Werner Schmidt

[Bombardier, September 30th, 1997]

Mr. Speaker, why will the letter not be tabled?

I wonder if the prime minister should not be more concerned about political interference in Canada than about political interference in Mexico.

Is he aware that Bombardier and the Cormorant helicopter group have just hired as a lobbyist the ex-executive assistant to the minister of defence?

The prime minister sent a letter to Mexico. Will he now send a letter to his minister of defence complaining about political—

[Bombardier, September 30th, 1997]

Mr. Speaker, Bombardier retains its cosy relationship with the current Liberal government. In an unprecedented move the prime minister sent a letter to the president of Mexico complaining about political interference causing Bombardier to lose a contract.

How does the prime minister justify this action and will he table the letter in this House?

[Supply, September 30th, 1997]

Madam Speaker, congratulations to you on your appointment as Acting Speaker.

I would like to congratulate my hon. opponent from across the way. He is a great speaker. He creates beautiful word pictures.

There is in this country a program called technology partnerships Canada. Its predecessor was called DIPP. This son of DIP took about $150 million of the money that had been allocated under DIPP, so the original purpose of TPC could not be met on those grounds alone.

I wonder whether the hon. member could tell us how much of the moneys that were handed out under DIPP have been repaid, at what rate and what is the interest that has been repaid to the government. One of the conditions under that program was that some of the money was to be returned. That is fiscal responsibility. Could he tell us?

[Speech From The Throne, September 25th, 1997]

Mr. Speaker, I would like to congratulate you. You occupy the chair so well. Not only do you look well, you act well, you speak well and you have such a passion for the House.

I would like to refer to the speech we have just heard from the hon. member for Algoma—Manitoulin. He used little phrases in his comment that really caught my attention. He said “and no one shall be left behind”. Now that was very interesting. In fact I think “no one is left behind” were the exact words he used. That is very interesting because the moment he finished his speech, the hon. member for Saint John had to point out to him that there are people who are already being left behind.

I would like to ask the member for Algoma—Manitoulin what he considers to be accountability and what he considers being left behind. I draw his attention to the the allocation or awarding by the Minister of Industry of TPC grants. It is is clearly the spoken intention of the Minister of Industry to say very clearly that these grants are to be in support of and to develop small industry in Canada. What do we discover? Until this point as of August 31, 1997, 75 percent of all of those moneys were not given to small industry but to large industries in aerospace and defence; 75 percent on industries that are wealthy, industries with a profit, yet the small businessman could not get in. Does he call that accountability? Does he call that being left behind? What is he talking about?

[Petitions, April 16th, 1997]

Madam Speaker, I rise to present a petition on behalf of my constituents who urge Parliament to remove the GST from books, magazines and newspapers.

They ask the Prime Minister to carry out his party's repeated promise to remove the federal sales tax from reading.

[An Act To Amend Certain Laws Relating To Financial Institutions, April 15th, 1997]

Mr. Speaker, it is with pleasure that I continue the debate on Bill C-82, an act to review the legislation regarding certain financial institutions.

Before I get into the other part of my remarks, I wish to reply to certain statements that were made by the Parliamentary Secretary to the Minister of Finance. In particular, he said that the clauses dealing with tied selling would not be proclaimed until September 1998. It was almost a sanctimonious kind of concession that suggested that this is such an important issue that it will be put into the legislation but the government will not proclaim it until September 1998.

This was put under the rubric or in the context of saying that it is in the interests of the consumer and that the government is looking after the interests of the consumer.

I wish to point out as I go through the various remarks that the very amendments dealing with tied selling in the proposed Bill C-82 are not in the interests of the consumer. I will move into that with some dispatch at this point.

First of all, may I draw members attention to it not being in the interests of all categories of consumers. That is the individual consumer, that is the large business corporation, the small business corporation, the partnership, the medium sized corporation. All these people use in various shapes and forms and at various times, in larger or smaller amounts, with different degrees and conditions of repayment and rates of interest the function of the bank as it lends money to these various ventures.

