Mr. Speaker, it is with some pleasure that I debate this bill at third reading. I am also very disappointed by the results of the vote held a few minutes ago in the House.
Let us begin with the few positive notes to be found in Bill C-82. The official opposition is happy to have helped remove two important sectors from this revision of the financial institutions act.
The first of these sectors is the sale of insurance through chartered banks. You will recall that about two years ago the banks asked the federal government, specifically the Minister of Finance and the secretary of state responsible for financial institutions, to allow insurance products to be sold by chartered banks, thus creating undue, not to say unfair, competition with insurance brokers and underwriters in Quebec and in Canada.
The Bloc Quebecois fought very hard to have this provision dropped from the bill before us, and we won. It is, in our view, one of the great victories of the official opposition and of the Bloc Quebecois since the beginning of this term of office.
The second sector of Bill C-82 where there is some cause for satisfaction is the leasing sector.
Once again, the Canadian chartered banks claimed, a few years ago, to be accredited to offer car leasing arrangements to consumers. Car dealerships in Quebec, as in Canada, rose up in opposition to this. The Bloc Quebecois took up arms over this both in the House and in the finance committee on their behalf, and we won the day.
Why did we share the dealers' opposition to the banks' offering car leasing? Purely and simply, because the dealerships did not have the guarantee of the financial institutions, nor of the federal government and the Minister of Finance, that the banks would be prevented from owning fleets of automobiles.
The second major reason for our opposition, and that of the dealers of Quebec and Canada, was competition-related. Let me explain. The banks lend money to dealerships, and if they were also involved in selling car leasing services, the free play of competition would be somewhat distorted.
The banks would have had a major lever for unfair competition with dealers; for instance, they could have cut back on their lines of credit. We had no guarantee on this, and that is why we did not hesitate in the least, right from the first weeks, to support the car dealerships in Quebec and in Canada that were calling for these guarantees, before the banks could be allowed to offer leasing. So those are the two good things about Bill C-82.
On the down side, I have just referred to the vote taken in this House a few minutes ago at the report stage, when the three amendments proposed by the Bloc Quebecois were defeated by the Liberal majority-by the Reformers as well, but that is less important. The Liberal majority defeated our three amendments.
And what were those amendments? The first one objected to a provision in Bill C-82 under which financial planning, which is strictly a provincial matter, will be regulated by federal legislation through the chartered banks.
In other words, the banks may offer financial and financial planning services, which come under provincial jurisdiction, and those which offer these services will not be subject to Quebec law or Ontario law or any other provincial legislation. However, those which offer financial planning services through bank branches will be subject to federal legislation.
This is the kind of intrusion we always felt was entirely unacceptable. In our amendment, which was defeated unanimously by the Liberals, we suggested a form of opting out.
When provincial laws to that effect exist in a province, the provincial legislation applies to financial planning services offered through banks and other institutions. Where such legislation does not exist, the federal legislation applies.
From the outset, the intent of our amendment was to provide for opting out, so that provincial jurisdictions would be respected. The Liberals turned down a reasonable proposal. They said no and preferred to add to the regulatory burden.
From now on, in Quebec, Ontario and the other provinces, there will be not one legislation to regulate financial planning services but two. We have become accustomed to this tendency which, instead of removing or relieving the burden on the financial sector, favours adding more regulations, resources and all manner of things which, in the final instance, merely increase inefficiency and create uncertainty, which includes passing this kind of legislation and turning down reasonable amendments that allow for opting out in areas under the exclusive jurisdiction of the provinces.
The second amendment we proposed concerns tied selling, in other words, putting pressure on the consumer to buy services in addition to those he is seeking from a financial institution. In fact, the issue of tied selling comes under the Consumer Protection Act. The Consumer Protection Act is provincial and covers an area under provincial jurisdiction.
Once again, the Liberals preferred to drop our amendment which suggested opting out as a possibility where the provincial legislation provides adequate protection for the consumer.
