Finance Committee on July 7th, 2020

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair.

Thank you to the presenters today, and everybody, for their questions.

It was a very interesting discussion. COVID-19 has certainly changed our world in a short period of time, especially for the people who are in very fragile financial situations.

I think our federal government has done a really good job, along with the Government of the Northwest Territories, our communities and band councils, the Métis locals, the friendship centres and the food banks. All have really made sure that our people are okay. We live in an area in the north where there's a high cost of living, and food security has always concerned us.

I'm curious, and perhaps I could ask a question about if and how COVID-19 has affected the financial protection of the potentially vulnerable consumer population, such as the elders, the seniors and people in remote communities. These are the ones who may, for the most part, have difficulty accessing financial institutions in their communities. I know that in the north we don't have a lot of banks, and people may not be able to securely or comfortably access online banking. That's my first question.

[Judith Robertson]

We share your concern, and it's something that we recognized early on.

In fact, as part of the research we did leading up to the seniors code, we did a survey of banking practices, banking habits by different segments of the population. That gave us insight into who uses bank branches, or who doesn't use digital banking. That information was very helpful to our reacting quickly to COVID, when we realized that bank branches needed to be shut down for the health and safety of the bank employees. We communicated both with the Department of Finance and the regulated entities, saying that we understood that they needed to protect their employees, but that they also needed to provide services, and that here are the groups we're concerned about, because we know that they are the ones who are most dependent. And you're right, they are our seniors or people who don't have access to reliable Internet or to the computer hardware that is required for digital banking.

We're pleased—well, “pleased” may be too strong a word, because we're never pleased—to recognize that banks did take action to provide alternative forms of service. In terms of telephone banking, obviously it's not perfect. Banks then provided things like specific hours for seniors and vulnerable people. One did a jump the line. They definitely did try to find ways to bridge this problem that, unfortunately, disproportionately affected certain segments of the population.

[Michael McLeod, Liberal, Northwest Territories, NT]

I'm also very curious; you talked about the financial consumer trends and the survey that you've done. I ask this question of everybody who talks about trying to assess what people are doing in terms of their habits and all kinds of measures that we seem to want to track, because these never seem to include the north. Does your survey include the Northwest Territories or Nunavut? We really have a hard time getting information to.... A lot of times, this is very important information that everybody else in the country is using to make decisions and base their decisions on. Do you do some of your work in the Northwest Territories?

[Judith Robertson]

I'll let Ruth respond specifically on the surveys, if she has that.

I'll just say, though, that in addition to surveys, as I mentioned, we have this large stakeholder network that we use. We recognize that it's the local community organizations that really have their pulse. We do have community networks in the north. There's a financial literacy network located in Whitehorse that's part of our group. At the beginning of the crisis, one of the things we did was to have an ad hoc call-around to bring people together: What are the problems? What are the issues? We continue to do that. That's a little bit more informal, a little more ad hoc, but it does happen, and it's tremendously effective.

Ruth, I don't know if you want to mention our more formal research and our ability to be granular down to a regional or provincial level.

[Ruth Stephen]

Sure. Thank you, Commissioner.

We do oversample target populations in order to identify challenges for vulnerable groups. That is a regular way that we collect research data. Sometimes it's difficult because of small population size, but we do tend to oversample so that we have enough incidents to be able to have results.

[Michael McLeod, Liberal, Northwest Territories, NT]

Does that mean you sample in the north, or do you just sample other parts of the country and use it to try to...?

[Ruth Stephen]

No, we do collect provincial data and territorial data, but sometimes we have to aggregate it on a regional basis. In terms of specific vulnerable subgroups, we will tend to oversample rural Canadians, for example, or indigenous communities so that we have enough to report on specific target segments.

[Michael McLeod, Liberal, Northwest Territories, NT]

I have just one more question.

[The Chair, Liberal, Wayne Easter]

Go ahead.

[Michael McLeod, Liberal, Northwest Territories, NT]

It's really surprising to see the increasing use of payday loans. I know that when the service moved into the Northwest Territories, we saw a lot of resistance but it still happened. The service is only available in the capital city of the NWT, so I would be really curious as to...if that's happening here in the Northwest Territories. The people who are using these loans are the ones who are falling between the cracks and ending up in the cities. They're the least able to afford it, actually.

I'm curious; how do these companies collect if the people who borrow default? How do they collect? Most people don't have the security to...or even a promissary note. What do they do? I don't know if you'd be able to answer that, but I'm pretty curious to know what happens there.

[Judith Robertson]

Yes. I'm really sorry, but I cannot answer that question. That's a level of operational detail on their business that I just don't know.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

I think you're seeing some of the committee members concerned about this particular issue.