Every Canadian who borrows money is affected by the provisions in proposed Bill C-82. These are loans that can be of short term, of longer term, of flexible interest rates or of fixed interest rates. It has to deal with bridge financing, if that is the instance, or it may deal with lines of credit. It deals with first mortgages and second mortgages, whatever the case might be.

What is the issue in this matter? The issue is that it will give to the banks increased power to do things that otherwise are not available to other financial institutions. How do I come to this conclusion? It comes from the two subclauses that are presented in clause 55 of Bill C-82. They refer to section 459.1 of the Bank Act.

How does this affect the consumer? I wish to read the sections of the bill so that we are each clear on what exactly it is that we are talking about. I want to go on record with this because the day will come, I am convinced, when a lot of Canadians will ask themselves why the government passed this legislation.

In order to put this into the appropriate context, we need to recognize that section 459.1 reads as follows:

459.1 (1) a bank shall not impose undue pressure on, or coerce, a person to obtain a product or service from a particular person, including the bank and any of its affiliates, as a condition for obtaining a loan from the bank.

Every consumer listening to this would say that is good and I agree. However, the bill does not stop there. It goes on to subclause (2) and (3). It is in subclause (2) that we need to read as follows:

For greater certainty, a bank may offer to make a loan to a person on more favourable terms or conditions than the bank would otherwise offer to a borrower, where the more favourable terms and conditions are offered on the condition that the person obtain another product or service from any particular person.

It is very clear that a preferred rate may be given on the condition that the borrower obtain insurance from a particular person, which could be a subsidiary of the bank or any institution with which the bank has an agreement.

Let us read subclause (3). It is in effect the mirror image of subclause (2) but written in a different way. It begins with the same words:

For greater certainty, a bank or one of its affiliates may offer a product or service to a person on more favourable terms or conditions than the bank or affiliate would otherwise offer, where the more favourable terms and conditions are offered on the condition that the person obtain a loan from the bank.

According to the amendments to Bill C-82, those two clauses are being used to replace the existing section 416 of the Bank Act. Section 416 reads as follows:

(1) A bank shall not undertake the business of insurance except to the extent permitted by this act or the regulations.

(2) A bank shall not act in Canada as agent for any person in the placing of insurance and shall not lease or provide space at any branch in Canada of the bank to any person engaged in the placing of insurance-

(4) Nothing in this section precludes the bank from

(a)requiring insurance to be placed by a borrower for the security of the bank; or

(b) obtaining group insurance for its employees or the employees of any bodies corporate in which it has a substantial investment pursuant to section 468.

(5) No bank shall exercise pressure on a borrower to place insurance for the security of the bank with any particular insurance company, but a bank may require that an insurance company chosen by a borrower meet with its approval, which shall not be unreasonably withheld.

That is the part that works today and that is what Bill C-82 states shall not longer be the case.

I submit that is operating not in the interest of the consumer but in the direct beneficiary interest of the bank itself.

Having set the context, we need to ask ourselves how this can affect the consumer. First, we need to recognize that in 1992 the four pillars of the financial institutions were collapsed. They do not exist any more. Those four pillars constituted insurance companies, investment dealers, trust companies and banks. They are no longer in existence.

With the destruction or the elimination of the barriers between these four pillars of finance went competition and came the exchange of information between these various aspects. What does this mean in practical terms? It means, and has in practice turned out that way, that banks today may own insurance companies. There is a whole variety of different kinds of insurance companies. They may own life insurance companies. They may own health insurance companies. They may own property and casualty insurance companies, automobile insurance companies or trust companies. The experience now is that 80 per cent of the investment dealer business is done by the banks through its subsidiaries.

Under the umbrella of a single board are contained all four of these that were before distinct and separate financial functions.

Let us take a look at a couple of scenarios on how this would work in the individual case, how it can work and how it has worked. There has been the greater consolidation of information under one umbrella. There are instances where a bank can own a life insurance or a health insurance company. When a life insurance policy or a health policy is issued a lot of very personal information is collected.

Let us take a person who owes $100,000 to the bank. The loan is there. Lo and behold the bank recognizes that a set of claims has been issued against its insurance company by the individual with the loan. The bank may now very easily project forward and ask under what conditions or how favourable is the repayment possibility of the loan.

