Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 30 - Evidence - May 27, 2015
OTTAWA, Wednesday, May 27, 2015
The Standing Senate Committee on Banking, Trade and Commerce met this day at 4:17 p.m. to examine the subject matter of those elements contained in Divisions 14 and 19 of Part 3 of Bill C-59, An Act to implement certain provisions of the budget tabled in Parliament on April 21, 2015, and other measures.
Senator Irving Gerstein (Chair) in the chair.
[English]
The Chair: Good afternoon and welcome to the Standing Senate Committee on Banking, Trade and Commerce. Today is our second meeting on Bill C-59, An Act to implement certain provisions of the budget tabled in Parliament on April 21, 2015, and other measures.
Yesterday, we heard from the department officials on both Divisions 14 and 19, followed by outside witnesses on Division 14. Today our focus will be on Division 19.
As you may recall, Division 19 amends the Trust and Loans Company Act, the Bank Act, the Insurance Companies Act, the Co-operative Credit Associations Act. The purpose of amending these acts is to modernize, clarify and enhance the protection of prescribed supervisory information that relates to federally regulated financial institutions.
Today, all three of our witnesses are appearing via video conference from the Canadian Life and Health Insurance Association headquarters in Toronto, for which we thank you for being assembled in one spot. I'm pleased to welcome, from the Canadian Life and Health Insurance Association, Mr. Frank Zinatelli, Vice President and General Counsel. I'm also pleased to welcome, from the Canadian Bankers Association, Mr. Bill Randle, Deputy General Counsel; and Mr. Darren Hannah, Acting Vice President, Finance, Risk, and Prudential Policy.
Mr. Zinatelli will present his opening comments, and then he will be followed by Mr. Randle. Mr. Zinatelli, welcome. The floor is yours, sir.
Frank Zinatelli, Vice President and General Counsel, Canadian Life and Health Insurance Association: Thank you, chairman. We appreciate this opportunity to meet with you.
My name, as you indicated, is Frank Zinatelli, and I am vice-president and general counsel of the CLHAI. The CLHAI represents life and health insurance companies accounting for 99 per cent of the life and health insurance in force across Canada.
The Canadian life and health insurance industry provides products that include individual life and group life insurance, disability insurance, supplementary health insurance, individual and group annuities, including RRSPs, RRIFs, TFSAs and pensions. The industry protects almost 28 million Canadians and about 45 million people internationally. The industry makes benefit payments to Canadians of $76 billion a year. It has $647 billion invested in Canada's economy and provides employment to over 150,000 Canadians.
We welcome this opportunity to appear before the committee as it reviews Bill C-59. Our comments will be on Division 19, Part 3 of the bill, which would amend the Insurance Companies Act and other financial services legislation with respect to privilege for supervisory information.
As noted in the Budget 2015 document, the purpose of Division 19 is to clarify the protection of prescribed supervisory information that relates to federally regulated financial institutions, such as insurers and banks.
As you know, the Office of the Superintendent of Financial Institutions supervises and regulates all federally regulated financial institutions, as well as private pension plans subject to federal oversight. OSFI's supervision and regulation involves assessing the safety and soundness of financial institutions. The provisions in the Insurance Companies Act and its regulations dealing with prescribed supervisory information and the analogous provisions for other financial institutions serve to facilitate the efficient and timely exchange of information between the financial institution and the regulator.
Financial institutions share information that permits OSFI to do three things: First, to supervise financial institutions to determine whether they are in sound financial condition and complying with their governing law and supervisory requirements; second, to promptly advise financial institutions in the event deficiencies are identified and require necessary corrective action to be taken expeditiously; and third, to advance and administer a regulatory framework that promotes the adoption of policies and procedures designed to control and manage risk.
If there were a risk that prescribed supervisory information was subject to disclosure in civil proceedings, it would likely impede communications between OSFI and the entities it regulates, which in turn may impede OSFI's ability to react quickly in identifying deficiencies and trends in the marketplace, to the detriment of the safety and soundness of the Canadian financial system.