I think our colleagues opposite and this government generally do not know the meaning of exclusive. Exclusive jurisdiction means there is only one player, not two or three. Instead of abiding by the definition given in the dictionary, they prefer to add more bureaucracy. They go overboard on regulating, protecting and developing the system, wrapping it in the Canadian federalist flag.
Federalism, according to members opposite, is supposed to be synonymous with greater efficiency, certainty and stable markets. When we talk about the financial sector, stability is important. Instead, in the past two years, and especially in the case of this bill, the government has proved the very opposite is true by trespassing on provincial jurisdictions and adding new levels of regulations.
The federal regime is synonymous with overlap, inefficiency, duplication, over regulation, uncertainty and instability. So much so that the players in the financial sector-and, as finance critic for the past two years I have met people in the financial sector in both Quebec and Canada-do not know whether they are coming or going. They sometimes wonder what sort of crazy world they are in, since everywhere else there are two watchwords: deregulation and performance.
What we have seen in the financial sector for two years is over regulation, administrative sluggishness and reduced ability to compete among the businesses in the various sectors, including finance. Speaking of competition, and the competitive strength of businesses operating in the financial sector, this was the focus of our third amendment, which was roundly defeated by the government for no apparent reason.
I have so much to say, and since you are giving me the time to say it, I must be able to get out my arguments. I was saying that there is a third amendment concerning competitiveness, the ability of a company operating in the financial sector to compete. Under Bill C-82 and federal legislation on insurance companies, which we thought this bill was amending, a provincially chartered insurance company cannot acquire either all or part of an insurance company that is federally chartered.
I will give the example of Quebec, because we have a blatant example of companies being blocked from becoming fully competitive. A Quebec insurance company operating in the Quebec insurance market cannot acquire blocks of insurance policies from another company that is also operating in the Quebec market, if the latter company is federally chartered.
On the brink of the 21st century, when we should be talking about unrestricted competition, free markets and efficiency, this provision in Bill C-82, uncorrected in federal legislation on insurance companies, is incongruous to say the least. I would say it runs counter to the spirit of the North American Free Trade Agreement, which talks of unrestricted competition and economic and financial integration.
It is also contrary to the spirit of the last treaty, in 1993, of the World Trade Organization, which already contained provisions to liberalize the financial sector internationally and which is continuing-starting a few days ago in Geneva-to talk about greater liberalization, a more permissive environment if you like, with respect to international financial transactions, regardless of their nature or the country of origin of businesses operating in the financial sector.
We have here an obvious case of barriers that are not commensurable with the effective operation of the insurance market. It is something that is a bit strange and that has the effect of making it easier for foreign companies-French, Brazilian, German, Italian, Norwegian, Finnish, you name it-to buy operations, in whole or in part, from Canadian insurance companies, something that provincially chartered insurance companies in Quebec are not allowed to do. It is complete craziness.
Like most branches of insurance companies operating in Canada, branches of foreign companies are federally chartered. Federal legislation therefore makes it easier for them to do business in Canada and in Quebec than for Quebec entrepreneurs. This state of affairs is quite simply unacceptable.
I will take the example of L'Entraide. This is a company whose head office is located in Quebec City. It is average in size. It hopes to take advantage of the development of the insurance market and the great rationalization now taking place. It wants to grow and improve its performance and its presence, and it has the chance to do so by buying up a block of insurance policies from a federally chartered company, whose clientele is located entirely in Quebec, for $1.3 million.
This may sound like a huge amount to taxpayers listening today, but in the field of insurance, where certain transactions run in the billions of dollars every week, it is not all that much. Compared to the transaction we saw last weekend in Les Affaires, this is not going to shake up the insurance sector. We will come back to the other acquisition I mentioned, which appeared in
So the insurance company L'Entraide, a Quebec company with a provincial charter, wants to acquire a block of $1.3 million of insurance in order to expand, to enhance its efficiency and competitiveness in the broadened North American and international markets. The federal government says it is not allowed to do so. It is not allowed to do so because it is a provincially chartered company, and a provincially chartered insurance company is not allowed to purchase, in whole or in part, the activities of a federally chartered insurance company. Even if this federally chartered company is involved in the Quebec market, has Quebec insurance policies, the provincially chartered company it is not entitled to acquire those $1.3 million in insurance blocks. That is utterly unacceptable. That is discrimination, pure and simple.
