Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 3 - Evidence - December 12, 2013
OTTAWA, Thursday, December 12, 2013
The Standing Senate Committee on Banking, Trade and Commerce met this day at
10:30 a.m. to study the ability of individuals to establish a Registered
Disability Savings Plan (RDSP), with particular emphasis on legal representation
and the ability of individuals to enter into a contract.
Senator Irving Gerstein (Chair) in the chair.
The Chair: Good morning. Today the committee is holding its third
meeting as part of its study on Registered Disability Savings Plans, RDSPs, with
particular emphasis on legal representation and the ability of individuals to
enter into a contract.
Last week, the committee heard from the Minister of State Finance and
officials of the Department of Finance. Yesterday, the committee heard from the
Council of Canadians with Disabilities, the Canadian Association for Community
Living and the Planned Lifetime Advocacy Network.
Today, we are pleased to welcome the Canadian Bankers Association as well as
the Bank of Montreal and the Canadian Imperial Bank of Commerce. Representing
the Canadian Bankers Association, we have Mr. Darren Hannah, Director; and Mr.
Randy Hopkins, Advisor. From BMO, we welcome Mr. Trevor Philp, Manager,
Registered Products and Managed Solutions; and from CIBC, Ms. Ann Elise
Alexander, Senior Counsel.
Thank you all for being with us today. We will begin our representations with
Mr. Hannah of the Canadian Bankers Association, followed by Ms. Alexander and
concluding with Mr. Philp.
Darren Hannah, Director, Canadian Bankers Association: Thank you and
good morning. We are pleased to be here today representing the Canadian Bankers
Association and our 57 member banks, which include domestic banks and foreign
bank subsidiaries and foreign bank branches operating here in Canada. With me
today, is Randy Hopkins, Advisor of Payments. We are joined by representatives
of our member banks, Trevor Philp, Manager, Registered Products and Managed
Solutions at BMO Financial Group; and, Ann Elise Alexander, Senior Counsel at
CIBC. We are pleased to be here to share our views on the Registered Disability
Savings Plans, specifically the issue of legal representation and the ability of
individuals to enter into a contract.
Banks understand and support the government's clearly articulated policy
objective of providing financial security to individuals with severe
disabilities and have invested considerable time and resources into the
development and delivery of RDSP programs since the introduction in 2008. RDSPs
are an important financial planning tool providing significant benefits to
Canadians. Beneficiaries may receive up to 300 per cent in matched funding from
the Canada Disability Savings Grant and up to $1,000 annually in Canada
Disability Savings Bonds. Since contributions are not tax deductible, they are
not included in a beneficiary's income when withdrawn. Additional investment
income earned in an RDSP is only included in the beneficiary income for tax
purposes when they're paid out of the RDSP. Withdrawals from an RDSP are not
affected by income-tested benefits at the federal level, and most provinces
ensure payments such as social assistance and other means-tested payments are
In 2011, the CBA participated in the government's review of the RDSP and
shared our comments on how the RDSP can be more effective for Canadians with
disabilities as well as for banks that offer the plan. The ability of
individuals to establish plans was one of the key issues in that consultation.
We recognize that some adults and their families face obstacles in
establishing RDSPs in situations where the beneficiary lacks capacity to
contract due to the nature of their disability. We're pleased that the interim
changes made in 2012 allowed certain family members to become the plan holder of
an RDSP in situations so that contributions and government assistance amounts
could start accumulating. We also support the objective of simplifying and
streamlining the process of opening RDSPs for beneficiaries who lack contractual
The banking industry is committed to the success of the RDSP program and
recognizes the importance of ensuring that RDSPs offer convenience and choice so
that individuals with disabilities can build their financial future. Banks are
promoting RDSPs to eligible individuals, and the CBA has been using many
different communication tools, including our website and social media, to
promote RDSPs to the general public and to the media.
In addition, we've provided information on RDSPs to members of Parliament so
they can share it with their constituents. In front of you, you have a copy of
the RDSP backgrounder that we've included in our basic banking guide that all
members of Parliament and senators received this fall. Banks continue to play a
vital role in supporting the delivery of RDSPs and are committed to working with
the government to help families, parents and others save for the long-term
financial security of individuals with severe disabilities. We look forward to
Ann Elise Alexander, Senior Counsel, Canadian Imperial Bank of Commerce
(CIBC): My name is Ann Elise Alexander and I'm Senior Counsel to CIBC and
its affiliates. I have been practising law for almost 25 years, and I'm a
certified specialist in estate and trust law by the Law Society of Upper Canada.
Before joining the CIBC legal department, I worked in private practice in trust
and estate planning and administration, which also included capacity law, in
particular powers of attorney and guardianship of property. At CIBC, I continue
to advise in these areas as well as support the registered plan business of CIBC
and its affiliates. In this latter area, I draft and provide legal support
regarding the RDSP at CIBC. I have engaged in numerous discussions with people
at the Department of Finance and the Canada Revenue Agency.
