Mr. Speaker, before I begin my remarks on Bill C-37, I would like to add a few comments on the issue of public finance.
The Liberal finance critic who just spoke reminded hon. members that the Mulroney years were extremely disastrous as far as public finance was concerned, with major deficits including the last one of $42 billion.
Nonetheless, I want to provide a few facts for the public's information and so that everyone knows the whole story. The first deficit recorded in 1975 was run by a Liberal finance minister, John Turner. Then a whole series of deficits followed until 1993-94. The Liberal solution was to offload the problem to the provinces, Quebec in particular, by creating the fiscal imbalance. If we look at the true public finance story of the past 20 or 30 years, neither side has anything to teach us.
Let us come back to Bill C-37 , An Act to amend the law governing financial institutions and to provide for related and consequential matters. The Bloc Québécois will obviously be in favour of this essentially technical bill and we will have no problem supporting it.
Precisely because this is a technical bill, it does not address the substantive questions that we would have expected the Conservative government to provide us with some answers to, some possible solutions, or even that it raise issues. I am thinking, for example, of the entire question of electronic transactions. There is absolutely no reference to that, apart from cheque imaging, which I will come back to.
We know that this is a major issue in the economic development of Canada and Quebec and all of our economies. Failing to address this question, failing to provide solutions, at least in terms of regulation, means that we run the risk of hitting a ceiling over the next few years in terms of electronic transactions. The regulatory framework is inadequate. We would therefore have expected that this question be addressed in Bill C-37.
The same is true of bank fees. It may be appropriate for there to be fees for certain transactions. But do fees need to be charged for all transactions? Some transaction charges are surely somewhat questionable. An example might be a cash withdrawal at an ATM that belongs to a bank other than the one that the person ordinarily does business with. There are relatively high fees for that transaction. This might at least have been given some thought.
In fact, the Minister of Finance will be meeting with the banks in a few days to discuss these questions. It would have been useful, before they are discussed with the banks, if we could have had a substantive discussion at the Standing Committee on Finance, based on various information that both the Department of Finance and the Minister of Finance could have provided to us. But no, the question had to be raised by one of the members of the Standing Committee on Finance and the committee had to take it upon itself to initiate a study of bank fees.
Once again, on questions of this type, we must not take an ideological approach, whether on the right or on the left. We must first try to understand why banks charge these fees, what they are for, and to establish rules or limits, to regulate this practice based on information and facts, and not based on preconceived notions.
The work on this will be done by the Standing Committee on Finance. We would have expected, however, in a bill to revise the Bank Act, something that happens only every five years, that these subjects, which have been widely debated in Canadian and Quebec society, would have been addressed.
There is another matter that should have been included in this bill. That is the entire question of reinvesting in the community. We know that discriminatory practices sometimes occur on the part of our banking institutions. I would say that they are not even committed intentionally. It is simply a certain way of doing things that is referred to as systemic discrimination.
Here is an example. Every year, the Canadian Federation of Independent Business, which is hardly a left-wing institution, as we know, speaks out against the discrimination that women entrepreneurs suffer, particularly small and medium-sized business owners. March 8 will be International Women's Day, and they will probably speak out against it again this year.
This is a known fact that even the business community recognizes, and we must therefore find ways to counter this systematic discrimination.
In the United States, community re-investment is a practice that forces financial institutions to take stock of their loan and credit applicants, and how the banks approve the applications. If it appears that certain groups are under-represented despite their applications, a special fund makes money available to those investors who have been discriminated against by the banks based on their profile. It is even better when there is no discrimination and the financial institutions take stock of the ratio of loan applications and approved loans.
However, I repeat, this is common practice in the United States, and this forces the financial institutions to re-invest in the community, in those groups that have the greatest difficulty obtaining credit, in particular, to start up a business.
Another question should have been addressed during the examination of Bill C-37 and that is the issue of tax havens. How is it that Canadian banks are such frequent users of tax havens? The Bank of Nova Scotia comes to mind, among others, since I discovered that it has locations in nearly all the tax havens in the West Indies, including Bermuda and the Bahamas. Why? Is it simply because it does not have the choice, given the global economy? We would like to know. The question has not even been asked. Is it because Canadian laws and regulations are not stringent enough? The Standing Committee on Finance began examining one possibility and will delve further into this over the coming weeks.
People will remember some interesting debates we had in the House on how companies like Canada Steamship Lines Inc. were using tax havens to avoid their responsibilities as good corporate citizens. As I was saying, we should at least have touched on this, although we still can. The Bloc Québécois intends, by the way, to introduce a motion in the next few weeks that the committee should pursue its work on tax havens.
Another aspect is identity theft. We know now that criminals can access our entire profile using social insurance cards. There are about five million too many of them in circulation.
With a certain amount of credit information, these people can go to a financial institution, take out a mortgage on someone’s house and disappear with the money. Unfortunately, these things happen every day. There is nothing about this crime, which is still not recognized as such. Sometimes people discover from one day to the next that they are indebted to the banks.
Who is responsible when this kind of thing happens? Are the banks not responsible for ensuring that when someone comes to them with certain information, he or she is the right person?
I think that we could have an interesting debate on this. We did touch on it when Bill C-37 was being studied. However, the department officials told us that it would have to be listed first as a crime in the Criminal Code before it could be included in the Bank Act.
We should have suggested a number of possibilities. The opposition parties, the Bloc Québécois and the NDP, have obviously tried to fix some things. However, most of their amendments were deemed out of order because they went beyond the bill before us.
As I was saying, this bill severely restricted parliamentarians’ ability to do their job and review the Bank Act. Unfortunately, this opportunity only presents itself every five years. I hope that the department, the minister and the Conservative government will not wait five years to do something about these issues of considerable concern to the public.