This is all the more discriminatory in that most insurance companies, which are Quebec subsidiaries of foreign companies, are federally chartered. The four major Canadian insurance companies, with head offices in Toronto, are federally chartered.
So, by continuing this discrimination and rejecting the amendment we proposed at the report stage, the government is offering the insurance companies and subsidiaries of foreign companies an opportunity on a silver platter to expand in the Quebec and Canadian market, to increase their profits, and their shareholders' dividends, through policy holders in Quebec and Canada.
Moreover, the four major Toronto-based federally chartered insurance companies are allowed to expand in Quebec by acquiring blocks of insurance, and they are entitled to do so because of their federal charters. Yet a Quebec insurance company operating within Quebec cannot do the same. If being ridiculous were fatal, there would be no one alive on the other side of the House. It is a mental aberration to maintain such discriminatory treatment toward Quebec insurance companies.
We heard all manner of things during the debate on continuation of this restriction. One of the arguments presented by the government-I was going to say the opposition, since they are the opposition as far as our amendment is concerned, you understand what I mean-one of the major arguments presented by the Minister of Finance, by the Secretary of State responsible for financial institutions, by the assistant to the Minister of Finance as well, was that consumer protection came first and foremost.
Consumers would not be sufficiently protected if provincially chartered insurance companies were allowed to acquire blocks of insurance from federally chartered companies. They are more protected when the one acquiring such insurance holds a federal charter, even if it is a subsidiary of a foreign company with its head offices way off in God knows what country. In that case, the consumers are properly protected.
On the other hand, if the acquiring company is a Quebec insurance company, regardless of how good the consumer protection is, no way. But the Minister of Finance, the secretary of state and senior officials go into a blue funk when you mention anything that would promote the expansion of the Quebec insurance sector.
Whether they operate under a provincial or federal charter, insurance companies in Quebec must apply annually for a licence to the inspector general of financial institutions of Quebec. Every year, the inspector checks the solvency of all insurance companies operating on Quebec soil before issuing a licence that must be renewed every year. federal body.
Second, the inspector general of financial institutions requires all insurance companies, under provincial or federal charter, to be members of the Société d'indemnisation d'assurance de personne, which is also involved in providing maximum protection for the consumer.
When we have a situation like this where we are watertight as far as solvency is concerned, whether the charter is provincial or federal, and where plenty of checks and balances are provided by the inspector general of financial institutions and the Société d'indemnisation d'assurance de personne, using consumer protection as an argument no longer makes any sense.
If that is the main objection, it no longer exists because whatever their charter and whether they operate in Quebec or Canada, insurance companies cannot be faulted on consumer protection.
Consumers can depend on the system, and policy holders are protected on the Quebec market by the inspector general of financial institutions and within the Canadian context by the Société d'indemnisation des assurances de personne. So what is the problem? Why are they so reluctant to move? They are in such a funk that a golden opportunity was missed for a company like L'Entraide d'assurance-vie du Québec to acquire a block of insurance worth $1.3 million.
They are so reluctant to move, although they have run out of arguments to prevent this kind of company from expanding, from becoming more efficient and a bigger player in a very competitive insurance market and even more so with the liberalization of the financial sector throughout the world.
On the weekend, I read an article I mentioned earlier, in Les Affaires, which said that Royal Life Canada had acquired an interest in Gerling Global. For your information, Mr. Speaker, Royal Life is a branch of a British insurance company. Gerling Global, which sold the blocks of insurance, is a branch of a German company. On the weekend, these two branches of foreign companies operating on Canadian soil, both under a federal charter, concluded a transaction in which Royal Life acquired part of the life insurance portfolio of Gerling Global for $12 billion. Twelve billion dollars, Mr. Speaker.
