Finance Committee on April 9th, 2020

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Thank you very much, Mr. Chair. I will direct my questions to Ms. Durdin or Mr. Hatch of the Canadian Credit Union Association.

It certainly is encouraging to see that it appears progress is going to be made in getting credit unions on the list of approved lenders through EDC, with respect to CEBA. When the program was announced, only 11 credit unions were on the list, excluding 95% of credit unions across Canada and excluding all credit unions in my province of Alberta, making it much more difficult for literally tens of thousands of small businesses in Alberta and tens of thousands of small businesses in other parts of Canada, particularly in western and other rural parts of Canada, to access these vital interest-free loans.

You stated, Ms. Durdin, that all 233 credit unions will be on the approved list of lenders. Could you explain how the process is going to work? I understand that an expedited process has been in the works for some time. Could you elaborate a little on the process to get credit unions on the list?

You further indicated you'd like to see this happen by the end of this month, and understandably so, in light of the urgency of small businesses needing that liquidity. Do you have any assurance that all 233 credit unions will be on the list by the end of this month? Could you elaborate on that?

[The Chair, Liberal, Wayne Easter]

Go ahead.

[Martha Durdin]

Thank you for the question.

The credit unions are being onboarded in phases. We began with a group of 11 credit unions last week, and that process is in the works now. We expect them to be completely onboarded by the end of the weekend. There is another group that was already credited with EDC, so it brings the total in this first phase to about 21 credit unions.

EDC and Finance have confirmed that they will roll this out in phases. We're looking at a group of 30 next, and then we'll move on to another group, which does mean a lot of effort to roll out 200 more credit unions. It's unclear how long that will take, but it's not days; it's likely weeks which, for Canadians and for our members, our small businesses, isn't really fast enough.

As of today, we're also working on a parallel track with our centrals. As you know, in our structure we have provincial centrals, which may be able to expedite that process, as well as Concentra Bank, which is a wholesale OSFI-regulated bank owned by credit unions. We're hoping that may alleviate the administrative burden on EDC and facilitate that.

Our centrals, our credit unions and CCUA are willing to do whatever it takes to expedite this process and onboard credit unions quickly and efficiently. It feels like it's very slow. We'd really like to ensure that we can move quickly to get this done.

[The Chair, Liberal, Wayne Easter]

You have time to ask a very quick question, Michael, but before you do, I would just ask people to double-check the mute button on their phones again. We are getting some clicks as a background noise, so I would ask anybody who is not speaking, to put their phone on mute.

Go ahead, Michael.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

In terms of moving slowly, what are the main impediments that are resulting in this delay? Also, can you speak to the total exclusion of Alberta credit unions and whether that's going to be rectified by the end of this week?

[Martha Durdin]

Actually, Servus Credit Union, in northern Alberta, has already been contacted, and they're well into the process. Conexus is on the list for the second phase, so they will.... Actually, I'm sorry. Let me correct that. Conexus and Servus were on the first list, and they have been in touch with EDC and Accenture, which is working with EDC, and that work is ongoing. I expect they'll be up and running by the end of the weekend, if they aren't already. That's working fairly well.

I think what's taking time is just the capacity of the officials and the consultants who are working on this.

[Michael Hatch, Vice-President, Government Relations, Canadian Credit Union Association]

If I may, the exclusion, prior to this event, of any credit unions in Alberta was merely a function of the fact that no Alberta credit unions happened to previously get on EDC's approved list of lenders. There were, as was mentioned, 11 credit unions on that list prior to this because, for whatever reason, in the past those credit unions chose to transact with EDC in one form or another. None of them happened to be in Alberta, so that's the only reason for the exclusion of Alberta credit unions in the very early phases.

As Martha said, the biggest members are now being onboarded, and the rest will be by the end of the month.

[The Chair, Liberal, Wayne Easter]

Thank you. That's very valuable information.

We have Ms. Dzerowicz next.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to start by saying a huge thanks to both the Canadian Bankers Association and the Canadian Credit Union Association for joining us today. It's really important for us to hear from you. We are very proud that Canada has probably the best banking system in the world, and we know that our financial institutions are key to helping us get through this pandemic and get our economy back on track.