The RDSP is an innovative savings tool that provides a real benefit to
disabled Canadians. CIBC supports the RDSP program, and we are pleased to play a
key role in delivering this important product to eligible individuals. Generally
speaking, the RDSP legislation works well for Canadian families for whom it was
The introduction of the expanded class of holder to include the parent,
spouse or common-law partner achieved an important objective: It allows a larger
range of individuals to benefit from the program. From the issuer's point of
view, there are two aspects to RDSPs for adult beneficiaries who are not
``contractually competent,'' to use the terminology in the RDSP provisions of
the Income Tax Act. The first is: Who can open and operate the plans for them?
That's the holder. The second is: Who can deal with the funds when they come out
The Income Tax Act has provisions setting out who can be the holder. The
holder controls contributions to the plan; investment instructions of plan
assets; and, if the plan allows for optional disability assistance payments,
when these payments can be made from the plan. They can direct when they can
made from the plan. Each province and territory has legislation that sets out
how one becomes a legal representative for an adult who is not contractually
The Income Tax Act provides, in some cases, that someone who is not the legal
representative of the beneficiary can be the holder of the RDSP. For minors, it
can be the parents. For adults who are not contractually competent, it can be
the parent, spouse or common-law partner under the current temporary limited
However, under the RDSP provisions, all disability assistance payments,
including the mandatory lifetime disability assistance payments, must be made to
the beneficiary. Where the holder is also the legal representative, they can
receive the disability assistance payments for the beneficiary. Where the holder
is not the legal representative, they cannot receive these payments. This issue
needs to be kept in mind in any consideration of legal representation for adults
who are not contractually competent.
Moving forward, we will continue to work closely with all levels of
government to come to resolve some of the outstanding issues regarding legal
representation. Ultimately, we all share the same objective, and that is for the
RDSPs to be available for all eligible individuals so that they can start
benefiting from what is truly a good program.
I am happy to answer any questions you may have.
Trevor Philp, Manager, Registered Products and Managed Solutions, BMO
Global Asset Management: On behalf of BMO Financial Group, I am pleased to
join today's discussion on Canadians' ability to establish an RDSP.
When Finance Minister Jim Flaherty introduced the RDSP in the 2008 Budget,
Canada showed the world how a smart, innovative policy can help provide
financial security and independence for people with disabilities. At BMO, we
strongly believe in promoting the benefits of having an RDSP, as Canadians with
disabilities can face extraordinary expenses and may be limited in their ability
to earn enough income to support themselves. We are extremely proud to have been
the first Canadian bank to offer the RDSP to the public, which we started doing
in December of 2008. Today, we remain a leader in the marketplace, with nearly
31,000 customer accounts and over $535 million in assets under management,
approximately a 45 per cent stake of the RDSP market. BMO fully supports
measures to make this great program even better.
As this committee knows, many individuals living with a disability face
challenges related to the opening of an RDSP account, particularly for
individuals who lack the mental capacity to enter into a legal contract with a
financial institution to become the plan holder. The Income Tax Act allows for a
qualifying person to act on such an individual's behalf but, for this to happen,
many of the various provincial laws require that an adult be declared mentally
incapable and in need of assistance from a guardian. This process can be
expensive and time consuming, and many individuals with disabilities and their
families do not have the means to go through this process.
The 2012 Budget provided a temporary solution, allowing qualified family
members, like a parent, spouse or common-law partner, to open the plan on behalf
of the individual until 2016 or until the various provincial governments could
pass or update their legislation around qualifying persons. While this measure
has certainly helped the situation, the very narrow definition continues to
impede the RDSP account-opening process.
At BMO, we believe that such a worthy program, which has provided peace of
mind to tens of thousands of Canadian families, requires federal coordination
and provincial cooperation. We believe that individuals with disabilities and
their families would be best served by a common solution that can be implemented
across all provinces. Such a solution needs to focus on inclusion and allow for
a framework where individuals who still have limited capacity can be involved in
One possible solution would allow individuals with disabilities to make a
personal appointment of a ``supportive person'' for decision making related to
the RDSP. This type of agreement has been promoted by some of our community
partners such as PLAN and the Canadian Association for Community Living.
Mr. Chairman, BMO's strong support of the RDSP is matched by our commitment
to find solutions to make the product better for Canadians in need. On behalf of
BMO, I am pleased to offer this suggestion and would be happy to answer any
questions you may have.
The Chair: Thank you very much for your opening statements.
As I indicated, we heard from a number of the disability advocacy groups
yesterday, and they all pointed to B.C. as a successful jurisdiction that has
overcome the legal representation issue. But when questioned by Senators Black
and Massicotte, the witnesses said that the participation in B.C. was roughly on
a par with the rest of the national average, which quite frankly surprised me.
From a legal point of view, Ms. Alexander, I was going to ask, does it surprise
Ms. Alexander: No. My understanding of the B.C. legislation that
allows you to appoint a representative also has limitations on what tasks that
representative can do. There is a list of things they can do and, while RRSP is
included, RDSP isn't included yet.
The Chair: That's a little different than what I understood. I had
understood them to say that basically the B.C. situation was the best and was
operating well. I am only repeating, but I am interested in your views.
Ms. Alexander: My review of the legislation is that while the
representative agreement compared to, say, power of attorney legislation in some
of the other provinces, the capacity to appoint a representative under a
representative agreement may be a lower level of legal capacity, so that you may
be accessing a different or larger group of people. There are limits. It's not
carte blanche to do anything with the grantor's assets. Right now, there is a
list in there that includes RRSPs but it does not include RDSPs.
