Mr. Speaker, I have a few remarks to wind up my address to the House.
Bill C-100 takes important steps to ensure that Canada's financial institutions enjoy effective, independent corporate government yet allows OSFI to intervene in the composition of senior management and boards when the institution is experiencing financial difficulty. Clearly it is often when institutions encounter financial trouble that management and boards need to be carefully scrutinized.
The current minimum one-third of unaffiliated or independent directors sitting on the board of a financial institution will no longer be permitted to hold a seat on the board of their unregulated parent. This will help ensure that there are directors of institutions who will focus on the institutions' interests alone. This measure will be particularly important for ensuring independence and objectivity in the management of institutions in trouble.
For institutions that are in trouble, the legislation will empower the superintendent to veto the appointment of directors and senior officers of that institution. This is a very limited provision as it applies only at the appointment stage and only when the institution is in financial trouble.
Incidentally, a similar authority exists in the United States. It is an important power since the institution in trouble needs to rely on its board to make important decisions about the future of the company.
My remarks so far have focused on the measures to give OSFI further power to enhance the quality of corporate governance. It is also important to note that this legislation recognizes that effective corporate governance is not just one-sided.
We should appreciate that Bill C-100 includes measures that will help boards perform the all important function of overseeing management. An example is the guidelines for supervisory interventions that are being set out. These guidelines identify four stages of increasing intervention available to the superintendent, culminating in the power to close an institution.
By knowing what stage their company is in and the penalties involved, directors will have both a tracking measure and a set-up to guide their dealings with management.
As well, the legislation includes providing the Canadian Deposit Insurance Corporation, CDIC, with the authority to apply varying deposit insurance premiums based on risk factors. This too will act as a source of information for directors who will be free to inquire why their institution may be paying more than the base rate.
I have covered a fair amount of ground. I will close by putting the legislation into context as I see it.
Bill C-100 is being put forward for the continuing success of a supervisory and regulatory system which must evolve with market trends and respond to current experience both here and in the rest of the world. The thrust of the legislation clearly is safety and soundness. These improvements in safety and soundness build on the recent Canadian experience with financial institutions that have failed.
By giving our approval to Bill C-100, we will be honouring a responsibility to help maintain what is truly a world class financial system. This is a goal we can all support irrespective of partisan politics. I urge all members of the House of Commons to support Bill C-100.