Two companies, subsidiaries of foreign insurance companies, one British and the other German, were allowed to acquire a block, to carry out a transaction involving a transfer of $12 billion worth of insurance business. Federal legislation permitted this, but it does not permit Entraide, a Quebec insurance company, to buy a $1.3 million block of insurance policies from a federally chartered Canadian company. That is ridiculous.
On the other hand, we keep hearing that we must look out, that there are consumer protection problems. My eye, Mr. Speaker. On April 8, I wrote the Minister of Finance to remind him that there was a problem here. The Quebec minister of finance has also said there was a big problem in this area. I think the government's inertia is hiding something.
It is not that this is a complex issue. It is straightforward. The government had only to accept our amendment today instead of rejecting it, and the matter would have been resolved. The problem is one of pure discrimination against Quebec insurance companies. It is so discriminatory that the Quebec minister of finance even offered to amend the Quebec law on trusts and savings companies, which discriminates to some extent against federally chartered trust companies. But he was turned down.
Mr. Landry said he was prepared to amend the Quebec law on trust companies so long as the federal government were quick to do the same thing to legislation on financial institutions to enable provincially chartered insurance companies to acquire blocks of insurance from federally chartered companies. The Minister of Finance turned up his nose at this attractive proposal, made in the spirit of free trade and aspirations for the future of the financial sector in Quebec and Canada. He preferred to continue to discriminate against Quebec insurance companies.
Two questions arise: First, is this not a way of eliminating provincially chartered companies? Second, is this not a way for the federal government to say: "It is true that insurance comes under the exclusive jurisdiction of the provinces, but we want to change that".
And the backhanded way to change things is perhaps to make it increasingly less profitable to have provincially chartered companies. Insurance companies will need federal charters in order to benefit from globalization, in order to achieve a more competitive position in the insurance market.
Is that it? If so, let the federal government tell us they want to restrict us in a field that supposedly comes under our exclusive jurisdiction, according to the Canadian Constitution that the members opposite say they respect and that they ignore every day. If they want to take this field of jurisdiction away, let them come right out and say so, because that is what it looks like.
But if that is not the case, what is behind this sullen attitude of the government and of the Minister of Finance toward an amendment that is and should have been logical, if the members opposite had indeed been logical?
We think there is perhaps another explanation. I was speaking earlier about the four or five Toronto-based Canadian insurance companies that dominate the market. I would remind members that these companies all have federal charters. The top four companies are being left lots of room so that when another insurance company wants to cease operations they can buy up insurance policies and continue to grow, to make profits and to pay dividends to their shareholders, while our provincially chartered insurance companies in Quebec cannot do what they wish in their own market with respect to Quebec policy holders.
We sometimes wonder if it is not these very companies, Canada Life, London Life, Sun Life Insurance Company of Canada and Manulife Financial, all great contributors to the coffers of your charming Liberal Party to the tune of $50,000-not bad as contributions go-that the government wants to help in future and for which it wishes to maintain privileges that are unjustified and
discriminate against Quebec's provincially chartered insurance companies.
The opposition is sorely disappointed with the government's attitude on this matter, but is, in a way, pleased that the Minister of Finance has, at least, agreed to meet the key shareholder of L'Entraide, the official opposition critic-myself-and a representative of the Government of Quebec, next Thursday in his office for a discussion of this matter.
It is most unfortunate, however, that our amendment, which would have settled this question for once and for all, has not been accepted. Our expectations of the meeting with the Minister of Finance this week, after the rejection of the official opposition amendment, encompass two possibilities.
The first is that he will assure us that he will be prompt in introducing a private member's bill from his department to remedy the injustice and discrimination being experienced by Quebec insurance companies. The second is that he will announce that he will be shortly tabling a notice of a ways and means motion clearly setting out his intention to move quickly, when we are back after the coming election, to pass a bill amending Bill C-82, to ensure that this discrimination toward provincially chartered insurance companies no longer exists, as it does in the current legislation on insurance and the current bill.