Industry Committee on Nov. 27th, 2007

[Raymond Simard, Liberal, Saint Boniface, MB]

You will get more information. Thank you.

[Nancy Hughes Anthony]

Yes.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Simard.

We'll go now to Mr. Arthur.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Thank you, sir.

Madam Anthony and Mr. Campbell, you had a very candid answer to the question about payday loans. Your answer to a large extent was that if banks were open at night and on Saturdays, maybe many people wouldn't deal with payday lenders, who charge a lot of money for loans that people could get at the bank at a better rate, and maybe with more respect, and maybe in a more human way.

At the same time, if we talk about service in the service industry, we can see that banks are not of one accord when we talk about service to the consumer. You have TD Canada Trust, which is making inroads in Quebec, at least, with very open hours, augmenting in a spectacular way the number of hours in a week when we can deal with a banker. You have some banks, especially the Royal Bank, that don't seem to give a hoot about that.

What's the real tendency of your industry? Are we going to see more banks follow TD Canada Trust, or are we going to see more banks follow the lead of the Royal Bank in not caring about the consumer? Where is your industry going?

[Nancy Hughes Anthony]

You can imagine, Mr. Arthur, how delicately I have to respond to this question.

All the member banks--and that includes President's Choice Bank and ING, which work virtually--have their specific business strategies. They are all trying to compete for individual retail business, meaning getting you into the branch and making sure your needs are met, and they are competing for commercial business and for small business and so on.

We can see, as I think was demonstrated in some of my presentation, that the points of access are actually growing: there are more branches, more ATMs, more electronic banking, and more ability for a consumer to connect with a financial institution. In some cases the hours are also increasing. I think I can say that the trend is for more access and more services at more times of the day, which, generally speaking, is what consumers seem to want.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Thank you.

I was somewhat amused when Mr. Swedlove mentioned the solidity of the life insurance business in Canada.

My pension plan was with Confederation Life, so you can now understand my little smile. It crashed, and it took years and years for people who had invested their pensions in Confederation Life Insurance Company to get back their capital, but not the interest. Their pensions stopped growing the day Confederation Life crashed; years later, thanks to your little pool arrangement, we got back our capital, but not more. There was no growth. It was a no-growth situation for a pension plan, one in which time is money.

In what specific area of the insurance business are Canadian companies the best in the world? I don't mean size; I mean new ideas, inventiveness, research, development. In what specific area are you the best in the world?

[The Chair, Conservative, James Rajotte]

Mr. Witol.

[James Witol]

Believe it or not, I think we're the best in the world in terms of solidity and security. The Canadian life insurance industry has a record of financial soundness that I think is unmatched around the world.

We have a strong regulatory regime. We've had it for many, many years. What this regulatory regime requires is a substantial set of risk-based capital requirements. Canada was the first life insurance industry around the world to determine through the regulatory regime the capital requirements, based on a very careful assessment of the risks the financial institution was assuming. The capital requirements in Canada were imported by the United States.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Are you telling me that the best part of the Canadian insurance business is that government watches over you?

[James Witol]

It is a good part of why we're good.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Thanks to the government, you're good.

[James Witol]

That's in part true, yes.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Thank you, sir.

Do I still have time?

[The Chair, Conservative, James Rajotte]

No, you're over time, unfortunately.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

I won't be able to ask Mr. Yakabuski how he became an expert on global warming?

[The Chair, Conservative, James Rajotte]

We'll have to leave that debate for another time.

We'll go to Ms. Nash, please.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you, Mr. Chair.

I want to raise another issue that I think affects many people right across the country, but certainly disproportionately affects people who are at the low end of the income scale, and that's the issue of bank fees. This is something a lot of people feel they're being nickel-and-dimed on; they feel they're being charged to access their own money. Even if you're cautious in using bank machines, the reality is that for many people, based on their working hours, the only way they can access their money is through bank machines. It ends up affecting you in a kind of nickel-and-dime way, but it can add up to hundreds of dollars a year.

I know that more than 20 years ago the banks did not charge these fees, and today they're extremely profitable—I understand the profits last year were about $19 billion. At a time when many Canadians are finding their income certainly not growing, and in some cases declining, and especially in a place such as Toronto, where the cost of living is so high, how can we justify having bank fees for people to access their own money?

I know there are American subsidiaries of Canadian banks that no longer charge these fees. I know the British banks no longer charge them. Why are we still charging these fees here in Canada?

[Nancy Hughes Anthony]

There is a wide range of options available for consumers. I'm thinking particularly about, as you mentioned, low-income Canadians, seniors, students. It is important I think for consumers to shop around and see whether they can find the lowest-fee package that suits their particular needs. Maybe they don't need bells and whistles in their particular account or their particular credit card or whatever; they just want plain vanilla.

There is I think a good variety of accounts and opportunities. I've just recently been in conversation with our good member at the President's Choice Bank. That is a “no fee” bank, for example. Many consumers, too, could hopefully take advantage of some of the information that's available, such as that from the Financial Consumer Agency of Canada, which actually has a website that lists things such as credit cards and charges on various accounts, where consumers can go shopping for what they need.

In terms of some of those international comparisons, I think you have to be very careful that we're not comparing apples and oranges. For example, in the U.K. they may at the moment have no fees on their ABM charges, but if you want to get a money order or have money transferred, etc., it costs several multiples of the amount a Canadian bank charges.

Overall, in the annual picture for an individual or a family, what are you going to need, and can you find a reasonable, affordable package of services? I think the answer is yes, but it needs some work.

[Peggy Nash, NDP, Parkdale—High Park, ON]

I can only--

[The Chair, Conservative, James Rajotte]

Ms. Nash, Mr. Yakabuski did want to answer.

[Mark Yakabuski]

Very quickly.

I think it's very important when talking about financial regulation, as in regulation of any field, that we understand the consequences of regulating the minutiae and the picayune. I think it's vitally important that consumers have information about the choices they have with respect to banking products and insurance products and all the rest of it.

If we want to have a really productive Canadian economy, we must have an engaged Canadian consumer as well. And there should be expectations on the part of consumers that they take the time to seek out the information they need about the financial products that are best for them and to make the right choices on that basis. There needs to be a common effort here, not just a stipulation that financial institutions have to do this and that.

[The Chair, Conservative, James Rajotte]

Thirty seconds.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Well, I know it was not regulation that got the U.K. banks to drop their fees; it was public pressure. And they did so voluntarily, without regulation. I can only imagine that the Canadian banks must be under similar pressure, because every time you take money out of the bank, that fee smacks you right in the nose. It does irritate people that they are being nickel-and-dimed to get their own money.

On your issue about consumer education, what are the banks doing to educate people, especially low-income people, about the options for avoiding these fees?

[The Chair, Conservative, James Rajotte]

Briefly, Ms. Hughes Anthony.

[Nancy Hughes Anthony]

I think each one of the banks does provide those kinds of educational materials. As I mentioned, so does the FCAC, and so does the Canadian Bankers Association. If you go onto our website, you will see a wide variety of pretty straightforward information material about managing your money, about credit, about what a mortgage is, that kind of thing.

The fact of the matter is, there needs to be a fair return to the banks in some way, shape or form. As I said, when you look at the U.K. example, there may not be an ABM fee, but there is an enormous fee for other kinds of services. So I still think that when I looked internationally at the kinds of banking services offered by country, Canadians are still getting a good bargain in terms of their banking services.