Some other things too would have deserved further consideration, such as the question of the bank ombudsman, for example.
I quite liked the debate that started up where bank representatives explained what this system was and why the banks financed it. These representatives also explained that the ombudsman is quite independent and the banks have complied with fully with his decisions since the position was created.
Nevertheless, some consumer associations and individual consumers still appeared before the committee and said they did not think they had the protection they needed to proceed with some of the outstanding legal actions between consumers and the banks.
I for my part will not prejudge the issue. However, it seems to me that we should have pursued this further. Even after Bill C-37 has gone through the study phase, consumer associations will continue to think, whether rightly or wrongly, that the Bank Act does not protect consumers sufficiently. I think that they are right at least in regard to the fact that we have not studied this issue enough and did not go into it further. To this extent, their questions remain unanswered.
As I mentioned earlier, Bill C-37 is very technical and has limited debate on a number of questions. Furthermore, this bill was studied very quickly, I must confess. The committee did this work in three sessions. I do not think that the members of the committee needed a great many more sessions, given the technical framework of the bill. However, in my opinion, in future, when we study a bill like this one, we should have much more substantial debates, especially since the Bank Act is only reviewed every five years.
As I have already mentioned, the Bloc Québécois will vote in favour of this bill. Although it does not affect the big societal debates surrounding banking institutions and the Canadian banking system as a whole, Bill C-37 will nevertheless introduce a number of measures on which the Bloc agrees. For example, it will introduce mechanisms for conveying information to consumers, and this will enable them to get more information so that they can make informed decisions regarding their use of bank services. This is a step in the right direction. More remains to be done, but we are headed in the right direction.
Also, a regulatory framework allowing the use of digital data in the processing of cheques has been introduced, and this will reduce the length of time cheques are held by banking institutions.
There too I do not think anyone will complain about the fact that, instead of their cheque being frozen for ten days or seven days, as provided under the voluntary agreement between the banking institutions and the Department of Finance, the funds will only be frozen for four days, if I remember correctly. I will come back to this. The members of the committee nevertheless wondered why the banks were continuing to freeze the funds of deposited cheques for more than 24 hours, in spite of all the electronic means at our disposal.
We will have to wait till digital imaging is put in place. We have not had any answers on this.
The time during which such funds are frozen must be reduced to a minimum. This creates a lot of problems, particularly for small investors and small and medium-sized businesses. Still, the possibility of imaging will be there. Let us hope that the banks will use it to reduce waiting times for releasing funds as much as possible.
There is a provision for reducing the regulatory burden on foreign banks, credit unions and insurance companies in order to make the regulatory approval regime more efficient. Obviously nobody wants regulations for the sake of having regulations. Everyone agreed that this was a good step, especially for the credit unions.
Facilitating the establishment of foreign banks in Canadian and Quebec markets can only be beneficial for consumers. We know that our banking market is extremely concentrated in Canada, with only five major players. Despite the efforts that have been made to create competition, in particular with the passing of Bill C-8 a few years ago, we have to acknowledge that there is not much competition, particularly in the regions.
In the case of Quebec, for example, it could be said that, in the regions, the Desjardins movement practically has a monopoly because the major financial institutions have decided to desert this market as it is not lucrative enough for them.
We find ourselves in a situation where competition does not have all the results expected and the arrival of foreign banks and credit unions provides an opportunity for real competition in the financial sector, which is quite desirable.
Regulations governing mortgage loans are also revisited: the insurable portion of a mortgage will be reduced. At present, up to 75% of a mortgage does not have to be insured; the remainder does. Naturally, that leads to additional costs for consumers who wish to purchase a home. The uninsured portion is being increased to 80%. Reducing by 5% the portion to be insured will make it easier for a number of individuals to purchase property and lower the cost of borrowing. We obviously cannot be against this measure.
Various other matters were also reviewed. They relate to the proportion of equity of a bank held by a single shareholder or groups of shareholders. This should make it easier for small banks to enter the market. That is desirable. As I mentioned, past legislation adopted has not yet led to the desired competitiveness in the financial market.
Therefore, we will support this bill. In the time allotted to me I would like to talk in more detail about certain matters found in Bill C-37.
My presentation will address the bill's objectives.
The first objective covers all matters affecting the interests of consumers. A certain number of measures in this regard were taken by Bill C-37. As I mentioned, we do not go far enough; however, some measures are headed in the right direction.
The second objective is to improve legislative efficiency and there are a certain number of measures in this regard in Bill C-37.
The last objective pertains to a group of varied measures in Bill C-37.
The first key objective, which is enhancing the interests of consumers, includes a first main element, namely to improve the system of disclosing information to consumers. I talked about it earlier, in my introduction. This will help consumers make informed decisions about the investment vehicles that they choose.
It was decided to set higher standards for disclosure of charges and obligations. Penalties that apply to various accounts and investment vehicles are also heavier. Moreover, once the act is passed, it will require institutions to clearly disclose this information in all their branches, through the Internet, and also in writing to any individual who requests it.
Some might think that it goes without saying, but these provisions were not yet included in the Bank Act. Since one can hardly be opposed to virtue itself, we will support this measure.
There is a second element in this key objective of enhancing the interests of consumers. It is, as I mentioned, the change made to the regulatory framework to provide for the introduction of electronic cheque imaging. This will allow financial institutions to reduce the hold period on cheques. That is also a change that was asked for.
As for legislative efficiency, I already talked about reducing the regulatory burden for foreign banks and for credit unions. We will have to streamline the regulatory approval process, and provide a more flexible framework for credit unions.
Finally, as regards the other measures, the most important one is, as I mentioned, to increase from 75% to 80% the loan-to-value ratio for which insurance is mandatory on residential mortgages.
In conclusion, as I said at the outset, the Bloc Québécois will support Bill C-37.