I presented this example to the finance committee when the bill was up for discussion. The president of the Canadian Bankers Association appeared before the committee. This is not a recollection from my memory but an exact quotation of what Mr. Protti said:

First, our privacy codes do not permit the sharing of information on health issues across subsidiaries. It doesn't happen.

That is very interesting. One bank, a member of the Canadian Bankers Association, sent a policy statement sent to clients of a subsidiary of the bank, an investment dealer subsidiary, which stated:

Its officers and employees must scrupulously observe in letter and spirit all laws governing business and securities activities. Its officers and employees must deal fairly, honestly and in good faith with clients-The confidentiality of client information is a fundamental principle of our firm. No employee may release confidential client information unless required by law or with the client's consent.

I will refer to this point later when we go through the policy statement. It further stated:

The misuse of confidential information or misuse of any inside information not generally disclosed for personal gain or for the benefit of anyone else is prohibited and grounds for immediate dismissal of an employee.

What is the nature of the bank and its relationship with a subsidiary? The subsidiary is a wholly owned subsidiary of the bank and the bank guarantees all the liabilities of the subsidiary.

What about the sharing of private information? The subsidiary may give confidential client information to the bank. This type of information includes a client's name, address, phone number, income, assets, debts, investment objectives and financial plans.

The bank may use this information for the following purposes: to sell its services to the client; and to survey the relationship between its subsidiaries and their clients. It is the beginning of a sharing of information among subsidiaries. It may use it to determine the amount of debt one has outstanding to the subsidiary and to the bank. The comes the catch all phrase. It says:

This information may be used for any other purpose about which the subsidiary will inform you, the client, in writing.

Earlier it stated that the bank would not disclose the information unless it was required to be shared by law or without the consent of the client. Before an account is opened with the subsidiary there is a client consent statement which reads:

By opening an account with this subsidiary you are consenting to the bank's use of this information.

It does not say how. There are no conditions placed on it. It is simply an agreement that the bank may use the information. If a client wants to end the consent written notice must be given to the subsidiary and addressed and delivered to the subsidiary's branch. Notice would be in effect when a written acknowledgement from the subsidiary is received. Should a client wish to close an account,

the subsidiary would give at least 30 days written notice before doing so.

Who is closing the account? The client chooses to close the account. If the client does so or if the client will not give permission to send the information, the subsidiary may close the account without any further consultation with the client. The bank is virtually guaranteeing the information will be made available to other of its subsidiaries and that the client, in order to keep the account, must give consent to the sharing of that information with the various subsidiaries. It is not far fetched that the information could be used by the bank in its decision making process.

Scenario No. 1 depicts a situation where a particular piece of personal information may be used to make a decision against clients or change their financial status.

Let me move on to another scenario. This time it is implicit rather than explicit. We will consider the following. A business has a loan. The bank advises that it is a big loan and asks about it being paid back by the business going public.

We all know what going public means. It means issuing shares which allows the public to buy parts of the business through the purchase of shares. Lo and behold the bank also has a subsidiary which deals in securities. One of the functions of a securities dealer is to underwrite new stock issues, which would be the case in this scenario.

First we had a private company that went to the bank and, in order to pay its loan, went to the public market to sell equity shares. Now the bank suggests to the individual to keep a bit of the loan on which it will give a preferred rate on the condition, according to subsection (2), the underwriting service of its subsidiary is used. On the other hand it says the company can go all the way with the underwriting and will be given a preferred rate but the underwriting has to be done through our subsidiary. The rate will only be given on the condition that if in the future the company needs to borrow money it will borrow it from the bank in question.

One could argue that is good business. However, when a person is in trouble it is tantamount to coercion. It is certainly tantamount to undue pressure. It is not good business. That scenario is not far fetched. It is a very real possibility.

I will outline a third scenario. This one concerns a business which at this point in time is in serious trouble. Under the umbrella provision it has given the bank all its business. The company pension plan, mortgage, personal RRSPs and home mortgage are all with the bank, in one place. The bank has knowledge of the affairs of the business, its proprietor, its family and its members. It knows the business is in trouble and that even if the company pension, the group RRSPs, the individual RRSPs, the house and the other mortgages were liquidated, there would not be enough money to cover the debt.

