Finance Committee on March 17th, 2022

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

The RCMP was quite co‑operative, then, and you didn't get the impression in your dealings with the force that it saw your institutions as less important than the big banks.

Is that right?

[Michael Hatch]

That's right.

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

Okay. That's good to hear.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste‑Marie.

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

Thank you.

[The Chair, Liberal, Peter Fonseca]

Now we're moving to the NDP and MP Blaikie for up to six minutes.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

Just along those same lines—and I'm speaking to Ms. Durdin—credit unions provide a lot of banking services. We're glad that credit unions can still call the services they provide “banking services”, despite some of the debate over that with OSFI. Is there anything that distinguishes your banking services from the banking services of the larger banks from the point of view of the emergency measures orders, in the sense of whether it's any less important to communicate with credit unions in a timely manner than it is with banks?

[Martha Durdin]

Credit unions are a lot smaller than banks. Our market share is a lot smaller than that of the big six banks, obviously. However, we do have an important part to play. In provinces like Manitoba, almost half of the market share is with credit unions. We serve close to six million Canadians.

So, yes, that's a huge chunk of consumers in Canada who need to be treated the same way they would if they had their financial services delivered by one of the large banks.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

As my colleague mentioned earlier, a big part of our job here is to look at how these special powers were used and to make recommendations about how that could be done better in the event that similar powers were invoked in the future.

I'm just wondering if you have any concrete recommendations either for the committee itself or that you believe we should consider making to government about how they might roll out these kinds of measures in a better way in the unfortunate situation where these powers may have to be used again?

[Martha Durdin]

I mentioned a couple of things in my opening remarks. I think making sure that credit unions are at the table at the same time is an important one. I think there was work the government could have done to be more clear about who they were actually targeting. As you know, there was a lot of misinformation in the first days, things like whether, if an individual made a $25 donation to the convoy, their accounts would be frozen and that kind of thing. It became clear over time, but it did take a few days for that to become clear.

Michael, I don't know if you want to add anything. Those are two that come to mind.

[Michael Hatch]

No, it bears repeating that in any such future situation, whenever the federal government has to pull the levers of the financial sector to accomplish its policy objectives—be it for the Emergencies Act or for the Canada emergency business account, the CEBA program, from the early days of the pandemic—that it think beyond six institutions and that it consult all members of the financial sector on an equal footing. That is to say not only federally regulated institutions, but also our sector.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

Two things that have been part of the discussion so far deal with what requirements, if any, financial institutions had to notify clients whose accounts had been frozen, whether they under the authority of the emergency measures order or under some other authority, and what financial institutions were expected to do with that information or any potential flags on people's accounts that should have been frozen under the order.

Can you give us your thoughts on each of those things—whether there was any clear direction provided in either of those cases, either verbally or in writing, and, if not, whether you think clear direction on those matters would be useful?

[Martha Durdin]

No clear direction was given to us in writing or verbally, as I understand it, to alert any individuals whose accounts had been frozen. That was left to the discretion of the financial institution.

I think some clarity around that would probably be useful in the future so that across the country there would be an even application of that part of it. If it's left to the discretion of the individual financial institutions, I think they would probably all handle it differently.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

On the matter of what to do now that the emergency order has expired, was any direction given verbally or in writing as to whether the information that financial institutions have ought to be destroyed, whether it could remain on a file, whether it could continue to inform how the financial institution relates to that individual, or whether it's appropriate to have it factor into a risk profile for future banking activities with that individual? Did your organizations receive any direction on that?

[Martha Durdin]

We did not.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Would you consider that kind of direction to be useful?

[Martha Durdin]

Financial institutions manage their own risk portfolios, and they have ways of flagging individuals or companies in their reporting to FINTRAC on whether there is a risk. In particular, credit unions understand the relationships with individuals and with companies, because they tend to be smaller organizations. I think some flexibility in that regard is probably what I would recommend.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you.

[The Chair, Liberal, Peter Fonseca]

That's the time.

Thank you, MP Blaikie.

Members, we are moving to our second round of questions. We're starting with the Conservatives.

MP Chambers, you have the floor for five minutes.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Mr. Chair.

Welcome, witnesses. Thank you for appearing and for sharing your time and expertise with us this afternoon.

I'd like to start, following up on the questions of my colleagues Mr. Blaikie and Mr. Ste-Marie, with the credit unions. You mentioned that your members did, in fact, freeze accounts. Were there circumstances in which your members refused to freeze an account?

[Martha Durdin]

There were not as far as I know.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

Perhaps you wouldn't mind double-checking that and getting back to us. There is some slight confusion as to whether that was a possibility or whether there was an obligation to do so. We'd be interested in knowing whether, upon receiving evidence from the RCMP, an institution did not freeze an account.

[Martha Durdin]

My understanding of the act is that the financial institution, upon receiving information from the RCMP, legally needed to comply and to freeze the account.

[Adam Chambers, Conservative, Simcoe North, ON]

Right, and so your members would not have had a choice, then, would they have?

[Martha Durdin]

That's right.