The amendments provided for in Bill C-59 will ensure that the intent of Parliament to maintain the confidentiality of supervisory information is maintained and would match similar provisions in other legislation, such as the Statistics Act. It is important to note that the restrictions on production in proceedings do not extend to the minister, the superintendent or the Attorney General, or generally to proceeding in relation to the enforcement of the act or of the Winding Up and Restructuring Act. We believe this to be appropriate.
The Canadian financial sector is widely regarded as one of the soundest in the world, which was evidenced by the way in which Canadian financial institutions weathered the financial crisis in 2008. One key reason why the Canadian financial system is held up as a model for others to emulate is our robust supervisory regime, which is predicated in part on the ability of OSFI and the entities it regulates to communicate in confidence.
The industry greatly appreciates this opportunity to participate in the committee's review of Bill C-59. We would be pleased to answer any questions you may have. Thank you, chairman.
The Chair: Thank you very much, Mr. Zinatelli.
Bill Randle, Deputy General Counsel, Canadian Bankers Association: Thank you, Mr. Chair. Good afternoon. I would like to begin by thanking the committee for allowing us to appear by video conference and our friends at CLHAI for offering us their facilities today.
We are very pleased to discuss with the committee Division 19 of Part 3 of Bill C-59, which modernizes, clarifies and enhances the protection of prescribed supervisory information that relates to federally regulated financial institutions.
As you may know, the CBA represents 60 banks operating in Canada, including domestic banks, foreign bank subsidiaries and foreign bank branches, and their 280,000 employees.
Our industry supports the proposed amendments in Division 19 of Part 3, as they will prohibit the disclosure of prescribed supervisory information. These important changes will help to ensure the effectiveness of the regulation and supervision of financial institutions and the stability of Canada's financial system.
The banking industry recognizes the importance of effective and appropriate banking supervision, given the industry's critical role in the economy and the banks' extensive efforts to manage risk throughout the system.
As the potential regulator, the Office of the Superintendent of Financial Institutions has a mandate to ensure banks and other financial institutions are in sound fiscal condition and compliant with their governing statutes and supervisory requirements. For banks, these requirements include stringent guidelines in a wide range of areas such as capital, liquidity, leverage, corporate governance, accounting and stress testing.
As a critical part of that supervisory framework, ongoing communication between OSFI and financial institutions is essential. Banks provide a wealth of information prepared for the exclusive review by OSFI to ensure that it has access to the data necessary to fulfill its mandate. Furthermore, the information provided often comprises commercially sensitive information. If this information was not provided on a confidential basis, it could jeopardize the efficiency and transparency of the informational exchange between OSFI and the institutions it supervises. This in turn would undermine OSFI's ability to effectively supervise financial institutions. It is in the public interest, therefore, to ensure that this prescribed supervisory information is kept confidential, allowing the supervisory framework to continue to promote open and ongoing communication and dialogue between OSFI and financial institutions.
This framework also prevents false interpretations of information provided to OSFI, which could in some circumstances be misinterpreted, with potentially negative reactions affecting the financial system as a whole.
It is important to recognize that the strong relationship that exists between the banking industry and other parts of the financial industry and OSFI has served Canada well. This was demonstrated during the global financial crisis when Canada's banks were proven to be stronger than their counterparts in other jurisdictions.
We largely attribute this strong performance to two factors: First, the prudent way in which Canadian banks are imagined; and second, the strong regulatory and supervisory framework for banking in Canada. That framework depends heavily on full and frank communication between OSFI and financial institutions.
We again wish to express our strong support for the changes proposed in the bill. We are pleased to have had the opportunity to appear today and participate in this discussion. We look forward to your questions. Thank you.
The Chair: Thank you very much for your opening statements. May I take it from each of you that, in your view, Division 19 has the balance right between supervisory processes and the need to ensure a transparent and fair judicial process?
Mr. Randle: That would certainly be our view.
Mr. Zinatelli: That is our view as well, chairman.
The Chair: Thank you.