The Chair: Thank you for that comment.
Senator Hervieux-Payette: Since I am going to speak in French, I want
to make sure that you can understand.
I received a letter this morning from the TaxWise Incorporated group,
complaining that the costs of the program are excessive; they use the words
``unethical disability tax promoter.'' I would like to understand what internal
procedures the banks have for those in charge of promoting the program. Are
there additional costs for other programs?
I know that our committee has often condemned the fact that the costs for
pooled funds would be much higher than elsewhere.
Does this measure cost those who use it a lot in administration?
The Chair: Before you answer, I would ask Senator Hervieux-Payette to
table that with the clerk. I don't know if it was circulated to all members of
the committee or not, but we will have it.
Senator Hervieux-Payette: Yes.
It's a coincidence that it's dealing with this matter, because they were
talking about a private member's bill but, as far as I'm concerned, it is this
The Chair: Thank you.
Senator Hervieux-Payette: Are those the transaction fees? Each year,
both the people and the management will contribute to the fund and, after 10
years, there will be a substantial amount of money.
What are the costs for participating in and administering the plan?
Mr. Hannah: Let me start, because I think there are two parts to this
question. There is the specific around DTC promoters, and I'll let Ms. Alexander
address that, and then there is the broader question around cost to clients of
participating in the program or accessing the program.
From a financial institution perspective, to the extent there is a cost, it's
typically associated more with the investment choice I make, not the
registration of the product. I think that's an important distinction.
Like all registered programs, there is a certain amount of administration
associated with it. You have to do reporting associated with it. The challenge
with this program is that it's available to a much smaller target audience, much
smaller pool, but it has equally complex registration and reporting processes
associated with it. Is it administratively challenging or at least
administratively heavy? A little bit more to so than normal, but we make the
product available anyway because this is a product that Canadians need, that
people want and that we want to make available to our clients.
With respect to your specific letter, though, there is a specific issue
associated with that, and I will let Ms. Alexander speak to it.
Ms. Alexander: I'm surmising that what they are talking about is not
RDSPs. There is, I understand, as I've seen the reports, a business that goes
after people to claim the Disability Tax Credit and to file reports, to claim
that they are disabled, which is a whole other topic unrelated in a way to the
RDSP. They get some advantages by claiming to be disabled and qualifying for
disability tax credits and getting disability pensions or payments. I don't know
if it's federally or only provincially. They search out people and help them
file claims and take something for that. I think that's different. I have never
heard of anything connected with the RDSP like that.
Senator Hervieux-Payette: People must have a disability to be eligible
for this plan. Who determines the disability?
I speak from experience, because in Quebec, in order to establish that a
person is disabled and can receive some benefits from the government, there is
an assessment and the person must ultimately be deemed disabled by the
government. Basically, it is not an arbitrary issue; the person may have
mobility issues or restrictions, but how do financial institutions handle this
issue for disabled persons? Do they already have a certificate that deems them
Ms. Alexander: In order to have your disability plan registered, you
must have achieved eligibility for the Disability Tax Credit. That's a separate
section under the Income Tax Act where you get a physician or a medical
practitioner to certify that you are eligible for the Disability Tax Credit.
They come to us. We tell them that this is a criterion to have the plan
registered for them. We send it in, and there is coordination with the
departments that administer it to find out whether they've achieved that status.
Then, they grant that it's an RDSP. We don't do any adjudication. We send it in
and if they have already qualified, it becomes an RDSP. If they don't, it gets
rejected. It happens apart from the bank or the financial institution.
Senator Hervieux-Payette: To be able to take advantage of the program,
they must absolutely be deemed disabled based on the tax credit rather than the
program, but action is still taken. Are you telling me that the private sector,
family physicians, make that decision?
Ms. Alexander: My understanding under the Income Tax Act is, yes, a
medical practitioner signs the certificate that then qualifies them for that.
There is a prescribed form under the Income Tax Act that they sign to certify
that they have the disability as described in the Income Tax Act.
Senator Hervieux-Payette: Yesterday, I asked the question about who
would be the greatest beneficiaries, and it would probably be the children who
perhaps have to face more challenges in their future when they have a
A physical mobility issue does not prevent them from working, but they would
still have a harder time getting a job. Generally speaking, are the clients
targeted by the financial institutions adults? How do you identify them? Canada
does not have a registry of persons with disabilities. What do you do to build a
client base and sell this product to every person who steps into a financial
institution? Do you ask them if they have a person with disabilities in their
family? What do you do to identify clients who can qualify? After all, this is a
small segment of the Canadian population.
Mr. Hannah: I'll let my colleague, Trevor Philp from BMO, address this
question because I think he can give you a better sense of what happens at the
branch level experience.
Mr. Philp: Traditionally, there are two ways we can come across a
client who might benefit from this type of plan. One, as you alluded to, is
someone who walks into the branch and lets us know that they are interested in
opening up these plans. Second, we do a lot of education effort working with
community partners, and some of them were mentioned by the chair earlier, to do
education sessions around the RDSP to get the word out that way. That might lead
them to come into our branch or the financial institution that they're most
comfortable dealing with.