By consolidating everything under one roof the bank has an unusual power and a coercion possibility that otherwise would not exist. That is dangerous and imprudent. It should not be considered prudent management of financial affairs if all products or services are subsumed under one bank or one financial institution.

Who benefits from all this? It is the bank that benefits. If we take the first scenario, the information is given by the client to the bank and shared with the subsidiary to the advantage of the bank and not of the client.

In the second case the banks underwrite through its subsidiary the share issue. The subsidiary gets the underwriting fees for writing the share issue. Its brokers collect the fees from the distribution of the shares to the general public. It also gets an overriding commission. Then there is the continued trading of that set of securities. The company, which was previously private, now has the additional difficulty of having to meet all obligations a public company has to meet. These are substantial. In all three instances the bank is favoured rather than to the individual.

I will review exactly what we have done so far. Bundling it all together, as the hon. parliamentary secretary said, will somehow be to the benefit of the consumer. By bundling all these products and services we can offer either a preferred rate on the loan or a preferred rate on services or products being purchased.

What is not in the act is important. The act does not require the bank to disclose the prices of these component parts or whether the specifications of the component parts would have been the same before they were bundled together.

There is no protection. It may not even be the same set of products the customer thought he was buying. Tied selling is a very dangerous.

What do other people have to say about this section of the act? Members have heard my interpretation. Let me read what Mr. Yakabuski, director of government relations of the Insurance Bureau of Canada, had to say in his brief to the committee:

If there is an area where the committee may choose to make Bill C-82 an even better piece of legislation, it is with respect to the tied selling provisions proposed under section 459.1 of the Bank Act.

Our view is that subsections 2 and 3 have been worded too broadly and may in fact permit the bundling of certain bank products and other financial services in a way which may not be beneficial to the consumer.

Mr. Yakabuski added to that section of his brief by saying:

With respect to those proposed subsections it seems perfectly absurd to us that the government would decide to put into law definitions regarding some things that might be good for consumers and some things that might not be good for consumers when everyone knows that it is not an exhaustive list. That is precisely why you have proposed section 455.5, which we support, which gives the governor in council the ability to make regulations determining exactly what is and is not beneficial for consumers.

We recognize that some bundling of products can be good for consumers, but why should you want to restrict the regulation making power now?

That is at the heart of the issue. That is what the insurance bureau had to say.

What did insurance brokers have to say? A letter to Mr. Frank Swedlove of the Insurance Brokers of Canada stated:

We believe that there is a cause for concern regarding the proposed amendments to the Bank Act and in particular section 459.1. In our opinion subsections 2 and 3 may limit the regulation making power of the Bank Act. To remove this potential problem it may be preferable to delete subsections 2 and 3. This can be done, if you agree, during the parliamentary review of this legislation which is expected to resume as early as this week.

That did happen but the government chose not to agree with that. Mr. Speaker, I submit to you and to this House that the day will come when we will ask ourselves, and the government will ask itself, why we did not do that? If the people of Canada elect a Reform government then that will be looked after and consumer interests will be preferred. They will be balanced off against the powers of the banking and financial institutions. That is what we need to do.

This same Madam Brown who wrote the original letter that I just read also said this at the committee: "There are other angles to tied selling that I think we overlooked. They are not just simple ones. We can tell you that favourable tied selling clauses that are in proposed subclauses 459.1(2) and (3) will be unenforceable". What do you think of that, Mr. Speaker?

The supervision of these activities will be almost impossible because we go through this ourselves now in the business of tied selling. This is not some amateur making this observation. This is someone who is in the business of insurance brokering. This is someone who understands property and casualty insurance in great depth. She says that it will be unenforceable to do something like this.

Why then does the government insist that this legislation be passed? Last Thursday we presented amendments. This afternoon we voted on those amendments and the government voted them down. What did those amendments say? They said to keep what exists in legislation now and make tied selling illegal.

Why did the government not accept those amendments? Why did the government bring to this House legislation that it has stated will not be proclaimed until September 1998 until the committee has had a chance to study it?