[Translation]
Senator Maltais: I would like to talk to Mr. Hannah. I am not going to deal with financial questions. Instead, I am going to concentrate on the confidentiality of medical information.
When people buy a life insurance policy, they commit to providing exact information that is often backed up by doctor's notes. Are you obliged to keep that confidential? Will the bill continue to protect the confidentiality of information about the health status of patients and their illnesses and medication?
[English]
The Chair: I believe you directed the question to Mr. Hannah, but did you mean it to go to Mr. Zinatelli?
Mr. Zinatelli: I would be pleased to address that, senator. As I understand these amendments, they would not affect the type of information that you just referred to. Medical information of individuals is protected under privacy legislation that applies under PIPEDA and other provincial privacy legislation, and would continue to be safeguarded in the same way as it has in the past — very effectively. This amendment we are speaking about today would not affect that.
[Translation]
Senator Maltais: Thank you.
[English]
Senator Massicotte: Thank you for being with us today. It's much appreciated.
This is a very technical bill and we're not members of the industry, so I'm not sure we always comprehend the significance or the effect of this type of legislation. We certainly understand the intent, but we need your help here.
The intent, from what we understand, is with this proviso, with these amendments, you'll be more comfortable in sharing information about other players, misdeeds or sensitive information with the government and with yourselves, because all of that information will be privileged and therefore not available for, if you wish, civil lawsuits among private players; am I correct? Is that the objective of the amendments in your comprehension?
Mr. Randle: Senator, you're essentially correct. At the moment, there are numerous forms and other reports that are sent by financial institutions, whether they're banks or insurance companies, to the regulator. In addition, the regulator may contact an individual institution and ask for additional information, some of which would be either competitively sensitive because it would reveal something about their ongoing operations to competitors or commercially sensitive.
This amendment would confirm what was always the intent of similar provisions in previous parts of the act back in 2000, and that is to protect the confidentiality so the relationship between the regulator and those institutions is a very productive, collaborative and co-operative one. The regulator can get all of the information it needs to assess what is going on and ensure that its mandate is fulfilled, the stability and solvency of the financial system, which I think we both indicated as being shown over the last few years by the Canadian system as working.
Senator Massicotte: We had some testimony yesterday. Part of the information could be shared by one of your members sharing information on another member, which is not maybe consistent with the best interests of a sound financial system. Is that also covered as being privileged if that is the case? It is information that you're aware of, but not necessarily your own corporate information.
Darren Hannah, Acting Vice President, Finance, Risk, and Prudential Policy, Canadian Bankers Association: Senator, the short answer on that one is given that OSFI has regulatory authority over each institution, if it has a question of one institution, it's not likely to go to another and ask. It will go directly to the source.
Senator Massicotte: Having said that, in other words, the whole purpose is to motivate you and make you feel comfortable sharing information, and yet it's very clear that the government and their representatives have a right at all times in these two proceedings to share that information; is that accurate?
Mr. Randle: Share the information with whom?
Senator Massicotte: If they decided to take action, they have full right to use that information. The privileged information only applies with civil lawsuits and not if it's initiated by, for example, the minister.
Mr. Randle: You're correct. There are exemptions built into the provisions to allow the regulator or others, including the minister, to take what action they feel is appropriate, which is consistent with the idea about all of this, and that is to maintain the stability and solvency in the system. So they may well have information that they feel they need to use in certain ways.
Senator Massicotte: If that is the case —
Mr. Randle: This provision would not stop them doing that.
Senator Massicotte: I appreciate that, but if that is the case, your starting point would be you should feel free to share information because it will not be used against you. But effectively the party you're sharing with has the discretion at any point in time to use it against you. Are we kidding ourselves in saying we'll share more openly because of these amendments?
Mr. Hannah: Senator, let me say something and then I'll let my colleagues jump in. The best way to think about this is that the intent of the measure is to reaffirm what we have always understood to be the case. It's not to change the relationship at all. In fact, it's to sustain it.