Senator Hervieux-Payette: Is this clientele really knowledgeable in
the area? When we talk about those types of benefits, whether for the education
savings plan or other plans, there are the fees, but there is also an issue of
the security of the fund. In terms of speculation, I am guessing that there is
not a more speculative fund for those people.
In terms of the plans you are offering, I believe there is a very limited
number of Canadians who can do the administration themselves on a yearly basis.
What precautions are you taking for people to make a profit on the money they
invested under the plan? How will they end up with more money and a
significantly reduced risk so that they will still be interested in using this
type of plan in 20 or 30 years?
Mr. Hannah: I will start and then ask my colleagues to step in. I
think what you're asking about what the investor relationship is: What do I go
through as a financial planner, in essence whether the client happens to be
disabled or any client, to make sure that the investments that I recommend for
them suit their financial needs?
Trevor, Ann Elise, perhaps you want to talk about the financial planning of
Mr. Philp: I'll take the first part of the question. Around the
eligibility or suitability of the fund or the underlying investment inside the
plan, there is no special way that we administer that for an RDSP. It's much
like you would administer for any individual. You ask them questions around
their risk tolerance and their investment objectives, which might be different
for an individual living with a disability. However, we offer a broad suite of
choices, so an individual is not forced to purchase, for example, a mutual fund.
They have the option of using a savings account or purchasing a GIC. A broad
base of solutions is offered under the plan.
Senator Hervieux-Payette: So do you think that all those people
understand your jargon and are really aware of the risks they are taking, and
that people in general make all the decisions, when you do not have a specific
envelope tailored to this type of program?
Mr. Philp: No. We do not specifically tailor an investment solution
for this program because, as you alluded to earlier, there could be a broad base
of individuals. A disability does not encompass only a mental disability; it
could be a physical disability as well. So we don't tailor a specific solution
to specific disabilities. We just offer the broadest choice possible to benefit
Senator Hervieux-Payette: May I ask the lady from CIBC?
Ms. Alexander: Under the Income Tax Act, eligible investments for
registered plans are the same for the RDSP as they are for the RRSP, the RESP
and the RRIF. This plan, as Trevor said, is available to anyone — the nature of
the disability can range. Just like any person, it depends on their investment
knowledge and choices. If the person has a legal representative, then that
person has to make decisions for that person based on their circumstances. It's
I understand that an emphasis of the program is that just because these
people are disabled doesn't mean that they have to have their road mapped out
for them; they have some choice themselves.
The Chair: Thank you for that clarification.
Senator Black: I thank each of you for being here and also for your
commitment to helping us to find a solution to what we understand is an issue.
Can I just play back to you what I've come to understand over the last couple
of hearings? Perhaps you could then help us to arrive at a solution.
This committee has come to understand that there is a small pool of disabled
people who currently are not able to access this plan. We understand that pool
to be people who would be mentally handicapped without the support network of a
parent, a spouse or a relationship who are able to act as their plan holder for
them. That's the constituency who are currently not franchised. Agreed? Good.
Mr. Hannah: I was going to say that I think they are franchised by
virtue of the changes made in 2012. The issue is whether that's durable because
it sunsets in 2016. Would that be correct?
Ms. Alexander: It's a combination. There are two issues. People who
have a parent or common-law spouse who can step up for them —
Senator Black: Assume they don't.
Ms. Alexander: — and they do not have a legal representative appointed
under the law of the province or territory where they live —
Senator Black: Assume they don't.
Ms. Alexander: — they will not be able to open the plan.
Senator Black: Correct. So that is the pool that is actually being
I was happy yesterday because I thought, great, the B.C. solution fixes this.
We heard, as the chairman has indicated, that what they have come up with in
British Columbia seems to fix that problem. Now I hear that perhaps that's not
as clear as possible.
Based on your knowledge and experience, can you please suggest to this
committee what the solution is? What is required to allow that constituency of
people to take advantage of this program? That's what I'd like to hear, please.
Mr. Hannah: I'll start from a general perspective. From a CBA
perspective, we certainly want the federal government and the provincial
governments to work together to come to a resolution. We want to ensure that a
durable solution is found that will make sure these people have access to the
product that they can benefit from. We would like it to be ideally a harmonized
solution. Whether that be federal or provincial, we're open, but certainly we
would like to make sure that Canadians across the country have equal access to
Senator Black: Agreed.
Mr. Hannah: How we go about that is a different question, and there
may be some different views or a variety of views on that. I think from a
general industry perspective, we're less concerned about the process and more
about the result. That's my perspective and the CBA perspective generally. I'll
let my colleagues add a bit more.
Senator Black: If I may, before my colleagues get to it, I agree
completely with your comments, but what's the answer?
Mr. Philp: I have in-depth knowledge at the client level with this
plan. I think the answer is to have a solution that provides federal guidance to
a federal plan. The challenge that we face with this is that if we had a
provincial solution — it could be the federal government working with the
provinces — provinces offering different solutions — then we have a plan that is
administered differently across different provinces. You have one individual who
in one province could perhaps open a plan and an individual in another province
that could not open the plan. That's, at the ground level, where we see the
challenges with this.