Let the committee study it. Let the issue come forward strongly and clearly and then make the appropriate changes to the legislation as necessary, but do not anticipate what the committee might find, or pass legislation which will not be promulgated until some time in the future. It is absurd.

There is more. This point has to do with some very significant issues. So far we have seen that the proposed amendments invite imprudent consolidation of various aspects of a business. It makes possible the sharing of information that is personal and private. It does not deal with the conflicts of interest between a subsidiary and the lending institution, the bank. It is silent about complete disclosure on price and specifications of elements of products and services that may be bundled together.

I cannot help but read into the record a case where the individuals in question were a hardworking couple in Ottawa. Over many years of hard work and perseverance they took themselves from the proverbial rags to riches. They were diligent about keeping their financial records in order. Their relationship with their bank was top-notch. So sound was their financial record and their relationship with their bank that written in their files were the words "no collateral required". No collateral was required by the bank whenever the couple needed to get a loan.

In keeping with their practice of fiscal responsibility, the couple planned for their retirement by investing in gas and oil stocks, but somewhere along the way a substantial stock certificate went missing. This discovery was made just as the couple was getting ready to retire and turn their family business over to their son.

The wife worried for months over the missing stock certificate she had so carefully placed in her safety deposit box. It was gone. The bank took no responsibility for it and insisted that the couple must have misplaced it. Only because of the diligence of a loyal daughter, often in the face of great adversity which included veiled threats from the bank, did the story begin to come together.

The missing stock certificate was in the possession of the bank during the entire time. This stock certificate had been removed from the couple's safety deposit box without any authorization from the couple, an illegal manoeuvre by the bank.

Despite reporting this to the bank manager, the bank president, the inspector general of banks which today is the of the Office of

the Superintendent of Financial Institutions and the Minister of Finance at the time, nothing was done.

The bank refused to admit that it was at fault, claiming that the stocks had been taken as collateral for a $15,000 loan. These were customers where no collateral had been deemed necessary. They were stocks that the bank had no knowledge of unless it had illegally entered into the couple's safety deposit box.

The result took a grave toll. The father died before the matter was ever resolved. The mutual fund froze the couple's investment, meaning that the mother never saw a dime before she passed away. Because of the bank's refusal to own up to a mistake, this hard working, honest family suffered.

More important, the relationship between this family and the bank has been marred for good, which means that the relationship between the bank and all of us has suffered to some degree. The bank did not live up to its fiduciary responsibility.

Despite an investigation that ruled in favour of the family, the bank has not compensated the family for the value of the stocks, the loss of the retirement funds and the time in personal sacrifice it cost.

To this day, the bank in question refuses to accept full responsibility for its mistake. Small amounts of compensation have been offered which neither reflect the dollar value of the family's financial loss or the value or their personal loss. The amounts, in the form of cheques, are offered on the condition that the family speak not another word of the injustice levelled against them by the bank. Needless to say, the cheques have not been cashed because they refuse to allow themselves to be muzzled this way.

I have been asked to tell this story to warn Canadians that it is unwise to fully trust an institution with such power to always act in their best interest. It is a warning, too, that legislative powers do not necessarily protect the consumer.

In 1979, in 1980 and in 1982, this case was raised again and again in this House. Neither the then Minister of Finance nor the inspector general of banks, now the Superintendent of Financial Institutions, did anything to ensure that the bank took responsibility for its mistake.

Banks in this country are powerful, indeed, more powerful than our elected government. That is precisely the reason why we should not allow clause 55, section 459.1(2) and (3) to stand as is.

Can we be assured that the banks will not unduly pressure or coerce consumers? I submit no, we cannot. That is why we must be diligent in protecting the interests of the consumer and the small business person against the ultimate power exercised by financial institutions. We can never take for granted that the consumer will be protected or the small business person treated fairly. We have heard too many cases where it has not happened.

There is going to be, I am sure, some people saying: "But Mr. Schmidt, that is one case". Yes, that is one case but it is an example of many other cases.

Does this mean that banks deal this way with most customers? Of course not. That is not the point I am making. We ought not to create a situation where it is always a predetermined condition where the bank may do this kind of thing with impunity. That is the issue.