Mr. Zinatelli: That is very correct. Indeed, as I understand it, the purpose is to affirm what the financial services industry and, more importantly, the regulator believe to be the situation. This clarifies it. This says it in clearer language than was the case previously.
One other thing, senator, if I may, is that this deals with, as it says, certain supervisory information. It doesn't apply to all types of information, so it is a subset of all the information that one shares between the superintendent and a financial institution.
Senator Massicotte: Given that this supposedly puts into law the practice, has there been any exception to the practice in the last 10 years? Has there been a contravention of that practice by the government, the regulator or yourselves and that's why there is a need for legislation?
Mr. Randle: As the witnesses from the Department of Finance indicated yesterday, the reason for these provisions and the need to make it very clear about the circumstances is, in fact, a case that was before the courts in Quebec, which was totally unrelated to anything with the regulator but part of a civil suit where it would appear that certain prescribed supervisory information may have been revealed.
I think, based on that, the Finance Department made clear yesterday that the decision was taken that the government needs to make very clear in the legislation, which these provisions do, that the intent of this type of information exchange between financial institutions and the regulator is to allow the regulator to fulfill the primary mandate and protect the financial system. That's what these provisions do.
Senator Massicotte: I'm jumping a little bit. As you know, secrecy or confidentiality as a matter of principle is somewhat anti-democratic, but obviously there's always a good reason and sometimes a legitimate reason to keep things confidential, but it's a difficult balance. Many countries, even today, use secrecy to their personal advantage and not to the advantage of the populations.
I'm expecting an opinion from you, but you're in somewhat of a conflict of interest on this question. Do you think in this case the balance is well achieved? In spite of the fact that it is anti-democratic, do you think we need to be so secretive with this information?
Mr. Zinatelli: Senator, what I think creates the right balance is that while the supervisory information, which is the information, for example, about the discussion between the financial institution and the regulator, is protected by this provision, the underlying information is not. So that would continue to be accessible, as it always has been, and that creates a good balance where that is accessible. It is simply the discussion between the regulator and the financial institution that is protected by this.
Senator Massicotte: Could I clarify that? You're saying that the raw data — and these are my words — is always available. It's only the discussion that is privileged.
Mr. Zinatelli: The discussion and some of the communications between the supervisor and the regulator would be protected by this. Whatever that might be based on would still be available. That is the way I understand it.
Mr. Randle: You get a situation where the reports on a consolidated basis are published subsequently by OSFI. Of course, all financial institutions are subject to all the requirements and financial statement reporting, which provides a lot of information.
The key here is that where there is commercially sensitive information that OSFI has in its possession from the institution, there is no risk of it becoming publicly available, which might be to the detriment of the institution that provided it but also to the financial system because if it's taken out of context, it may lead to a sense of something in the financial system that is actually not true — that there is some type of risk, et cetera, which isn't true.
The intent is to allow the regulator to get as much information, both initially and subsequently, as they need, including such things as going back to the institution, which the regulator does, to say that you may need to upgrade this in a compliance area or in certain other areas, without that advice from the regulator becoming available.
Senator Black: Gentlemen, thank you very much for being available today. My question follows on the questions of Senator Massicotte. I'm obviously glad to hear that you're very supportive of the proposed amendment. That was helpful to hear. I'm interested in understanding the following: Before this amendment was proposed, and one presumes it will be passed into law, did you conduct your business or your affairs in any different manner than you will going forward?
Mr. Randle: The succinct answer to that is no. One of the reasons for these provisions is to ensure going forward the relationship and the way that relationship is being conducted over the years between regulator and institution will continue.
Senator Black: I understand — correct me if I'm wrong — that because of this court case in Quebec, a cloud was raised over the exchanges that possibly were going on amongst yourselves and the regulator. Therefore, you are saying, to ensure your confidence going forward, that this proposed amendment achieves that goal. Is that your evidence?
Mr. Randle: Essentially, yes.
Senator Black: My second question is: Can we use this opportunity to take the advice of the three of you as to anything further you think should be included in future legislation to assist the relationships that exist? It is wish-list time.
