Evidence of meeting #39 for Finance in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was sector.
A video is available from Parliament.
Head, Government and Regulatory Relations, Wealthsimple Investment Inc.
I don't think it's controversial to say there's not enough competition in the Canadian banking sector. We need more.
We often tell our colleagues in the federal government that we now administer $150 billion worth of assets for our clients. Just provincially, because we're a brokerage and not a bank, we've been able to attract one million customers and $1 billion of assets. We offer something like a bank account—
Head, Government and Regulatory Relations, Wealthsimple Investment Inc.
Yes.
Bloc
Head, Government and Regulatory Relations, Wealthsimple Investment Inc.
I like that comment.
Yes, it's difficult, but in terms of leveraging deposits, lending money or compliance, we can't say whether there are too many or not enough regulations, because we don't do that work. We trust the banks for that. We ask them if they're going to pay us a higher interest than they're paying their retail customers, and the answer is yes.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
To be able to offer these products, you had to be creative and quite innovative. You can't just break into that market. It's difficult, even for a company that has the financial support you have, for example.
Head, Government and Regulatory Relations, Wealthsimple Investment Inc.
That's true.
Generally, in the past, a business started as a bank, then added payment processing services, investment services and credit card services. That was the model. However, we started with investment services, then added credit card services, but didn't become a bank. To create competition, businesses don't have to be banks if they want to be big. If the services we offer our customers—
Liberal
The Chair Liberal Karina Gould
Thank you, Ms. Oliver.
We're going to have to conclude it there.
Thank you, Mr. Garon.
We will continue with Mr. Lawrence for five minutes, please.
Conservative
Philip Lawrence Conservative Northumberland—Clarke, ON
Thank you, Madam Chair.
Ms. Oliver, I have a couple of questions for you. After having a little hiatus, I'm back as a guest at the finance committee. I can't remember how many times I've asked you about open banking, fees and real-time rail. I think we have to be going on a decade of these things not being done.
Where would you rank Canada in broad terms among G7 peers when it comes to fees, real-time rail and open banking?
Head, Government and Regulatory Relations, Wealthsimple Investment Inc.
I'm going to lean into your colleague's description of me as diplomatic and say that I see a lot on the horizon for us.
It is not new information to share that Canada will be the last of the G7 countries to have real-time payment settlement and is one of the last on open banking.
Conservative
Philip Lawrence Conservative Northumberland—Clarke, ON
It was said in the panel before and is said in every pre-budget consultation that Canada has a huge productivity issue. We have simple things to fix that.
Would you agree with me that getting real-time rail and getting open banking would boost Canadian productivity?
Head, Government and Regulatory Relations, Wealthsimple Investment Inc.
Yes.
Conservative
Philip Lawrence Conservative Northumberland—Clarke, ON
Thank you.
We talk about the fees. The spring update talked about them, but they haven't put in any type of legislation yet to eliminate those fees. Is that correct?
Is it your position that it should be done?
Head, Government and Regulatory Relations, Wealthsimple Investment Inc.
Yes. The budget committed to banning the fees, and the spring economic statement committed to introducing regulations for consultation in the coming weeks. We expect that any time now.
Conservative
Philip Lawrence Conservative Northumberland—Clarke, ON
Ms. Oliver, don't you agree with me? Why do we need to consult? We either ban the fees, or we don't. We're not getting into the details of cryptocurrency here. This is pretty simple stuff. What are we consulting on here?
Head, Government and Regulatory Relations, Wealthsimple Investment Inc.
Yes. Well, I would agree with—
Conservative
Head, Government and Regulatory Relations, Wealthsimple Investment Inc.
No.
I would agree with you. There is no legislation at the moment to ban fees, yet Wealthsimple has chosen not to levy those fees.
Our execution is exclusively digital unless the other institution requires it, which is just a couple of percentages of the time. In terms of inbound transfers, 45% of the inbound transfers that we get are by fax, mail and paper cheque. We think that if other institutions want to use those outdated methods, they should be responsible for the cost, not their clients.
Conservative
Philip Lawrence Conservative Northumberland—Clarke, ON
Speaking of those other institutions, we happen to have the CBA right here.
I'll put some of Ms. Oliver's assertions right to you gentlemen here. As a spoiler alert, I'm a bit on her side.
Do you agree that closing fees should be eliminated?
Vice-President and Head Economist, Financial Stability and Banking Policy, Canadian Bankers Association
Yes, they should be eliminated for all financial institutions.
Ms. Oliver talks about the 24-year-old who saves for a house, retirement, maybe, or school. They could be doing all the right things, but if their investments are with, say, a provincially regulated financial institution not captured by the Bank Act, they will still have to pay those fees.
What we're suggesting is that prohibition gets put into the Income Tax Act, so it applies to all financial institutions, not just banks.
Conservative
Philip Lawrence Conservative Northumberland—Clarke, ON
Thank you for that.
I'm going to go next to you, Ms. Karringten.
I think it's well known that crypto ATMs were used for negative purposes; however, the government has come in with a very heavy-handed solution in just banning them all. I believe it was your testimony that it is possible to have a solution whereby we stop the fraud but continue to allow acceptability for crypto ATMs.
The other part is that if we are overly negative to cryptocurrency, don't we risk having billions of dollars of investment not come to Canada?
Executive Director, Canadian Bitcoin Consortium
Oh, goodness. Thank you for your question.
The Canadian anti-fraud centre has identified that 2.2% of fraud occurs on bitcoin ATMs, and our organization has effectively been attracting multi-billion-dollar investment deals into Canada. We have about $10 billion pending right now in terms of bitcoin ATMs. I do urge the government, considering there was zero consultation, to actually consult with bitcoin ATM operators and figure out how compliant they are before introducing a ban that they had no notice was coming.
Liberal
The Chair Liberal Karina Gould
Thank you very much.
Thank you, Mr. Lawrence.
Mr. Lavoie, you have the floor for five minutes.
Liberal
Steeve Lavoie Liberal Beauport—Limoilou, QC
Thank you, Madam Chair.
Thank you to the witnesses for joining us. Their comments are very interesting, and my colleagues have asked very interesting questions.
I'd like to start with the representatives from the Canadian Bankers Association.
I'm glad you talked about productivity. Actually, my colleague already talked about the superdeduction introduced in the last federal budget to help sectors and businesses with machinery and improve productivity. We need to help our businesses. Things are moving quickly, and Canada has always been a laggard when it comes to productivity. Measures have been adopted to help our businesses improve their productivity.
My question is about banks: What are you doing? How do you adjust?
As we know, our reality has changed, and I'm not the one saying that. We've probably lost our ability to make predictions. We live in a world where unpredictability is likely to remain for a long time. We went through that during the pandemic: lines of credit and inventory had to be adjusted because things had changed.
What did the banks do? In the current unpredictable reality, what do you plan on doing to keep pace and allow Canadian businesses to continue to adjust in terms of productivity and market development, among other things? Are there things we've known about for decades, but that you're going to move away from in the current model?