Now, I know the B.C. legislation and I understand that some of the groups
were talking about that B.C. solution. My understanding is that that solution
could be very feasible as long as it were to be updated to include the RDSP. My
understanding of that legislation is that it predated the RDSP and therefore
does not include the RDSP at the current time. That solution could be very
feasible if it is inclusive of the RDSP, and perhaps a federal framework or
guidance on that could be very helpful.
Senator Black: That's very helpful.
Have you comments?
Ms. Alexander: I don't know that there's a one-size-fits-all solution.
If we went with the B.C. solution, I still don't know that it would capture
everybody. There may always still be a class of people for whom a
court-appointed guardian is the only solution for those people, unless somehow
the RDSP was changed to be not a savings plan that's then paid out but was an
end-to-end process, where somebody was in charge of the assets through the
savings component and the payment component, where it was distributed to them.
But that's not the way it's structured right now, so that would take some
Senator Black: Ms. Alexander, would you be comfortable with a plan
whereby I, as a mentally disabled person, indicate that my friend, Senator Ngo,
is going to be my plan holder, and my friend Senator Rivard certifies that we're
friends and this is all legitimate? Are you comfortable with that?
Ms. Alexander: Well, I think this is where you get into the
constitutional issues about how you can bestow authority on a person. Does
somebody have capacity to bestow that authority? If it is ruled that that is a
binding act of me, then we have that certainty.
Senator Black: Who is not competent; that's the problem.
Ms. Alexander: Right. I guess the law is: Can we make a range of
competency that captures this provision?
As I pointed out before, there's operating the plan and then the money comes
out of the plan. I think that will be more relevant in the future. This is a
plan that's being worked on. It got started and it's evolving. That's one of the
things we have to work towards.
Senator Black: That was very helpful. Thank you all very much.
Senator Massicotte: Thank you for being with us this morning.
Chair, I must declare I have a conflict of interest. I'm in conflict with
Having said that, we have an issue regarding the authorization, and I think
it has to get resolved, and I agree with that. I think you're all saying the
When you dissect the number of people and the effect — because it has to be
``mentally handicapped.'' It's a very minor sense, probably less than 5 per cent
of handicaps I suspect it applies to. The issue has to get resolved.
The more fundamental issue in my mind is that you have 15 per cent of the
potential marketplace participating in a plan, which doesn't seem to be very
high. I know the plan has only been in place for six years. When this is deemed
to try to render service and help people who are unfortunately handicapped, it's
a socially important project for a government and for our country. But why only
15 per cent? We heard yesterday that the most serious impediment to getting
greater participation is not this legal problem; rather, it's not well known.
It's just not well publicized.
Now, that is not the case for other savings plans like RRSPs because they
apply to a larger population, so the banks are highly motivated to get their
product and the information out there; but in this case it's a relatively minor
number. The suggestion was that the banks are not motivated to get it out there
because there's not a lot of money to be made from this. Yet, we look at BMO.
You have 45 per cent of the marketplace. Why are you so successful and why are
the others such laggards?
Mr. Philp: I'll address a couple of issues there as far as the
outreach of the plan.
The difficulty when you're dealing with the disability community is that
they're very fragmented. Usually, the support networks are based on the
disability — CNIB for an individual with vision impairment, and so on. You have
these fragmented groups, and it's a bit of an education effort. That's where we
at BMO have focused on the plan, really around the education front. Registered
plans always tend to have a little legal background to them, so we make it
client friendly and put it out there. I've done probably between 500 and 600
educational seminars to end-clients, whether that's in conjunction with a group,
such as some of the ones that the chairman mentioned that spoke yesterday, or
other groups, to get the word out and help facilitate opening the account.
I think the government does a lot of education efforts, and they have done a
lot of education effort. They actually contract some of these groups through
HRSDC to do presentations on the RDSP. But the case is, as with all of us and
with any type of financial education, we live busy lives, and these individuals
even more so with some of their limitations. It is a very young plan and is a
bit of a work-in-progress, but I think we're doing what we can with the
government to get the education effort out there.
Senator Massicotte: Why are you 45 per cent and why do the other five
or six large banks only have 55 per cent amongst themselves?
Mr. Philp: Our success has been two-pronged. We're the only bank that
offers this through two channels. The first channel is through our retail
banking network. The second channel is through our investment adviser network,
so dealing with independent investment advisers in Canada and promoting the plan
through them and having them brought up to speed on the plan and able to offer
that to their clients. We've taken a two-pronged approach in that effort.
Senator Massicotte: I will jump to fees. Senator Hervieux-Payette was
talking about this earlier. When somebody opens an account, is there a set fee
for opening the account, for the forms?
Mr. Philp: No account fees take place on this account. There are no
fees to transfer the account to another institution. The only underlying fees
that an individual could incur are on the actual investment product itself, and
those are no different than any other plan.
Senator Massicotte: Just like an RRSP, you can invest in mutual funds,
exchange-traded funds or whatever you want.
Mr. Philp: The way we administer it, and different banks have taken
different approaches in terms of the investment products offered, is we offer
this through cash and savings, through GICs and through mutual funds.
Senator Massicotte: Any mutual fund.
Mr. Philp: Yes, our whole line of mutual funds.
Senator Massicotte: CIBC, you're obviously lagging. Why not more
emphasis to get out there and compete with BMO?