Senator Massicotte: How about increasing taxes?
Mr. Hannah: At this moment, our priority is to make sure that we're able to reaffirm the structure of the existing relationship. That's really our priority at the moment. Bear in mind that we have a strong financial sector here. Part of the reason is that we have a very well-structured regulatory system and a well-functioning relationship between the regulated industries and the regulator. Our real priority is to make sure that continues.
Senator Black: I will take from that that if there are further changes you want or would suggest as helpful going forward, we will hear from you.
Mr. Randle: I would say that's a safe guess.
Senator Ringuette: Have both of you or members of your association lobbied the government to have this proposed amendment?
Mr. Randle: I wouldn't say that we lobbied the government, no. This matter came up, as the Finance witnesses noted yesterday, due to this court case. The concern was shared by all financial institutions. The CLHIA, the CBA and the Insurance Bureau of Canada all sought to intervene in the case to put forward our concerns about what was happening.
Senator Ringuette: All of you have intervened with the Department of Finance on this issue as a follow-up to the case in Quebec.
Mr. Randle: We intervened in the case itself before the Quebec Court of Appeal, as did the Attorney General of Canada. We all put forward similar views. The government was also concerned, and I presume the regulator was concerned, about the possible impact if these provisions were not enacted to clarify the intent of Parliament was when they initially passed these provisions in the Bank Act and the subsequent regulations.
Senator Ringuette: I will make the following statement — correct me if I'm wrong. This proposed amendment is to prescribe supervisory information as privileged. As I read that, I say a prescription is a document in this situation that would be coming from OSFI to any one of your members prescribing a correcting action on your behalf or one of your members. Am I wrong?
Mr. Zinatelli: If I may, senator, when I look at the description of "prescribed supervisory information," I think of it as a term of art that's used in drafting laws. To me, "to prescribe" simply means "to put it in the regulations." That's certainly the way I take it.
Mr. Randle: Most of the information we're referring to here is provided by the financial institution to OSFI. In fact, it comes from the financial institution. These provisions do not introduce anything new, we would say. They simply clarify what was always the intent when similar regulations were passed almost 15 years ago.
Until this court case in Quebec, it was generally thought that the intent was there. When the regulations were introduced in 2001, the regulatory impact statement made it clear that the intent was to protect the confidentiality of these types of information. These provisions don't really bring anything new, they simply clarify what the intent always was of these provisions and these regulations because of what happened in the case in Quebec.
Senator Ringuette: How do you call any documents that you would receive from OSFI instructing you to take action on an urgent matter for your members? What would you call that document or process? Isn't it a prescription to you?
Mr. Zinatelli: It is a prescription but only certain types of prescriptions are covered under the definition of "prescribed supervisory information," which is not touched by this proposed amendment because that definition is contained under a regulation under the Insurance Companies Act, the Bank Act and other financial services statutes.
It is not all information. It is a subset of information that is specifically defined in the regulation.
Senator Ringuette: Gentlemen, I have an issue in regard to seeking clarity for the amendments that are being proposed. I have no problem in the fact that documents containing competitive information is sensitive and should be confidential. That's not the issue as far as I'm concerned.
What I'm looking at here is an issue that if one of your members received a directive from OSFI to take corrective measures, that document should not be confidential or be held as privileged in regard to the courts because if OSFI is doing their job and, on the other hand, your members, or one of them, are not doing theirs, following the directive of OSFI, I'm sorry, but I don't think that the Parliament of Canada should give you a blank cheque.
Mr. Randle: With respect, senator, I think it is unfair to say it is a blank cheque. Also, I would note that one of the things that OSFI would do is a rating system, which is done by regulators around the world. Non-regulators issue publicly that rating system that they give to the financial institutions. The reason for that is because, if you take it out of context, you can get a misinterpretation of what is going on.
The idea is the regulator is there to ensure that the financial institution is not only complying with the regulations but maybe in addition it wants to take certain actions in certain areas that the regulator feels is appropriate. What we're saying is that the relationship between the two parties has been a very cooperative one, and we need to ensure that continues.