We'll go to a question from Mr. Ste-Marie and then Mr. Julian. Then we'll go to a five-minute round with Mr. Cooper and then Mr. Fragiskatos.

Gabriel.

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

Thank you, Mr. Chair.

Ms. Robertson, in your presentation, you said that you work closely with your provincial counterparts. In Quebec, the Office de la protection du consommateur administers the Civil Code, and so, contracts.

Can you tell us more about those ties and relationships? How do you work with the Office de la protection du consommateur?

I have the same question with regard to Desjardins Group, Quebec's main financial institution. What is your relationship and what ties do you have with Desjardins Group?

[Judith Robertson]

Maybe an example is a good way to answer that. I introduced myself to the head of the Office de la protection du consommateur when I first joined and then, as a result of COVID, we had occasion to communicate about credit ratings.

This is a serious issue, of course, that we were very concerned about. We made it clear to our regulated entities that any deferrals or skipped payments should not negatively affect the credit standing of the consumer, but we have no regulatory authority over the credit agencies. I did some outreach, again to the Office de la protection du consommateur, and also to the AMF. We had a very engaging discussion in which we agreed that we were aligned in our concern and we were able to share our knowledge: they understood what we were doing with our regulated entities and we understood what they were doing. That's a good example of where our jurisdictions touch, don't overlap, but it's important that one side knows what the other side is doing.

Is that a fair example?

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr.—

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

Yes, I had asked about Desjardins Group as well, but I believe my time is up.

[The Chair, Liberal, Wayne Easter]

Go ahead now, Gabriel, if you want to ask a question because we'll soon run out of time.

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

Thank you, Mr. Chair.

I'd like to know about your relationship with Desjardins Group.

[Judith Robertson]

We do not regulate Desjardins as a financial entity, although we are interested. Quite often, they show leadership in things related to consumers, so we are quite keen. We meet with them from time to time to make sure we are exchanging information. The only official intersection we have is on the credit card side.

[The Chair, Liberal, Wayne Easter]

Okay, thank you all.

Mr. Julian followed by Mr. Cooper and then Mr. Fragiskatos.

Peter.

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

Thanks, Mr. Chair.

I'm going to dovetail two questions together.

You mentioned having granular information around banking and I would like to ask you to share that information with the committee. You mentioned that there are some financial institutions that aren't levelling penalties and fees. It would be very useful, I think, for this committee to know who is doing that.

Community Savings Credit Union in New Westminster, B.C. has offered zero per cent on lines of credit because of the pandemic. I'm interested in knowing, on things like lines of credit, whether other banks are doing that. On credit cards, Vancity, the largest credit union in the country, has offered zero per cent on credit cards.

To what extent do you have that granular information available to us so we can actually determine if there are any banks that are following best practices?

Then, in terms of payday loans, does the FCAC have a position on a publicly owned banking institution like the postal banking system so that those communities can actually get service from a banking sector rather than being redlined?

[Judith Robertson]

I think it's probably best for me to commit to provide you with that information that you requested, the more granular information and the differentiation among the various banks.

As far as the credit cards are concerned and interest on outstanding balances, again, there are some differences amongst the banks. Some—I would say most—have dropped to half of their normal rates, to just under 11%, but to my knowledge no banks have gone as far as Vancity to zero.

Then, related to your question on payday lending, we have not engaged in any research on potential solutions as you suggest. I don't have anything to offer there.

[The Chair, Liberal, Wayne Easter]

Okay. We have to move on.

You can provide that information, Ms. Robertson, to the clerk and we'll get it to committee members.

We'll split the remaining time four minutes apiece. First we have Mr. Cooper, and then Mr. Fragiskatos to wrap it up.

Michael.

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

Thank you, Mr. Chair.

Thank you to the witnesses.

I have a few questions just arising from your report, “Bank Complaint Handling Procedures”. I note that page 15 of the report notes that of the four steps in terms of escalating complaints, in the first step, which is really the first point of contact typically in a financial institution, 90% of complainants are not satisfied with the resolution, or, where it's not resolved, don't advance it any further. That seems awfully high.

Why do you think that is? Your report suggests that “it is not straightforward or easy for consumers to escalate complaints.” Could you elaborate on exactly what the issues are, because that seems very high?

[Judith Robertson]

Yes, we would agree with you that it is high and it is of concern.

I will point out, in fairness, that three-quarters of the complaints are dealt with successfully. The definition of “success” in the legislation is to the satisfaction of the consumer, so that is a very high success rate for any retail operation.

We are very concerned about the challenges faced by consumers if they are not satisfied. We identified many issues in the report: first, the lack of knowledge about their ability and their rights to escalate; second, the onus being placed on consumers to navigate these systems; and third, the delays and lack of assistance on the part of the banks. I think those are the main ones.