We know that our banks and our credit unions have been engaged with our Minister of Finance and government officials to discuss flexible options to support Canadians in general and Canadian businesses during this difficult time. I think both of you have done a wonderful job of saying how you've stepped up to provide support during these last few weeks.

I will say, though, that we are still hearing far too many stories of small and medium-sized businesses walking into their bank to ask for a mortgage, loan or line of credit deferral and being rejected. They're not seeing the flexibility that they're hearing is supposed to exist right now at their financial institutions. We're also hearing from renters. Many of them are long-term customers at a particular bank. They don't own property, but they are looking for some flexibility on some of the financial instruments that they might have with the bank, whether it's a loan or a line of credit. Again, too many of them are telling us they're not being successful. I know there have been extraordinary efforts done so far. There seem to be some inconsistencies in different parts of the country.

I'll direct my question to the Canadian Bankers Association.

What will banks do to continue to address the need and meet the flexibility that Canadians and Canadian businesses are asking of banks today?

[Neil Parmenter]

Thanks for the question. I appreciate the opportunity to answer.

The challenge here, as you can imagine, is that everyone's financial situation is unique and different. People have different credit products, deposit products, and it takes some time to figure out, particularly if someone has had an immediate loss of income or job, what the right product for them is. As I detailed in my remarks, I think that banks have mobilized quite quickly over the last three to four weeks, since this crisis began, to try to maximize the amount of flexibility that people have.

In essence, what people need is access to low-interest forms of credit. There's been a lot of talk about credit cards and those sorts of things, but there are also a lot of other products available, such as personal lines of credit and personal loans and those sorts of things, that can offer a lower interest rate, and those might make sense for the individual customer.

On the notion of flexibility, as again I highlighted in my remarks, I think the banks have worked tirelessly to explore different alternatives and creative solutions for people, building off some of the things they've learned just in the normal course. On things like mortgage deferrals or skipping a payment and those kinds of options, many banks offer those at all times. Banks recognize that people can be displaced from their jobs through a variety of reasons. People are given a variety of options to either skip a payment or defer mortgage payments or others, so flexibility is clearly the name of the game.

I think everyone is reacting to an incredibly dynamic situation. With the scale of the situation and the immediacy, banks are working very hard generally to try to offer and extend maximum flexibility to their customers, understanding the enormity of the challenge they face.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you for that, Mr. Parmenter. I appreciate that.

I want to get in one more question in very quickly. I want to say that I appreciate the work that the banks have done so far, and I want to acknowledge it. I want to ask you to please continue to be as generous and as flexible as possible, because we are hearing so many of these stories.

The next question I have is this. I know that the Bank of Canada has cut interest rates down to 0.25%, which means that the cost of capital and products has been greatly reduced. Many Canadians, as I know from a lot of emails to me from Davenport residents in my riding, are wondering if banks can do more to reduce the rates on credit and loan programs to provide more breaks for Canadians, many of whom are in economic distress and have lost much of their investments and savings. Is there anything more that banks can do to support Canadians at this time?

[Neil Parmenter]

Again, if you look at some of the credit and loan products, you will see very low interest rates. The same is true, frankly, with home equity lines of credit and other products that I'm sure folks in your riding are taking advantage of.

I think banks are working tirelessly and as quickly as they can to mobilize a variety of different creative offerings for customers to offer maximum flexibility at a time when they need access to low-interest credit.

[The Chair, Liberal, Wayne Easter]

Thank you, all. We'll have to end it there.

We will go to Mr. Ste-Marie and then to Mr. Julian after that.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

My questions are for the Canadian Bankers Association.

My first question is as follows. During the current crisis, many more purchases are being made online, and most of them are being paid for with credit cards. As we know, credit card interchange fees are generally higher for online purchases than for physical payments. The European Union caps these interchange fees at 0.3%, whereas here the rate is closer to 1.5%, and can even be as high as 3%.

In your opinion, can Canada cap these fees in the same manner as the European Union?

[Neil Parmenter]

I understand the question and the ask.