Senator Ringuette: But the rating document is not a directive. I am specifically talking about a directive that one of your members would receive from OSFI, and you have not answered that.
Mr. Hannah: Senator, what makes our regulatory system strong is that it is based on trust and communication. It is principles-based, and it works very well. But that's based on confidentiality. It is based on having an open and frank discussion between the regulator and the regulated.
Senator Ringuette: I'm sorry, but if one of your members has received a certain directive from OSFI and has not acted efficiently and properly and has caused some Canadians that may have investments to lose some money, it is no different than going on the 417, which has a speed limit directive of 100 kilometres an hour, and going 150 and getting caught. You get a ticket because you didn't abide correctly by the rules. This is no different.
The Chair: Senator Ringuette, do you want to conclude with a question to them on what you've just stated?
Senator Ringuette: I still have no legal evidence that shows me that what this piece of amendment is providing, a blanket in regard to a directive from OSFI to one of your members in place of a court challenge. I still don't have that legal evidence in front of me.
Mr. Zinatelli: Senator, if I may, I'm not sure with respect to the specific example that you raised, but certainly I want to reiterate that the definition of what is prescribed supervisory information is not all-encompassing. It only includes a subset of a high level type of orders, maybe having to do with capital or having to do with the staging of a company's financial situation, where you would want OSFI to be able to advise the institution so that they can take appropriate steps, not harm the consumer in any way but to take appropriate steps to become stronger where they might have some weaknesses. One should look at the definition on a case-by-case basis to see if some of those things that you are thinking about might be covered, but I don't believe that they would be.
Senator Tannas: Thank you, gentlemen. I had some clarification questions more than anything. OSFI, in their supervisory role, typically looks at a whole bunch of things around capital and wants to understand your risk appetite. It wants to look at your governance and control environment. Through that process, they ask for all kinds of different modelling and calculations and so on that you provide them that gives them insight into your particular business, or each individual member business, I guess. That could be all kinds of different scenarios they would ask or actually require be done on some regular basis.
All that information that is in the normal field of their oversight, so things like dynamic capital adequacy testing that gets done in the life business and the horrible scenario thing they make you do for banking where a bunch of your loans go bad and that kind of thing, would all of that information be shielded under this law change?
Mr. Randle: You are right, senator, that a great number of reports are required to be provided by a financial institution, and most of those are prescribed supervisory information because they are a result of regulations that are passed pursuant to provisions in the Bank Act or whatever the governing legislation is.
OSFI does publish, as you may know, on a consolidated basis, a great deal of that information. There is a great deal of information they publish on an individual basis about assets and such things, about individual institutions. The key area here is where those additional requests that come in from OSFI and all sorts of areas, either on an industry basis or even on an individual basis, to allow OSFI to get a greater understanding of what an institution is doing, what it is planning to do in the future, which it may well ask about, and the institution and the regulator wouldn't necessarily want that to be in the public domain or be available to the public domain. That is, in a succinct way, trying to say what is covered by this. You are right that a lot of the information is actually specified in various regulations, either covering the insurance industry or trust and loan or the banking industry.
Senator Tannas: I don't want to let the air out of yours tires, but frankly, what would be publicly available is probably a subset of what is protected. We are not talking about the vast majority of the information flow between OSFI and the regulated entities as being wide open and only a tiny subset being protected. It is actually the other way around, and that's okay. I'm in support of this, but I just wanted to be clear. Is it fair to say that maybe that's a better way to put it?
Mr. Hannah: Senator, I think it is fair to say that institutions provide an incredible amount of information to OSFI in order to help it fulfill its mandate. OSFI will publish a subset of that, but there's certainly a large amount that they don't publish because it is commercially sensitive.
Senator Tannas: Senator Ringuette asked the question about whose idea was it to put this amendment forward, and you responded that everybody, the industry and the regulator, were intervening in this trial, all very interested in making sure that this kind of information is protected.