Ms. Alexander: We have provided this plan and we do support it. We
have outreach programs where our advisers hold seminars with various
communities. We partner with a particular organization that services families of
the disabled. Jamie Golombek, one of our spokespersons, is an avid supporter of
this plan. We determined that the best place to offer it was within our mutual
fund group, so we have a complete suite of mutual funds offered to it. It's a
work-in-progress that we keep building on; and we are there. BMO went out first
and captured the vast majority, initially; but we are in it and committed to it.
Senator Massicotte: Are those who participated in CIBC's fund limited
to mutual funds or can they invest in anything, like term deposits?
Ms. Alexander: It's a full suite of mutual funds that are offered.
Senator Massicotte: It would originate with your mutual fund
salesperson, which means he's probably more apt to buy mutual funds.
Ms. Alexander: It's only mutual funds. They go to an investment
adviser who advises them on the suite of mutual funds.
Senator Massicotte: They're limited to a suite of mutual funds only.
Ms. Alexander: Yes.
Senator Massicotte: They can't do ETFs.
Ms. Alexander: No, it's mutual funds.
Mr. Hannah: If I may add a point, I think there's a great story here
on the benefits of having a national banking system. The fact that we are able
to take a niche product and, because we have national institutions, be able to
offer it on a platform across the country through a number of financial
institutions so that people in all parts of the country are able to access it is
fantastic from my perspective. It shows the benefit and value of having
institutions with that scale and scope to be able to make that product available
in all markets, irrespective of the local market size.
Senator Massicotte: You're saying that competition is very important
and diversification of product is important. As opposed to having 5 banks we
should have 20 banks — that would be even better; is that what you're saying?
Mr. Hannah: No. The U.S. system of regional banks may not be able to
make offering the product economical in the way that large institutions can
because large institutions can offer the same product using the same platform
across the country.
Senator Tkachuk: We should have one bank.
The Chair: Mr. Philp, to clarify a question that Senator Massicotte
asked, did I understand you to say that BMO was the only bank taking a
two-pronged approach, i.e. investor advisory services, which I suspect are
initiated by the bank, and retail branches, where it would be more initiated by
Mr. Philp: Yes, that's correct. We're the only bank that offers this
on the IIROC or through that platform — that's the industry platform. You can
offer it through your retail branch and you can offer it as a method of offering
to any independent financial planner or adviser across Canada; we offer it
through that channel as well.
The Chair: With the 45 per cent market share that you have, would you
have a sense as to where more of these plans are initiated, whether it be from
the branches, where the customer comes in, versus the advisory service, where it
is being promoted actively?
Mr. Philp: I'd say it's about one third through the independent
adviser community right now and two thirds through the retail bank.
Senator Massicotte: We must congratulate BMO. Maybe the others will
wake up. This is very good.
Senator Tkachuk: I want to get back to an issue that Senator Black
raised yesterday: the problem of people who may not have the mental capacity to
make these decisions and how power of attorney is decided, and all the rest of
it. If I were a parent of a mentally disabled person, I'd fear that after my
wife's death and mine that the person would be left basically alone. Who would
look after that person's affairs? Is it possible that a power of attorney could
be a third party? For example, if there was no one to look after my mentally
disabled son, I might choose a charity that belongs to my church to be power of
attorney. Is that legal or is that something that could be done?
It seems to me that it's a matter of trust after death. Maybe there's a whole
pile of money, so who will get their hands on it? Is it going to be the
legitimate person who should have the money? Perhaps I'm going to leave money in
the will as well for that person? Who looks after that person legally, presently
under the law? Is it possible that we could consider a third party, like a
charity, to do that?
Ms. Alexander: If I'm the parent, it's my money and I leave it in a
will for my child. I can say who will be the trustee of those funds and how they
are to operate it and pay it out. They can pay it to the child or for the
benefit of the child.
Senator Tkachuk: Can it be any third party, such as a charity or a
church? Does it have to be a person?
Ms. Alexander: Generally in the law of trust, it has to be an
individual or a trust company. You don't generally let other corporations
administer funds as trustees. They have to be a trust company. The power of
attorney is where a person bestows authority on another person. We're not
talking power of attorney here, because I can't bestow authority over you; only
you can bestow authority over you. Where you can't bestow that authority, right
now the state provides who can be given that authority. That's the question of
Senator Tkachuk: That would be my fear: the state doing it.
Ms. Alexander: The state, through its laws —
Senator Tkachuk: I have no idea who it will be. I want to know, as a
parent, who it is. Isn't that part of the problem?
Ms. Alexander: Right now, there is no law for a parent to bestow legal
authority over an adult. The laws say that a guardian can be appointed —
somebody who applies to the court. In cases where no one will step up or there's
an emergency, it's usually the public guardian and trustee or the public curator
who takes on that role. The legislation in the provinces says how that works.
If we go back to the trust concept about saying who is a trustee of funds,
look at the RDSP. It is set up and the government puts money in and other people
put money in. If they agreed to the terms of the whole plan, the lifetime
process of this money, it's not out of the realm of possibility to provide that
as a mechanism for the control of the funds through the lifetime. It's a
difference from what we have right now, when we have money exiting the plan and
belonging to the beneficiary, so then it's a question of who controls that money
when it leaves the plan.
