Finance Committee on May 17th, 2021

[The Chair, Liberal, Wayne Easter]

That was your question. He stole your question, and he's your colleague.

[Ted Falk, Conservative, Provencher, MB]

Yes. I can't believe it.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. O'Brien.

We'll go to part 4, division 4, changes to the sunset provisions of the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act.

Who's on that one?

[Manuel Dussault, Senior Director, Framework Policy, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance]

Good morning. It's Manuel Dussault here, senior director at Finance Canada.

Let me present an overview, and I'm happy to take questions.

This division would amend the Bank Act, the Insurance Companies Act and the Trust and Loan Companies Act to extend the current sunset provisions by two years to June 30, 2025.

Canada's federal financial institution statutes currently include sunset provisions that prohibit federally regulated financial institutions from carrying on business after June 21, 2023. These sunset provisions are an important feature of Canada's financial sector framework. By mandating the renewal of the legislation every five years, the sunset provisions provide an opportunity for the government and Parliament to regularly consider the framework to ensure that the financial institution statutes remain up to date, are technically sound, and respond to changes and emergent trends in the financial sector.

Extending the current sunset dates by two years to 2025 will enable full consideration of the impacts of the pandemic on the financial sector as part of the next legislative review.

Thank you.

[The Chair, Liberal, Wayne Easter]

The reason is COVID, I suppose.

[Manuel Dussault]

Yes.

[The Chair, Liberal, Wayne Easter]

Are there any questions from anyone? We're all okay on division 4.

The next one we will turn to is division 9, I believe, and we'll come back to division 1.

I might mention.... I'm just going through my list of all the divisions we're dealing with today, and division 5 is not mentioned in any, so Mr. Clerk, I guess we'll need someone as a witness on division 5 at some point.

Now we're on division 9 of part 4, changes to the Pension Benefits Standards Act, 1985.

[Kathleen Wrye, Acting Director, Pensions Policy, Financial Crimes and Security Division, Financial Sector Policy Branch, Department of Finance]

Thank you, Mr. Chair.

My name is Kathleen Wrye. I'm the acting director of the pensions policy team at Finance Canada.

This division proposes legislative amendments as part of the establishment of a revised framework for multi-employer negotiated contribution pension plans. Negotiated contribution plans are a type of defined benefit plan in which contributions are fixed by an agreement, and employers are required to contribute only the amount set out in the agreement.

The proposed amendments to the Pension Benefits Standards Act are part of this revised framework. They would establish new safeguards, uphold benefit security for these plans through requirements for them to establish and maintain governance and funding policies, and grant new regulation-making powers to the Governor in Council with respect to those requirements and with respect to amendments to negotiated contribution plans.

I'm happy to take any questions.

[The Chair, Liberal, Wayne Easter]

Mr. Falk.

[Ted Falk, Conservative, Provencher, MB]

With regard to that question—it's a CPP question—when an individual works for multiple employers or has multiple T4s coming in, on a person's personal income tax return, the overcontribution because of multiple T4s is refunded to the employee.

Is there any consideration given to also reimbursing employers on a pro rata share basis for their contributions, because you're getting sometimes double, triple or quadruple the CPP contributions from various employers?

[Kathleen Wrye]

Unfortunately, that's not my area of expertise, so I'm not able to respond to it.

[The Chair, Liberal, Wayne Easter]

Could we get somebody to send us a little note to answer that question? What happens with the overcontribution on the employer's side, when it's overpaid?

Are there any further questions on division 9? If not, we'll go back to division 8.

On division 8, which would enact the retail payment activities act, who's up?

Ms. O'Brien, go ahead.

[Erin O'Brien]

Hello, Mr. Chair, it's me again.

I'm here with some of my colleagues. I'd like to acknowledge Richard Bilodeau, director general of the financial institutions division; Manuel Dussault, whom you met a few moments ago, senior director of frameworks policy; and Julie Trepanier, senior director of payments policy.

I'll provide just a short introduction, and then we'd be happy to take your questions.

The government is committed to maintaining a well-functioning financial sector that serves Canadians' needs and ensures public confidence in the integrity of retail payments. The retail payments sector enables millions of Canadians to send and receive money on a daily basis and plays a key role in promoting economic activity.

The current COVID-19 crisis has accelerated the adoption of digital payments and has highlighted the need to keep them safe and reliable. The proposed retail payment activities act implements a new retail payments oversight framework that would promote growth, innovation and competition in digital payment services, while making these services safer and more secure for consumers and businesses.