Would you not say that this amendment is designed and will, in fact, be for the benefit of the regulator as much as it is for the financial institutions? I'm thinking about a bank failure, a trust failure, a life insurance failure where all of a sudden people say, "We want to know exactly what the regulator was asking" in the hopes that maybe they forgot to ask a question or they were off on the wrong tangent when they should have been looking at something else.
I'm thinking all the way back to the superintendent himself who testified here that one of his biggest fears is that he will miss what the next thing is in his supervisory role. Could you envision that this is also here to protect the regulator and the Government of Canada and the taxpayers of Canada as they do their level best to provide supervision?
Mr. Randle: I would agree entirely with you, senator. It might sound a bit self-serving, but I would say the main beneficiary of this is the regulator. I think the regulator, in the approach that's being taken in Canada very successfully, has been to have a collaborative, co-operative approach to get information so that they aren't surprised and they can take whatever appropriate action is necessary.
The reason why both the government and the regulators are in favour of this is not because it makes their job easy — it's not an easy job — but it makes them more capable of doing it because they can rely on getting as much information as is necessary to fulfill that mandate, which is in the interests of all Canadians to make sure that we don't have failures here. And we haven't had failures here because of the exchange of information between the two parties.
Senator Tannas: Would you agree, in the tone in which the exchanges happen, beyond just the regular filing of reports and modelling and so on, a lot of the interchange that comes from the regulator to the financial institution is actually probing for vulnerabilities within that institution; is that fair to say?
Mr. Hannah: I think that's certainly fair to say. There's the filing of regular information and then the dialogue that goes on between the individual institution and their individual manager at OSFI.
Mr. Zinatelli: It's an essential tool for the regulator, senator, in order for them to do their job effectively.
Senator Meredith: Thank you, gentlemen. I've listened attentively to the discussion here, and in your presentation you stated that if there was a risk that prescribed supervisory information was subject to disclosure in a civil proceeding, it would impede communication between OSFI and the entities it regulates.
Can you describe for me what those risks would be, the time frame that we're talking about in terms of a response and how this piece of legislation addresses that?
Mr. Randle: I think we've all indicated that because of the relationship, and because of the way it's been governed, often the regulator will receive information that is commercially sensitive for an institution, or it may be competitively sensitive. The two things may be related, but sometimes there will be different things.
If there's a sense by a financial institution, whether it's a bank, an insurance company or whatever that there's a possibility the information it provides could go into the public domain, there would clearly be a concern about what is provided and how.
With the way it is at the moment — or has been — the feeling that they could rely on the confidentiality of whatever information is provided to the regulator has meant an open dialogue between the two parties and a willingness to share material, which includes commercially sensitive material that the regulator can then use in assessing its views about that institution and whether it wants any additional information, feels certain action can be taken or whatever it may be.
That's the major concern and these provisions, as I say, aren't intended to bring anything new. They're intended to clarify what was always the intent of the original legislation, making it clearer to everyone what that original legislation was intending to do, and to protect the confidentiality of the information that's provided.
Senator Meredith: With the time frame with respect to the exchange of information, who sets those times in terms of the time limits for the exchange of that information, given the fact that it could be information that relates to a particular transaction that individuals could potentially benefit from? Can you clarify for me the time frame and how that is ascertained?
Mr. Hannah: It depends. If it is a regular filing, it may happen on a regular basis. It could be monthly, quarterly or annually. If it's in response to a request as part of a dialogue between an individual institution and OSFI, it would be dictated by whatever OSFI feels is appropriate at the time.
Senator Ringuette: Since this deals with the regulator, OSFI, I hope that they will be appearing as a witness. They should be, as mandatory.
My request is to the research officials present. I feel that we would be enlightened if we could have the documents pertaining to this 2014 class action in Quebec City with regard to MÉDEC and Manulife in the Quebec Court of Appeal. I think that would highlight more of the issue.
The Chair: To our panel, on behalf of all of the members of the committee, we greatly appreciate your appearance today. You have been very helpful in our understanding of Division 19. Thank you again.
The committee is adjourned.
(The committee adjourned.)