I remember one bank that is proud of itself. In fact, it had a national advertising campaign. One of the characteristics of that advertising campaign was that it said it had become the largest bank in Canada one customer at a time. It is one anecdote at a time that has brought this kind of thing to pass.

As legislators we need to have the interests of the consumer at heart first and foremost. We need stable and solid financial institutions. Our banks are second to none in the world but that does not mean that we have to keep expanding their power. That is the issue.

The point has come where we need to balance the power of all our financial institutions, not just banks. They are not the only institutions that do these kinds of things. There are other groups that do this. Credit unions do this kind of thing. Trust companies do this kind of thing. The insurance companies who are opposing this legislation do some of these kinds of things. The issue is one of fairness. The issue is one of adequacy. The issue is one of justice. That is what I am concerned about. That is what we should all be concerned about. It can be done.

I am sorry the amendments were not passed, but surely to goodness before this legislation is promulgated we will at that time come to a clear understanding that these kinds of provisions cannot be allowed to continue to stand in the Bank Act as it exists in our legislation today.

[Criminal Code, April 15th, 1997]

Mr. Speaker, Bill C-55 deals with serious offences and the consequences that should be the result of engaging in behaviour which can be described adequately by two adjectives, heinous and repulsive. We find these offences difficult to express and difficult to define.

The proposals which have been made by my colleague would add at least ten to those which I am prepared to read into the record this morning. They have been listed, but I want to review briefly the things that are being discussed.

Serious offences should include sexual exploitation of others, bestiality in the presence of children or insisting that a child commit bestiality, a parent or a guardian who procures sexual activity from a child, living off the prostitution of a child, obtaining sexual services from a child, incest, sexual assault, sexual assault with a weapon, threats to a third party or causing bodily harm, and rape.

Any one of those is extremely serious. Not only are they a violation of the person, the consequences to the victim are automatic, immediate and very often permanent. Yes, the individual may learn to adjust. Yes, the individual may go on with their life. Yes, the individual may draw a line and say they will forget the incident and move on. Inevitably and invariably the victim of these kinds of behaviour says that it does not go away. The healing process which is essential in order to carry on normal activities and have a normal lifestyle is very difficult. Very often we do not deal with these offences with the sincerity and seriousness which which they ought to be dealt.

There is a provision in clause 15 which gives me cause for grave concern: "If the long term offender expresses the interest in being supervised in an aboriginal community, that community must receive notice of the supervision order and have the opportunity to propose a plan for the release and integration into the community". That is a very good provision. However, it would appear to be an example of the Liberal government's decision to treat some Canadians differently than others and bring about inequality.

Aboriginal communities will have the right to a notice of the release of a high risk offender into their community and the right to become involved in planning for their release. Other Canadians do not receive this notice or opportunity. That is a very difficult situation.

We need to know that this kind of provision ought not to exist. The offender is as dangerous in one community as in any other community. The issue has to be laid to rest once and for all. We have enough distinction and separation among Canadians. The time has come to build a united country, a country in which individuals are equal, where provinces are equal and where we can look forward to equality before and under the law, before and under the

Constitution and under every piece of legislation in this country. Notwithstanding the comments that are being made from across the way, every one of us should be equal and we should all be treated equally before and under the law.

The time has come for us to recognize that we have to do that. I would suggest that the hon. member who is making some comments should check his facts to see that we do subscribe to and recognize the equality of individuals before and under the law. We need to be factual and honest in our situation.

I want to go on to another thing here, victims. There are two kinds of victims. I talked about the first set of victims, the ones against whom rape is committed and against whom all kinds of influences are brought to bear. Those are the direct victims. There are indirect victims as well. These indirect victims are the families, associates and friends of the victims who suffered directly.

The mother of a child who has been raped suffers seriously, not in the same way her daughter or her son did, but suffers nevertheless. We identify with our children and our partners. Mr. Speaker, I cannot imagine what kind of an impact it would have if your wife were raped. If the Minister of Justice would have that kind of experience in his family he would not treat this in quite the same way as it is being treated at the present time.

