worked with Ontario and the Minister of Education for Ontario specifically.

[Jérémie Ryan]

A few years ago, the Government of Ontario undertook consultations with Ontarians to look at how to embed financial literacy into curricula. We were invited—the financial literacy leader and FCAC—to speak about the importance of building the financial literacy of young Canadians—

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

If you can stop there, that's okay, because I only have five minutes and I have a lot to say.

Going through the presentation that was provided, there are quirks in terms of how you have oversight of debt collection practices, but you don't have oversight of the credit reporting agencies. That seems a little strange to me, but it's one of those things.

Within the mandate, one of the pillars of your mandate is to “monitor and evaluate trends and emerging issues that may affect consumers of financial products and services”. Do you think you have the capacity, or the resources, and maybe even the capability, with what is going on in the financial services sector—call it banking fintech—to stay on top of sales practices that are impacting consumers?

[Lucie Tedesco]

As I mentioned, when I joined the agency, I think we had close to 75 people. By the end of next year, we should have 104. We are ramping up and reassessing our needs as we get additional bench strength. There's no question that right now we are putting forward our best efforts to keep pace with the evolution in the financial sector.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

In my view, the direction is the correct one, even the voluntary codes of conduct on interchange for merchants for debit and on mortgage prepayment. I think that's the way to go, rather than legislating everything. I want to ensure that the resources are there to ensure consumers are protected.

I'm going to go to the CBA now. I don't want to let you off the hook, to be frank.

I worked at a financial institution for many years both here in Canada and in the United States. They employ tens of thousands of people, and they do a great job for the most part. Sometimes they don't.

I want to make sure that the sales practices put in place.... There may be some overzealousness. The practices could lead to Canadians being put at risk but also the financial system in certain pockets being put at risk, whether it's forgery or whether it's providing credit—credit cards or any sort of credit, unsecured or secured—to Canadians not able to afford it. For me, that is very important. Because of that and the downturn in the economy, and so forth, the repercussions may be significant.

My comment is that the industry association...working with the schedule I banks, putting in place measures to ensure that what we saw on CBC Marketplace or whatever does not recur.

[Darren Hannah]

Everyone is taking these allegations seriously. There is no doubt about that. Everyone is concerned about them. But it's also true that institutions are certainly looking within their own practices to make sure and to satisfy themselves that their systems are robust and that they are incenting the appropriate behaviours to build the culture they want to build.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Let me interject. There's nothing incompatible with having sales targets—every corporate organization has them, that's the private sector—and having proper sales practices. We need to ensure the two are blended, or melded properly. If it goes off track in some way, on the right side right now in the sales practices, it's corrected and measures are put in place to ensure it does not happen again.

Those measures can be voluntary, in the organizations in place, or feasibly, they could be legislative measures, if that's....

I'll leave it there.

[Darren Hannah]

It ties in with something I said earlier. The intent is always to set the incentives in a multi-dimensional way so that they ultimately incent you to move toward the culture that the organization is trying to create. It is exactly along the lines you just described. You want to make sure that ultimately what comes out of this is a client experience where the clients feel they are getting the appropriate product, the appropriate service, and feel they're getting value from the relationship and want to extend it. That's exactly as you've described.

You need to balance a series of different dimensions in whatever objectives you set for your employees so that ultimately it travels in that direction. Then you need to set up monitoring to ensure the behaviour aligns and reinforces the culture they're trying to build.

[The Chair, Liberal, Wayne Easter]

Mr. Liepert.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Thank you, Mr. Chair.

I think most of the questions that have been asked of our guests.... I have concerns about some of the comments made as part of the questions. Questions have been asked along the lines of these incidents happening. I think we have to be careful, because we haven't heard testimony yet from those directly involved in it. I look forward to that opportunity in our other sessions.

I'm listening to the conversation, and the work that Ms. Tedesco's organization is doing, and I'm wondering if we're adding any value, since they already seem to have been launched into a pretty significant investigation. I guess we'll see some of the other testimony when the banks and the individuals appear before us here.

It seems to me it might be more beneficial to wait until the review is done, because quite honestly, that's exactly what the Financial Consumer Agency of Canada is set up to do. Here we seem to be doing the same thing all over again.

With those couple of comments, I will give my remaining time to my colleague Mr. Albas.

Thank you.