Senator Tkachuk: We need more innovative approaches to solve this
problem. It seems that the present legal system — the way it sits right now —
doesn't solve the problem we're talking about. In other words, the deterrence to
operating this is the fact that we have someone who is mentally incapacitated.
Who will look after their cash? Parents will have difficulty dealing with this,
I would think, and so would other relatives perhaps. There has to be a way to do
it besides saying that the state will do it, because that's an unknown. I think
people would say that they'd not bother doing that. They'd just save the money,
find another way and not use this particular vehicle.
Ms. Alexander: It's a start. You have to be thinking a little bit
outside the box.
Senator Greene: We've heard testimony that the reason that there is no
national plan is that there are constitutional issues. Can you describe exactly
what those issues are? This has piqued my interest because, of course, we have a
national RESP plan; and there could be constitutional issues there, because
education is a provincial responsibility. I'm just wondering if you could list
for me or tell me exactly what the issues are.
Ms. Alexander: It's interesting: People think that it's a lot like the
RESP because they both use the word ``beneficiary,'' but from a legal point of
view, there is no registered plan like the RDSP where you can have a split
between who operates the plan and who gets the money. For the RSP and the RRIF,
the annuitant owns the money, controls it and gets the money.
With the RESP, you have the subscriber and you have beneficiaries, but the
subscriber owns that plan and it's totally within the subscriber's control
whether or not that money goes out to this person called the ``beneficiary.''
The beneficiary has a legal right to that money. When they get it, it's taxed in
their hands and that's the whole issue, but they have no right to say it's
theirs. The RDSP says the money goes to the beneficiary, so it's different.
The constitutional issue is that the provinces have jurisdiction over
property and civil rights, which includes the ability to decide as to legal
capacity and the ability to appoint a guardian. The Attorney General for the
Crown has the inherent jurisdiction to look after people who are not mentally
capable. So when you start naming people to look after people's property, that's
a provincial issue. I think that's the constitutional issue here. It's naming
somebody to have authority over a person's property, and the property is the
money coming out of the plan.
Senator Greene: What's the position of groups like CNIB, et cetera,
that assist on those issues? Is there an interest in attempting to overcome the
constitutional issues in order to create a national plan?
Mr. Hannah: I think we would be reluctant to speak for what the
position of those groups would be. You might want to call them and ask them
Senator Maltais: We are studying this bill — and we have a lot of
senators around the table — and since yesterday, we have all been wondering
about the ``trustee.'' Let us try to figure that out because I do not know if
there is a difference between civil law in Quebec and common law in the rest of
I will tell you what my understanding is and correct me if I am wrong,
because you are going to have money in your funds, in our banks. We, as
lawmakers, must make sure that, when a person goes to look for their money in
your banks, they are the right person.
In Quebec — Senator Hervieux-Payette can correct me since she is a lawyer — a
mandate in case of incapacity is given to a person, either to their spouse or to
one of the children, in case they become incapacitated. Do you have that as
Mr. Hannah: Yes.
Senator Maltais: There is also what we call ``guardianship,'' for
parents with children; if the parents die young and they have minor children,
they can choose one or two guardians under the law, and those guardians will be
responsible for taking care of the children until they are 18 or 25, regardless
of what the parents decided.
In Quebec, it is recognized that parents are the legal guardians of children
with disabilities. So while they are still alive, parents will usually choose a
legal guardian themselves if their disabled children are in their 30s or
mid-thirties and the parents feel they are getting older. A legal guardian is
someone appointed by a notary or a lawyer through a formula that is consistent
with the legal system in our province.
Senator Tkachuk has raised a point about trusted friends. As you know, the
road to hell is paved with good intentions. I for one am scared of trusted
friends like the devil is scared of holy water. Yesterday, I thought it was odd
that the Canadian association of persons with disabilities focused on trusted
friends, trusted representatives, and so on. I would not want to go along with a
piece of legislation that allows third parties to misrepresent the objective of
the legislation in any way whatsoever, an objective that seeks to enable persons
with minor or major disabilities to save for a decent retirement. That is my
Ms. Alexander: A couple of things there. In all provinces, I don't
think parents can appoint a guardian for their adult child. Only the law does,
through the process. If you're talking about a legally appointed guardian, there
are ways to monitor that guardian in the various provinces. Some are more active
than others. Some require reports. They can be brought to court to account,
things like that. The issue of abuse is a very important one that has been
Senator Maltais: I think you misunderstood me. If I choose a legal
guardian for my child while I am alive, I do not think the government can choose
someone else, can they?
Ms. Alexander: Well, actually, they can. No one can name a guardian
for an adult: only the court can, in all jurisdictions.
If you gave a power of attorney or a mandate to endure beyond incapacity, so
if you were an adult and you bestowed a mandate on somebody or a power of
attorney on somebody, that could continue beyond your incapacity. But if you
never had capacity to make that appointment in the first place, the only way a
guardian of your property can be appointed is through the legislation and the
Senator Maltais: Let me explain something. Thousands, perhaps hundreds
of thousands of people in Quebec have parents who have given a mandate in case
of incapacity to one of their children, and the children carried out the mandate
when their parents were no longer able to make decisions. I am thinking about
seniors. I am thinking of my mother who, at 95, was eventually no longer able to
make decisions, but 40 years ago, she gave me a mandate in case of incapacity on
all accounts. Are you telling me today that the government could have managed my
mother's affairs despite the fact that she had given me a mandate in case of
incapacity? Would the government have said, ``You will manage your mother's
assets in such and such a way''? Not a chance.
