Madam Speaker, I am pleased to speak to the third and final reading of the financial system review act, Bill S-5.
I will begin by saying that Bill S-5 is important to the strength of Canada's financial system and I will briefly describe how it came about.
Every five years, the government conducts a review of the policy framework governing federally regulated financial institutions. The previous legislation review was completed in 2007. The present five year review was launched in September 2010 when the finance minister invited Canadians to share their views on improving our financial system by way of an open consultation process. This five year review process helps guarantee Canada keeps its status as a global leader in financial services and it maintains the soundness of the sector.
A key priority for our Conservative government is ensuring Canadians keep on having a strong and secure financial system and one that serves as a model for countries around the globe. Today's bill would ensure that continues to be the case. In fact, the World Economic Forum recently ranked Canada as having the soundest banks in the world for the fourth year in a row. Both in Canada and internationally, this strength has been widely recognized by independent observers.
Peter Worthington, noted Toronto Sun columnist, declared:
Canada’s banking system is now widely recognized as arguably the world’s best. No Canadians fear for their deposits as many Americans do.
An Ottawa Citizen editorial reads:
Our banking and financial system is the envy of the world. While the great money edifices of countries such as the U.S., Britain and Switzerland cracked at the beginning of the recession, Canadian banks stood firm.
However, as I mentioned earlier, this recognition stretches well beyond Canada's shores, as it is repeated around the globe.
David Cameron, Britain's prime minister, has heralded our system by saying:
In the last few years, Canada has got every major decision right. Look at the facts. Not a single Canadian bank fell or faltered during the global banking crisis. ... Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.
The Irish Times has applauded it by saying:
Canada’s policy of fiscal discipline and strict banking supervision was a reason why it was one of the world’s strongest performers during the recession.
The Economist, the renowned magazine, has recently asserted that “Canada has had an easier time than most during the recently global recession, in part, because of a conservative and well-regulated banking system”.
The financial ratings agency Fitch, when reviewing Canada's top tier AAA credit rating, focused its assessment on the fact that “Canada's banks proved more resilient than many peers thanks to a conservative regulation and supervision environment.
I share and welcome that high praise.
Furthermore, the financial services sector has a significant role in the health of the Canadian economy. Not only does it represent 7% of Canada's GDP, it is also responsible for over 750,000 good, well-paying jobs. It also plays a distinctive, indispensable function in fuelling the growth, nurturing financial stability and safeguarding savings, all of which are necessary for the success of Canada's economy.
Today's bill would contribute to the continued strength of Canada's financial system. Indeed, the mandatory five year review that shaped today's bill is key to helping set apart Canada from almost all other countries. This practice makes certain that the laws governing our financial system are reviewed and updated on a regular basis, ensuring they are responsive to an ever-changing global marketplace.
In a similar vein, the global financial crisis of the past few years has underlined why a stable and well-functioning housing market is necessary for the financial system and overall economy.
While Canada's financial system remains sound, well-capitalized and less leveraged than its international counterparts, our government proactively acted to bolster the stability in our housing market by adjusting our mortgage insurance guarantee framework. This included reducing the maximum amortization period for government-backed insured mortgages with loan-to-value ratios greater than 80% from 35 years to 30 years.
As well, we withdrew government insurance from home equity lines of credit and lowered reduced borrowing limits in refinancing.
Independent observers and economists have roundly applauded such adjustments. For instance, a recent Waterloo Region Record editorial said, “The federal government has done the right thing in tightening up the rules for mortgages in this country”. A Calgary Herald editorial added, “...the right direction...it is good to see the government continue to be vigilant on this file”.
Without a doubt, our Conservative government is working hard renewing many key fundamentals of our financial system and strengthening it with new tools.
Through the financial system review act, we are modernizing, fine-tuning and harmonizing the existing framework to ensure it keeps the high level of performance. Canadians know and understand that the present framework that has made our financial system the soundest in the world functions well.
That is why the financial system review act seeks to build on, not rebuild, that solid foundation with a proposed legislative package that includes measures to: better focus financial institutions legislation to support financial stability and guarantee Canada's financial institutions keep operating in a competitive, effective and stable environment; fine-tune the consumer protection framework, including further improving the Financial Consumer Agency of Canada's powers; and reduce the administrative red tape on financial institutions to enhance efficiency and add regulatory flexibility.
Other measures contained in today's bill include: increasing the capability of regulators to effectively share information in a timely manner with international counterparts while respecting privacy laws; guaranteeing the right to cash government cheques under $1,500 free of charge at any bank in Canada to all Canadians; enabling co-operative credit associations to provide technology services to a broader market to promote competition and innovation; and much more.
I am happy to note that many public interest groups have given their strong endorsement of today's bill. For instance, the Canadian Life and Health Insurance Association declared:
It is important that legislation be periodically reviewed so that it keeps up with the changing environment.
The industry welcomes a number of measures outlined in...[the financial services review act].
Today's bill would strengthen stability in the financial sector, improve the consumer protection framework and modify the regulatory framework to new developments. It provides for a renewed structure that will benefit all Canadians.
We recognize that, to remain a global model of stability and ensure the soundness of the financial sector for all Canadians, routinely reviewing what regulatory changes are necessary to foster competitiveness is essential.
The financial system review act upholds the long-standing tradition of ensuring standard reviews of the regulatory framework for financial institutions to keep a stable and secure financial sector. For that reason, I urge all members to support for all Canadians today's bill and the continued safety and security of our shared financial system.