Those are not the only indirect victims. The other set of indirect victims are members of society.

Not too long ago Mindy Tran was killed in Kelowna. Still today young children on their way to kindergarten are saying to their parents "mommy, should we not stop that person over there, she is walking alone?" They are afraid. This young person who is going to kindergarten and who said this did not know Mindy Tran and the anguish and agony that was created in the family, but she did understand that there is danger out there. If that kind of danger is allowed to go on unhampered and unhindered by the kinds of things we do to serious offenders, we as a society are in trouble.

There are the direct victims but there are also the indirect victims. There are some who would argue that this whole business of punishment really does not deter anyone. In a sense that is true. I remember having a bit of a discussion not too long with a young fellow who said that fines deter. He said when he drives he slows down when he sees a policeman. I said "After you have passed the policeman you speed up again, right? Are you breaking the law? You broke the law before and you broke the law again after so you paid the fine. Have you sped since you last paid your fine?" He said yes. Fines do not deter.

In some cases where people are a threat to reoffend in a similar way, we have to make sure that society is protected to the degree possible so that the offence does not again take place in that society. Something has to be done that will protect the rest of us.

I want to go beyond this point and indicate that we need to get into the business of preventing crime in the first place. It starts at home with an individual sense of what is right and what is wrong. Actions begin with thoughts. If we think right we act right. If we think wrong we act wrong. If we do not have a good governor of what is right and what is wrong in our conscience we will do what is wrong.

If we want to engender in our communities, our people or our citizens a sense of justice and fairness, we must also build in a clear understanding of what is right and what is wrong. That means strong families where values can be transferred from one generation to another and where the parents exemplify and demonstrate in their day to day operations how they can actually live in a just, fair and upright society.

[An Act To Amend Certain Laws Relating To Financial Institutions, April 10th, 1997]

moved:

Motion No. 2

That Bill C-82 be amended by deleting Clause 45.

Motion No. 4

That Bill C-82, in Clause 55, be amended by deleting lines 19 to 42 on page 31 and lines 1 to 10 on page 32.

Motion No. 6

That Bill C-82, in Clause 412, be amended by replacing lines 18 to 22 on page 254 with the following:

"Governor in Council."

Mr. Speaker, I wish to speak to these amendments and to refer briefly to the hon. parliamentary secretary with regard to Bill C-82 covering a number of financial institutions. I think that is correct, a number of the wishes were put into place, a marked improvement forward.

However, the sections I am referring to, essentially clause 45, part of clause 55 and the subsequent amendment to clause 412, are there for a very specific reason which has to do with tied selling. Tied selling means to sell one product on the condition that another product be purchased. In other words, in the case of getting a mortgage from an institution you would get that mortgage only on the condition that you also brought your RRSPs or other kinds of things to that institution, which could be a bank, credit union, trust company or whatever the case.

The difficulty is that the individual once having made application for loan and wanting that loan has no choice. That is where the issue lies and this is where we want to come to grips with this matter.

I draw this to the attention of the House. The government has indicated that it would pass this legislation at this time but that it would not proclaim these two sections of the act until September 1998. That proposes a very interesting dilemma. If the issue is that this should be done now, then why would one delay this thing? The rationale given was that it has to be given to the finance committee so it can study in depth the implications of tied selling in the world of financial business.

All the rest of this was done in consultation with industry and was subjected to an in depth study. Now apparently this issue requires further study but in the meantime the government will pass legislation to permit institutions to do it. There seems to be a certain lack of logic in this procedure.

I am so concerned about this issue because it is not in the interests of the consumer. There are people who would argue this is of particular interest to certain vested interests in the financial sector.

I submit that the interest is the consumer and the protection of the consumer. I draw to members' attention the comments that were made by the director of government relations of the Insurance Bureau of Canada when he appeared before the committee: "If there is an area where the committee may choose to make Bill C-82 an even better piece of legislation, it is with respect to the tied selling provisions proposed under section 459.1 of the Bank Act. Our view is that subsections (2) and (3) have been worded too

broadly and may permit the bundling of certain bank products and other financial services in a way that may not be beneficial to consumers".