The proposed legislation includes requirements for payment service providers that are not regulated financial institutions, such as card networks, payments processors, money remitters or e-wallets, to safeguard end-users' funds against losses and to mitigate risks associated with operational failures that could disrupt their service. The Bank of Canada would regulate payment service providers' compliance with the framework and maintain a registry of regulated payment service providers.

The proposed legislation also includes national security safeguards, modelled on the framework that applies to federally regulated financial institutions, to enable the government to identify and respond to national security-related risks.

The government has consulted broadly on the development of the framework and has engaged with a wide range of stakeholders, including provincial and territorial officials, who have expressed broad support for the objectives of the proposed framework.

The framework recognizes that the federal government and provincial and territorial governments have complementary objectives and powers in this area. The federal government looks forward to maintaining strong collaboration in support of provincial and territorial governments as we move forward with the implementation of the framework.

While the proposed legislation sets out the main elements of the framework, regulations and guidance will be required before it can be brought into force.

Thank you. I look forward to your questions.

[The Chair, Liberal, Wayne Easter]

Thank you, Ms. O'Brien.

We have many questions on this one. We'll start with Gabriel Ste-Marie, then go to Annie Koutrakis and then to Peter Julian.

Gabriel.

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

Thank you, Chair.

I have three questions, would you prefer that I ask one now and the others later?

[The Chair, Liberal, Wayne Easter]

It's up to you. I'd say one at a time, Gabriel. I think we have ample time for this panel.

Go ahead.

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

That's fine.

I would like to welcome and thank all the public servants here with us today.

Thank you for your presentation, Ms. O'Brien. My first question is for you.

If I understood correctly, in the consultation document of 2017, the intention was to protect consumers against non-authorized use or errors, except in cases of fraud. In Bill C-30, this idea is rather vaguely expressed in sections 17, 18 and 19, under the concept of “Operational Risk Management and Incident Response”, where they are talking about the provider's risk management framework, which must comply with regulations.

Am I to understand that the protection will be set out in regulations? If so, why wasn't it included in the act?

[Erin O'Brien]

Yes, the legislation right now outlines the framework at a very general level. The intention is that it would address operational risks posed by payment service providers, but the specific details with respect to how the operational provisions would work need to be outlined in regulations. Those will be forthcoming. Our intention is to consult both stakeholders and provincial and territorial colleagues as we develop those regulations.

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

Thank you.

I come to my second question.

Will this coverage ensure that the consumer enjoys as much protection as he would have had he made a traditional payment through a bank?

I have my doubts.

[Erin O'Brien]

I would say that in general, the principle is to ensure that financial consumers have the same level of protection whether or not they're issuing a payment through a regulated financial institution or a payment service provider. That's certainly the overall intention.

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

If I understand your answer correctly, the intention is to offer the same degree of protection as that of a traditional payment made through a bank.

My third question is the following. Payments made from one individual to another, or between a business and an individual, and so on, fall squarely under Quebec's civil code. In your presentation, you said that the act stipulates that there must be communication with the provinces.

How can you guarantee that the bill will not infringe the civil code of Quebec which has been in use for centuries?

[Erin O'Brien]

Initially our intention is to articulate protections around safeguarding end-user funds and operational risk management. Market conduct would be addressed at a later point in time.

I can assure you that we have undertaken significant consultations with all of the provinces and territories, but in particular with Quebec, which recognizes that this is an area of complementary powers and authority and objectives. We have addressed a number of concerns that the Quebec government raised in the consultations to ensure that we are respecting its perspective and jurisdiction in this area.

Notably, we have excluded provincially regulated institutions from the scope of this framework. In addition, we have included a recognition mechanism whereby, should any province or territory develop an approach that is significantly similar to the protections that would be provided under the RPAA, those would be recognized and addressed outside of the framework if necessary.

We feel that we've balanced the shared jurisdiction in this area.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

We can come back to you if need be, Gabriel.

We will be turning to Annie Koutrakis and then Peter Julian.

Ms. Koutrakis.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair.

My colleague Monsieur Ste-Marie covered with his last question most of my question.

Ms. O'Brien, I would be interested to know if you could elaborate a little further on the process of the consultation. What is the actual process when you're consulting with provinces and territories? I'm specifically interested in the province of Quebec.