Evidence of meeting #40 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was information.
A recording is available from Parliament.
4:05 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you all.
We'll turn now to Mr. Julian, who will be followed by Mr. Kelly.
4:05 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Thank you, Mr. Chair.
To our witnesses, thank you for coming forward. We certainly hope your families are safe and healthy. We appreciate your work on behalf of Canadians.
I have a bunch of questions, so give relatively short answers if you can.
Of course, the concerns I'm raising are concerns that many people feel across the country. The federal government and its various agencies—we've heard from the Office of the Superintendent of Financial Institutions—have supported the banking sector to the tune of close to $700 billion, with an extension of up to $750 billion, which is three-quarters of a trillion dollars, and yet there has been very little asked of the banking sector, particularly Canada's big banks. Just in the first few weeks of the pandemic, as we know, they announced profits of $5 billion. Anecdotally, those profits are skyrocketing as the misery of the pandemic continues to afflict Canadians.
In that context, for the banking sector, do you track the administrative monetary penalties levied against the banks over the last quarter or last year or whatever period you have available?
4:10 p.m.
Commissioner, Financial Consumer Agency of Canada
Just to clarify the question, are you asking what FCAC has levied?
4:10 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
It's what you are aware of, from FCAC or other agencies.
4:10 p.m.
Commissioner, Financial Consumer Agency of Canada
Any administrative monetary penalties that we have levied are available on our website. They are publicly disclosed. I do not have a total to provide you.
4:10 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
More specifically, have any penalties been imposed by the Financial Consumer Agency around the practice of redlining? I know you're aware of it, but this is for the public who are tuned in to the finance committee.
Redlining is a practice that the banks use to basically exclude a group or exclude a whole community from having access to loans. Often it's in communities that have to go to payday loans as a result. Payday loans, as we have seen, have absolutely scandalous interest charges that make it difficult for people, particularly indigenous people and particularly single-parent families, to ever get out of the debt load.
Is there a list of administrative penalties that have been levied against banks on redlining? Is it your sense that redlining continues as a practice, or are you confident that it is being used less often?
4:10 p.m.
Commissioner, Financial Consumer Agency of Canada
It's such an interesting area. We would agree that it's an area of concern. I am not aware of any AMPs being levied as a result of redlining. This is not an area that has been elevated to us. Certainly it's on our radar generally, but it's not something we have seen evidence of in the recent time. As I say, I've been here for not quite a year.
4:10 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Okay. Thank you for that.
As far as the process with external complaints bodies is concerned, do you have a sense now of what the average period is for handling complaints from level one right through to level four? We've had complaints in the past at the finance committee about banks basically ragging the puck and not allowing consumers to get to the period of an external complaints body. Do you know what the average time is now for the four stages of handling complaints?
4:10 p.m.
Commissioner, Financial Consumer Agency of Canada
Off the top of my head, I'm sorry, I don't know the average time, but I will say that it's too long. In our industry study that we published in February, I think we were quite clear about that. I don't know the time, but we have made it very clear to the banks that it is too long. We view this as an industry problem that requires rectification and attention.
4:10 p.m.
NDP
4:10 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Okay. Thank you.
In terms of the information you've provided around the deferral of requests and approvals, I understand that these are statistics that come from the big-six banks themselves. I note the number of declined deferral requests. If it were put out across the country, it would mean that in my riding, seven deferral requests would have been rejected. I can tell you, just from people I know of and constituents, that it's far more than that in New Westminster—Burnaby alone.
I'm wondering if there is a bit of a filtering process going on. The banks are providing these numbers around mortgage deferrals, but are they also including people who have been discouraged from applying or who haven't completed the deferral process because banks have already told them that they won't qualify?
4:10 p.m.
Commissioner, Financial Consumer Agency of Canada
The data is as good as we can make it, I would say. We have no reason to suspect that it is not accurate. It is reflective of what we see in the traffic at our call centre. We continue to work with the banks to refine the data. What we have shown you is a summary.
Of course we have a lot more granular data behind that, and we also compare our datasets with our other regulatory partners, such as OSFI. We are quite confident in the accuracy of the data.
4:15 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Thank you, Mr. Chair.
As to the more granular data, I would be very interested in knowing how many of these deferrals take place without penalties, without fees, without all of the add-ins that I certainly heard from my constituents that banks are imposing. They're profiting from the deferral.
Does your granular information reveal what percentage of the deferrals have come without penalties and what percentage have come with fees, penalties, and compounded interest charges on top of that?
4:15 p.m.
Commissioner, Financial Consumer Agency of Canada
I think that's an important point to clarify. We do probe and we have almost daily conversations with our regular entities. They aren't just the top six; they are all of our regulated entities that we are collecting data on.
The first thing is that we are not aware of penalties or fees being charged on deferrals. We share your concerns about that, but it is not a standard that we have seen applied.
There are different methods that different banks are using in their treatment of interest. Some are continuing to charge interest during the deferral period. Others are rebating that interest collection. Our focus has been on ensuring that the disclosures banks are making to their consumers are initially accurate, and we've also asked them to go back, now that the dust has settled on the first wave, to ensure consumers really understand what they have agreed to and what all of the costs are.
4:15 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you all.
We'll turn to five-minute rounds, starting with Mr. Kelly, who will be followed by Mr. Sorbara.
4:15 p.m.
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
Thank you.
On the deferral program, based on the data here, the overwhelming majority, it seems, of those who have applied for or are receiving deferral, according to the chart that you had.... The numbers are quite extraordinary. We heard testimony at this committee about the effect that mortgage deferral and default may have on the health of the real estate market.
Are you concerned overall about the deferral of all these different types of consumer credit and how that will eventually work itself out? We know that insolvencies were approaching 10-year records before the pandemic hit. Now payment obligations are being deferred, but this is going to catch up at some point. Is there a concern about what is around the corner as these deferred debts pile up?
4:15 p.m.
Commissioner, Financial Consumer Agency of Canada
We do have a concern about the unwinding of all of these provisions. That goes back to our focus on communication and disclosure to consumers. We know that in the first wave of the pandemic, quite a lot of consumers, even if they weren't affected or didn't lose their job or something, opted for deferrals as a bit of an insurance policy.
We are reiterating to the banks that we expect them to ensure that they are disclosing all of the costs and the potential outcome for consumers, not just initially but on the way through, and then in particular on the unwinding.
4:20 p.m.
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
It's interesting that in your new financial consumer protection framework you specify that banks are prohibited from providing false or misleading information to consumers. I think any business that provides false or misleading information would be committing fraud.
Why does that specific piece need to be in your framework? I'd like you to explain that, particularly in the context of the need for clear, transparent disclosure by banks in programs like mortgage deferral.
4:20 p.m.
Commissioner, Financial Consumer Agency of Canada
The false and misleading aspect is actually in the legislation, I believe, or the regulations. I may have that wrong.
This is, I think, an appropriate reflection of the complexity of financial products and the difficulty, which we are very aware of, that consumers have in understanding them. Part of the challenge with financial literacy is the complexity of the products, and we see that over and over again. That's part of the challenge in ensuring that consumers are informed enough to make the right choices.
4:20 p.m.
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
Have you noticed a lot of complaints about poor disclosure or non-disclosure of costs of credit related to the deferrals, or is it too early to say? Do you expect that or have you seen it already?
4:20 p.m.
Commissioner, Financial Consumer Agency of Canada
We haven't seen that, but I will ask one of my colleagues to give a bit more colour on it.
Frank, would you mind piping in on our specific activities in relation to the disclosure statements? I'm hoping Frank is still with us.