Looking at the interchange fees in different jurisdictions is always challenging, because looking at an individual product in isolation often doesn't represent the breadth of the options.

In a lot of these jurisdictions and markets, on debit, for instance, there is interchange on debit payments. We don't have that in Canada. At the best of times, looking at different jurisdictions to try to compare apples to apples when it comes to interchange across a suite of payment products is certainly not comparing apples to apples.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

I gather that your association has no interest in limiting credit card interchange fees.

Your members will receive a great deal of support—

[Neil Parmenter]

Just to be clear, the Canadian Bankers Association wouldn't have any influence or role in setting prices for any products.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Okay, thank you.

I was saying that your members will receive significant government support, either in the form of cash or through the purchase of assets that have lost all value.

Can your members consider making an additional effort to support the government, for example by no longer using tax havens to avoid paying all taxes on profits generated in Canada?

[Neil Parmenter]

I mentioned the amount of taxes paid by Canadian banks. All Canadian banks operate within the confines of the law, so I'm unfamiliar with the reference you're making to other tax jurisdictions.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

I acknowledge that this is being done legally. In my opinion, just because something is legal doesn't necessarily mean that it's moral, especially when we consider that the banking system is protected in Canada. I'll take your answer as a no.

Thank you.

Mr. Chair, this concludes my questions.

[The Chair, Liberal, Wayne Easter]

Thank you, Gabriel.

We will turn next to Mr. Julian.

In the next round, we'll start first with Mr. Cumming and then Mr. Fraser.

Go ahead, Peter.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thanks, Mr. Chair, and thanks to our witnesses for coming. We certainly hope that you and your families are safe and healthy.

My questions will be to Mr. Parmenter and Mr. Hannah. Thank you for being here today.

The banking sector has received over $46 billion in profits, so Canada has been very good to the nation's banks, but we are in a crisis now. Millions of Canadians are without work. Often they are struggling to keep food on the table and a roof over their heads, and they are dependent on lines of credit or credit cards in order to make ends meet and feed their families. Many of these people are front-line workers who are going to dangerous situations every day and struggling to keep a roof over their heads and food on the table.

We are seeing financial institutions in the credit union sector stepping up. Vancity, the largest credit union in the country, has moved to 0% interest on its credit cards. It is waiving penalties and waiving fees, and many other credit unions have done the same thing, so I have three questions for you, Mr. Parmenter.

First off, will your members agree to go to 0% , as we've seen with Vancity, and waive penalties, fees and interest fees for the next 60 days as Canadians struggle to cope with this crisis?

Second, has finance Minister Morneau asked members of the Canadian Bankers Association to do that—to waive interest, waive penalties and waive fees?

My third question you probably will find easier to answer. I and Brian Masse, who is our industry critic and the member for Windsor West, have pressed the government to take action, to use the tools the federal government has in terms of banking and the banking sector. If the government required members of the Canadian Bankers Association to waive interest, waive penalties and waive fees, do you believe members of the Canadian Bankers Association would respect those requirements from the government?

Thank you for answering these questions.

[Neil Parmenter]

Thanks very much for the questions.

As you heard me detail in the opening remarks, banks have taken a variety of different actions, including cuts on interest rates and flexibility and deferrals and all those sorts of things. In many cases, those comprehensive programs started three and four weeks ago.

We did see the Vancity announcement yesterday. As I said, individual banks are going to make individual pricing decisions when it comes to fees. A lot of these fees, as I mentioned in the opening remarks, are being waived.

I think that answers your first question. Remind me of the second question, please.

[The Chair, Liberal, Wayne Easter]

It was whether Minister Morneau asked you to waive fees.

[Neil Parmenter]

I'm not privy to the conversations between the minister and the banks. I know that the minister has spoken to a number of board members, as I'm sure you would expect as well. I'm not privy specifically to what he said, but what I can go by is what he has talked about publicly.

I think the minister has spoken many times about credit cards and credit card rates and opportunities for Canadians to take advantage of low-interest forms of credit, the lines of credit and the personal loans that I mentioned earlier. There has been some very encouraging dialogue between members and government about potential creative ideas on other forms of low-interest credit as well.