Mr. Speaker, we are at this point today because we have to be, since the legislation requires a review every five years. That last time the financial system was reviewed was in 2007, so it is very appropriate that the members of the House are looking at this issue now.
Like most of my colleagues, the NDP will support this bill at second reading, partly because we would like the Standing Committee on Finance to examine the bill in detail, and partly because we do not have much choice. Indeed, we have very little time, because the bill must pass in April.
That said, this does not mean that we do not have some serious concerns about this bill. One concern is the government's haste to pass this bill so quickly. We believe that the process has been rushed. There was less than a month's notice and consultation was very quick. About 30 submissions were received, most of which were not even signed. Thus, public consultation was very limited.
It is too bad, because this bill, although a necessary part of the review of the financial system, also affects the wallets of Quebeckers and Canadians. We truly regret the government's haste. This is a serious process that should have been taken seriously. As far as we can tell, that has not been the case.
Another one of our concerns is the fact that this bill comes from the Senate. Why? Consultations and consideration could just as easily have begun here in the House of Commons, with a much more in-depth process. We would have had more time, instead of ending up in a situation where the bill is coming from the Senate and was studied there. This House is practically being asked to ratify a decision that was made in the Senate.
There is a big difference between the other place and here. We are elected parliamentarians with a mandate from the people, the same people whose wallets are affected by the proposed changes in this bill. Nonetheless, we, the elected parliamentarians, simply have to comment on a more thorough study that was initiated in the Senate.
This bill is important and it is really sad to see that the process has been taken so lightly.
A third concern is the government's right to veto substantial foreign acquisitions. Some of my colleagues raised this matter. There are two conditions: first, the acquiring bank must have equity of $2 billion or more; second, the value of the foreign entity’s consolidated assets, in combination with the value of the consolidated assets of the bank’s other foreign control acquisitions in the past 12 months, must exceed 10% of the value of the bank’s consolidated assets.
This process is officially a ministerial guarantee that Canada's banking and financial system will continue to be stable, even though some banks and institutions have a strong desire to expand their activities abroad. The rationale is that this requirement will prevent the purchase of an entity that does not have the same aversion to risk and that could jeopardize the stability of the system in the event of another crisis.
Some uncharitable souls might say that this government is trying to take credit for Canada's strong performance. What concerns me more is the provision whereby the government has 30 days to review a foreign acquisition and, if the time expires, the transaction is deemed to have been approved by the minister.
At the Standing Committee on Finance hearing on Bill S-5, my NDP colleagues tried to get answers about this provision, and the minister of state did not provide any reassurance. When asked by my colleague for Brossard—La Prairie, as well as the Liberal member for Kings—Hants, if the application would automatically be approved if the Office of the Superintendent of Financial Institutions indicated that the proposed transaction was not to Canada's benefit and the 30 days elapsed, the deputy minister replied that that was correct.
Therein lies the loophole. If the minister wants to take credit for Canada's sound financial position, he must also guarantee that significant transactions abroad will benefit our country.
As my time is limited, I will now turn to what is missing from the bill. It is unfortunate, because we would have had the time to study the bill if the consultation process and the review here in the House had not been rushed. We would have liked to have seen some important items, which are not in the bill.
When this bill was announced the Minister of State for Finance said:
The most important thing to us is making sure that we protect ordinary Canadians, that their savings are protected, that there's credit available to them, that we have strong and stable banks. When Canadians need to borrow money, we have to have strong institutions for them. It is overall oversight, the final oversight, that is in the right place in the hands of the finance minister.
The problem is that the government is engaging in doublespeak. On one hand, it is doing a very good thing by expanding and enhancing the powers of the Financial Consumer Agency of Canada. However, on the other hand, the government does not seem to understand the importance of proper regulation to ensure that financial institutions take their share of responsibility for debt and financial literacy.
Credit must be given where credit is due: this government is doing a good thing for consumers by extending the definition of consumer protection provisions. A wider range of organizations will thus be subject to these provisions, including banking representatives and intermediaries.
However, the government is completely missing the mark when it comes to the more specific provisions on consumer rights. How can the government advocate for greater financial literacy—a task force, a motion and a bill—and then turn around and say something like this about personal and household debt:
I'm not the first one to make this statement and I won't be the last: interest rates have only one way to go, and that's up. Canadians need to recognize that whatever debt you take on now, please plan on the cost of carrying that debt increasing at some point. It may stay low for a long time; we don't know that. But the downside is much less than the upside possibilities.
It is important to understand that banking and financial regulation must serve two purposes: the expansion and development of the system and public protection. That is why rules must be implemented by a neutral and impartial third party.
In my opinion, there is a very good example of this problem, and that is the fact that the big banks are not required to participate in the system of the Ombudsman for Banking Services and Investments, the OBSI.
Only last year, the Toronto Dominion and Royal banks pulled out of OBSI system and chose to go with their own ombudsman system. Terry Campbell, president of the Canadian Bankers Association, stated on behalf of the association that this was a change in provider.
While revising the legislation, could the government not have taken advantage of the opportunity to develop a better system and require large federally regulated financial institutions to be governed by that system?
That question is worth asking. Instead of doing that, the minister told the committee that there will soon be regulations governing internal and external dispute resolution mechanisms.
The OBSI's 2011 annual report was released last week and received significant media coverage because of those two pullouts.
The report said that the move by TD Bank and Royal Bank to opt out of the process and instead hire their own independent firms to handle customer complaints lacks credibility:
The dispute-resolution process that consumers access needs to be credible, independent, and impartial—not beholden to any one stakeholder group.... Allowing banks to choose a dispute resolution provider gives all the power to the financial institution and none to the consumer.
This bill fails to address some crucial issues. I think that consumer rights is one of those issues, and this bill would have provided a perfect way to resolve consumer rights issues and remedy the excesses that were in large part responsible for the crisis in 2007, 2008 and 2009.
But that is not in this bill because the process was not taken seriously and was bungled. The process began in the other place, but it should have started here. Parliamentarians have been given very little time for discussion because the deadline to pass this bill and renew the Bank Act provisions is April 20.
We will therefore be supporting this bill on second reading, simply because we have no choice. We are living in a time of economic uncertainty, but that does not relieve the government of its responsibilities. The government should have used this process, which comes around every five years, to do a thorough review of financial legislation in order to protect consumers but also to protect the future of the economy. Unfortunately, there are many things missing.