That is the crux of the issue. It is not only our view but it is the view of the Insurance Bureau of Canada and the member companies. It is also the view of the Insurance Brokers Association of Canada, which has written a similar letter on this issue.

The matter goes even further when we get into the statement: "The finance committee is also expected to assess ways to make a distinction between cross-selling and practices anti-competitive or coercive ones. The distinction between what is and what is not acceptable could be, we are told, reflected in future regulations. If our understanding is correct, it implies that the proposed interpretive amendments to section 459.1(2) and (3) of the Bank Act may be deleted or modified to reflect the finance committee's findings and recommendations".

What are the implications of tied selling that make me concerned and that show why these provisions are not in the interests of the consumer? Probably the primary issue here is the matter of forcing consolidation of financial assets into a single institution.

Why is this significant? In this case we are dealing only with banks. It should apply to other institutions as well but the act refers here only to banks. They could precipitate a change in loan status, credit lines and so on based on the customer information available to them from information that may be existent in a subsidiary.

We were told before the committee by the Canadian Bankers' Association that the bank would never use information from its health insurance subsidiary or their life insurance subsidiary to in any way influence what would happen in terms of this issue.

Let me read the policy statement that exists in one of the subsidiaries of one of our six major banks. This is written to clients of this subsidiary: "In respect of the law the officers and employees must scrupulously observe in letter and spirit all laws governing business and securities activities. Confidentiality of client information is a fundamental principle of our firm. No employee may release confidential client information unless required by law or with the client's consent".

Then there is assurance that the subsidiary is wholly owned subsidiary of the bank and the bank guarantees all the liabilities of the subsidiary.

Now comes the key part, sharing client information. The subsidiary: "May give confidential client information to the bank. This type of information includes a client's name, address, phone number, income, assets, debts, investment objectives and financial plans".

The bank may use this information for the following purposes: to sell its services to the client; to survey the relationship between the subsidiaries and their clients; to determine the amount of debt outstanding to the subsidiary and to the bank; for any other purpose about which the subsidiary will inform the client in writing. That is the clincher.

What is excluded? Nothing. The bank will not pass this information to anyone else. Notice under the heading of consent: "By opening an account with this subsidiary, you are consenting to the bank's use of the information. If you want to end this consent, you must give written notice to the subsidiary, addressed and delivered to your subsidiary's branch. Your notice will be in effect when you receive a written acknowledgement from that subsidiary. The subsidiary may then decide to close your account if you said you wanted to withdraw this consent, and give you at least 30 days written notice before doing so. They will assume that you have received this notice five days after it was mailed".

If that is not a clear indication of how the information in a subsidiary may become the information available to another subsidiary or the bank, I would like to know what could be clearer than that.

That is one of the reasons confidentiality of information and consolidation of all of one's financial assets under one bank could be very serious if one of these businesses or certain parts of the enterprises get into difficulty.

There is another reason this is not in the best interest of the consumer. The point has been made, which is precisely what subsection 459.1(2) states, that preferred rates may be given on the condition that certain other products and services be purchased from a particular person. Preferred rates are given.

What does this suggest? It seems to me that we all know about lost leaders. It is certainly possible for a financial institution, in this instance a bank, to provide the individual a preferred rate, perhaps even a preferred rate in RSP purchases or in terms of negotiating securities. Then, once the business is consolidated under one roof, it could simply say: "Guess what? Our costs have gone up and we are going to have to increase the price of these services to you".

It is certain price fixing and a certain monopoly position vis-à-vis a particular customer that may not be in the interest of the consumer.

Finally and probably the most significant part is to recognize that we in this country need freedom. We need freedom of choice, fairness and equality. If the government wants to declare its support for consumers in the first instance, to support growth and development of small business and to maintain strong, stable and viable financial institutions like banks, it will support these amendments.

[An Act To Amend Certain Laws Relating To Financial Institutions, April 10th, 1997]

Mr. Speaker, I have a question of clarification. I wish to introduce amendments to Bill C-82. Is that appropriate now or do you have to do something to bring those motions forward?

[Budget Implementation Act, 1997, April 10th, 1997]

Are they proud of their tax increases too?