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 unaffected.

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 competence.

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 your questions.

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 structured.

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 of plan?

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 competent.

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 provisions.

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 the process.

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 you?

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 subject matter.

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 disabled?


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 disability.

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 this.

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 our clients.

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 their choice.

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 affected here.

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 the program.

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 changes.

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 CIBC's fees.

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 same thing.

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 the user?

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 legal representation.

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 directly.


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 Canada.

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 well?

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 question.


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 raised.


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 court mechanism.


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 response.


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 that happening?

Mr. Hannah: Trevor, do you want to speak about the mechanics behind it?

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 do that.

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 today.

(The committee adjourned.)