Evidence of meeting #99 for Finance in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was bank.
A video is available from Parliament.
As an Individual
By the financial literacy component, do you mean getting the public to understand all the ins and outs of all their financial products?
As an Individual
Well, I guess the only way for a person to really be well informed is to do everything through a financial adviser. They have to go into the branch, make an appointment, and sit down with that person in order to get all the information they need to make an informed decision.
At the same time, that financial adviser has the pressure to sell them things they don't need. They trust the financial adviser. They trust their advice, and sometimes it's very bad advice indeed.
Liberal
Founder and President, Small Investor Protection Association
Yes, I'd like to make a general comment on investor education. As has been said, the industry is complex and the regulatory system is complex. There are myriad products out there, and really, people do need somebody to advise them.
What we need is advisers who can be trusted. The regulators claim to be protecting investors. Most Canadians believe they can trust the industry. In reality, it is “investor beware”, but people cannot learn enough about investing to really protect themselves and make all the decisions. They need financial advice.
I think government must recognize that and must ensure that the people who are giving advice are qualified to give the advice and are held accountable. That's what I think is needed.
Liberal
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Thanks, Mr. Chair.
When you get down to this end of the table, many of the questions have been asked and answered. I only have a couple of brief questions, so I'll give back some of the time my colleagues so inappropriately ate up.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Mr. Elford, I think I heard you say something to the effect that you had no confidence in in-house investigations, if I heard that correctly. Would you consider the FCAC review of this to be an in-house investigation?
Independent Financial Industry Analyst, As an Individual
No, I don't know that I'm extremely familiar with what the FCAC is able to do.
In response to that, however, I have not seen anything, from 1984 to 2017, nor including Monday's testimony, that gives me confidence that the FCAC, to answer your previous question, even understands or addresses the point that there is a systemic issue that costs Canadians more than all the crime in the land.
Page 4 of my submission shows one example in which $100 billion was removed from investors' pockets in one case of a systemic issue. Out of 14,000 such cases that research has come up with, one case removes $100 billion. I don't see the FCAC even being aware of those kinds of systemic issues. I'm shocked.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Well, I would hope they would be. That's their job.
Independent Financial Industry Analyst, As an Individual
I would hope they would be, too.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Mr. Buell, could you comment on that?
If I understand correctly, you are a consumer versus an employee, or ex-employee, of the bank. You are representing a consumer organization. Is that correct?
Founder and President, Small Investor Protection Association
That's absolutely correct.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
So the FCAC shouldn't have any difficulty looking into your allegations.
Founder and President, Small Investor Protection Association
We have focused on the securities industry simply because most Canadians own mutual funds, and as Larry has pointed out, people are losing billions of dollars investing in mutual funds.
The problem in Canada is that we don't have one single regulator. In Quebec, they're a bit closer to the truth, because they have one regulator that clients or customers can go to. In Canada, we have 13 provincial regulators for securities. We do have a secretariat in Montreal, but they will refer people to the provincial regulators. So there's no one source that people can go to.
However, the real problem is that the industry is based on selling product, and that is getting into the banks now, where they're based on selling product rather than being a trusted organization that customers can go to and expect that they will get the best advice. That's the fundamental problem. They're selling products instead of helping customers by giving them sound advice.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
One of the challenges we have as a committee is that we hold a hearing and we listen to all the testimony, and this is no disrespect to what we're about to hear, but when the banks come before the committee I'm probably expecting to hear that, yes, they've investigated some of these concerns, that there were some situations where there were some—these are my words, not theirs—bad apples in the system, and they've dealt with them and it doesn't happen today.
That's part of the challenge we're going to have as a committee, trying to figure out the old “he said, she said” situation and we're stuck in the middle. That's why I would hope that the ongoing investigation by the FCAC could get more to the bottom of it than we as a parliamentary committee could.
Mr. Chair, that's about all I have.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Thank you, Mr. Chair.
Thank you, witnesses, for being here.
Mr. Buell, my question is for you.
I have actually read some of the reports on your association's website. I have in front of me the report, “Above the Law”, wherein the issue of financial advisor/adviser, an “o” or an “e”, came up.
My colleague and I asked questions about that with the FCAC. Granted, the FCAC doesn't regulate on the investment side. However, there was a comment made along the lines of—and I'm definitely paraphrasing because I don't have the exact testimony in front of me—regardless of the spelling of the word, if the employee is acting in a regulated way, so if they're selling some type of investment, regardless of their title, they fall under the regulation.
That is not what we've heard or read about in certain things. Do you have any comments on that?
Founder and President, Small Investor Protection Association
If the rules and regulations were followed and if the codes of ethics were adhered to, I would not see much of a problem.
The problem I see is all that information is made available to the public, so they believe they can put their trust in these financial institutions. However, the reality is people are losing billions of dollars every year when they place their trust in these institutions. That is why I've recommended that the committee listen to some witnesses, and what I think should result is the committee should be making a recommendation to the government that they have a public inquiry and not just to listen to one or two or a half-dozen witnesses, but listen to hundreds.
I know from talking to thousands of people within the industry, within the regulators, and the public. I just talked to a 75-year-old gentleman who's learning to use the Internet, and now he's finding out information. He had a line of credit for $70,000 that he took out to help his son years ago. He went into the bank and said he didn't use the line of credit anymore, that he didn't need it anymore, and he wanted to cancel it because it's showing up on his home as an obligation. He has no mortgage on his house and he doesn't need the line of credit. He wanted to cancel it. The bank said okay, but there's a $200 fee to cancel that unused line of credit. That is unreasonable.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
From the side of the average Canadian about where to turn or where to get answers, is this where your recommendation—I tried to write it quickly, so correct me if I'm wrong—for a national consumer regulator that would...all the different silos that exist.... We heard testimony, too, that there are constitutional issues in terms of jurisdiction. If there was some kind of national oversight to ensure that there....
Is your suggestion to ensure that the regulators, as we heard from Mr. Elford, are actually regulating what they're supposed to be regulating?
Founder and President, Small Investor Protection Association
Well, I'm not arguing against different silos for regulation. What I am saying is that I believe the Government of Canada should be responsible for the welfare of all Canadians. I feel they should have the responsibility to ensure that all Canadians are protected and that agency or authority should work with all the different silos of regulation. It's not to replace them, but just to protect Canadians, because too many people are losing their savings.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Thank you.
Then if I have time, Mr. Elford, there are a couple of things. One, you mentioned the TD policy around the $2,000 a day in fees and you said that it's public. I did a quick Google search and I couldn't find it. If you have access, would you be able to send that to the clerk for our reference?
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Thank you.
In addition to that, one of the questions or concerns I think about, even for myself or my family members, is someone going into a bank.... You might go to one of the larger banks, if you have access, but I know in some communities you don't, and that's where credit unions come into play.
When we're talking about banks specifically, there is a level of trust and protection that when you put your money in, relatively speaking, you're going to be able to get it out when you need it. The concern is that it's almost an unfair advantage in the sense of this trust around protection of funds, the insurance that your funds are going to be there.
For Canadians who maybe decide not to invest through a large bank, what protections do they have? I was doing some research and I know there's the Canadian Investor Protection Fund. However, it goes back to that literacy. How do Canadians really know what their options are or do they just feel that the banks are the only option and those fees are just part of doing business? If they want to be investors, even small-time investors, then those are the options they're left with.
Mr. Elford, this is something I'm grappling with. What would be the average Canadian experience for someone like yourself who might have dealt with clients and things like that? Is that a fair assumption that some Canadians would worry about?