Ms. Alexander: She did give you a mandate that endured beyond
incapacity. I said if the person is capable and they give it, then that will
stand. The court can always step in if you were abusing it and could remove you.
For people who never had the capacity to give a mandate, then the only way
for them to get a guardian appointed is through the legal process.
Senator Maltais: Legally, parents with disabled children have the
natural mandate; they are the parents. Does the government manage people with
major disabilities when they are 4, 5 or 6 years old or do the parents? I want
that to be clear.
Ms. Alexander: I did check this with my colleague in Quebec before I
came. The only way you can bestow someone with authority over a person's
property, an adult's property, is through the court appointment process. So
parents do not have a natural guardianship over their adult children's property.
Senator Maltais: I am sorry, but it is important, Mr. Chair. If a
couple has a young boy or a young girl of 14 or 15, who is healthy, are they not
the legal guardians of those children? Is the government going to say, ``You are
going to school and you are going to wear that dress''? No. Are you telling me
that it is the government, not the parents?
If the government does that for a person with disabilities, why does it not
do it for a normal person?
Ms. Alexander: There are two kinds of custody or guardianship: of the
person and of the property. In Quebec, I understand a parent is the guardian of
their child's property. But in the rest of Canada, they aren't; they need to be
appointed by the court.
Then you get into custody of the person. I believe in all jurisdictions,
parents are guardians or custodians of the person, of the personal aspect of
their child. When they become adults, they are no longer their guardians, for
person or property; and to be officially appointed, they would need to be
appointed by the court.
Lots of times you don't need to have a guardian because you don't have issues
where you're facing — like, on personal issues, many of the provinces allow a
parent to consent to treatment if they can. On the property, there maybe hasn't
been a focal point where they've had to deal with a legal issue.
The Chair: Senator Maltais, one concluding comment and then a
Senator Maltais: What you are saying was true before the Quebec
Automobile Insurance Act. I am an insurance broker by profession and, at the
time, when a child had to receive compensation after an accident, the father had
to be appointed by the Superior Court as the legal guardian. You must remember
that, Senator Payette. Today, that is no longer required, because the Automobile
Insurance Act applies. We will have to go back to that.
Mr. Chair, I would like this lady to give us her opinion, because it is very
important to know what we are getting into.
To wrap up, I am pleased with your answer to Senator Massicotte that there
would not be any fees on fees or fees because of fees. Thank you.
Senator Nancy Ruth: On the same issue, if I had an incompetent child
and I wanted to provide for them, I would most likely go to, say, an insurance
company and buy an annuity. What I am missing is the government's contribution.
As somebody pays into this fund, can you explain to me how the government
provides and how could you see that in, say, the life industry, something like
Mr. Hannah: Trevor, do you want to speak about the mechanics behind
Mr. Philp: There are a couple of points here. I think the government's
approach is a little bit two-pronged in the sense that the various provinces
have a social support network that covers everyday living expenses. It's meant
to cover your costs of clothes, food, shelter — those aspects. Where the RDSP
plays in is that long-term savings element, so a way for individuals to put away
money for long-term savings.
In the case of the actual mechanism, it's also two-pronged. It's a matching
grant contribution, so three for one on the first $500 and two for one on the
next thousand that you contribute to the plan, and there are limits on the
actual amounts. There is also a bond for individuals with limited income who
might not be able to contribute to the plan, a bond amount that the government
will put in on an annual basis to allow these individuals to open up the plan
and have money go into the plan.
As far as the life insurance industry, it is interesting that, as far as I
know, no life insurance companies have gone down the road of the RDSP for
insurance products. The way I could see that working under the current
mechanisms could be through segregated funds. However, I don't know; I'm not an
expert on the insurance industry.
Senator Nancy Ruth: But theoretically, there is no reason why the
government could not make the same type of grant if the life industry chose to
Mr. Philp: You're talking about a basic insurance policy?
Senator Nancy Ruth: I was thinking of some an annuity that would pay
out on a monthly or semi-annual basis.
The other thing I wanted to know is if someone is incompetent, it's highly
likely they're on some kind of subsidy from the province they live in. Is there
a clawback mechanism to any of these funds coming in?
Mr. Philp: Most provinces in Canada do not have a clawback. There are
certain jurisdictions that instituted on the payment from the plan. That really
is based on the province, so it does depend on the province across Canada.
Senator Black: Ms. Alexander, yesterday we had clear evidence from the
folks that appeared before us that, in their view, a national solution — i.e., a
solution promulgated by the Government of Canada — would not be possible in this
context because it would be unconstitutional. Do you agree?
Ms. Alexander: If the federal government is legislating who can be the
legal representative of a person, I would say there is a constitutional issue.
Senator Black: So you would agree with that?
Ms. Alexander: On that point, yes.
The Chair: Thank you very much to our panel, who have been extremely
helpful in our deliberations today. On behalf of every member of the committee,
I would like to express our great appreciation for your appearing before us