Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce

Issue No. 33 - Evidence - February 8, 2018

OTTAWA, Thursday, February 8, 2018

The Standing Senate Committee on Banking, Trade and Commerce met this day at 10:30 a.m. to give clause-by-clause consideration to Bill S-237, An Act to amend the Criminal Code (criminal interest rate).

Senator Douglas Black (Chair) in the chair.


The Chair: Good morning, colleagues. We are gathered here today to deal with clause-by-clause consideration of Senator Ringuette’s Bill S-237.

For those watching at home, I think it’s useful that we introduce the senators, please. I am Doug Black.

Senator Marwah: Sarabjit S. Marwah, Ontario.

Senator Galvez: Rosa Galvez, Quebec.

Senator Tannas: Scott Tannas, Alberta.


Senator Ringuette: Pierrette Ringuette from New Brunswick.

Senator Maltais: Ghislain Maltais from Quebec.

Senator Dagenais: Jean-Guy Dagenais from Quebec.


Senator Stewart Olsen: Carolyn Stewart Olsen, New Brunswick.

Senator Tkachuk: David Tkachuk, Saskatchewan.

The Chair: We are also ably assisted here by our clerk and by our analysts.

Before we begin, I am told it is important that I need to remind senators of a number of points.

If at any point a senator is not clear where we are in the process, including the chair, please ask for clarification. I want to ensure that at all times we have the same understanding of where we are in the process.

In terms of the mechanics of the process, may I remind senators that when more than one amendment is proposed to be moved in a clause, amendments should be proposed in the order of the lines of the clause.

Therefore, before we take up an amendment in a clause, I will be verifying whether any senators had intended to move an amendment earlier in that clause. If senators do intend to more an earlier amendment, they will be given the opportunity to do so.

On an additional point, if a senator is opposed to an entire clause, I would remind you that, in committee, the proper process is not to move a motion to delete the entire clause but rather to vote against the clause as standing as part of the bill.

I refer to Beauchesne citation 698(6), which notes:

An amendment to delete a clause is not in order, as the proper course is to vote against the clause standing part of the bill.

I would also remind senators that some amendments that are moved may have consequential effect on the other parts of the bill. I refer senators, again, to Beauchesne citation 698(2), which notes the following:

An amendment must not be inconsistent with or contradictory to, the bill as so far agreed to by the committee, nor must it be inconsistent with a decision which the committee has given upon a former amendment.

In the spirit of this statement, it would be useful to this process if a senator moving an amendment identified to the committee other clauses in the bill where this amendment could have effect, if any. Otherwise, it would be very difficult for members of the committee to remain consistent in their decision-making.

Staff will keep track of these places where subsequent amendments need to be moved and will draw our attention to them.

Because no notice is required to move amendments, there can, of course, have been no preliminary analysis of the amendments to establish which ones may have additional consequences.

If committee members ever have any questions about the process or about the propriety of anything occurring, they must certainly raise a point of order. As chair, I will listen to arguments, decide when there has been sufficient discussion of a matter and make a ruling.

The committee is the ultimate master of its business within the bounds established by the Senate, and a ruling can be appealed to the full committee by asking whether the ruling shall be sustained.

As chair, I will do my utmost to ensure that all senators wishing to speak have the opportunity to do so. For this, however, I will depend on your co-operation and I ask all of you to consider other senators and to keep your remarks brief and to the point.

Finally, I wish to remind honourable senators that if there is ever an uncertainty as to the results of a voice vote or show of hands, the most effective route is to request a roll call vote, which obviously provides unambiguous results. Senators are aware that any tied vote negates the motion in question.

If there are no questions, we will proceed to the business at hand. We are doing clause-by-clause consideration of Bill S-237, An Act to amend the Criminal Code (criminal interest rate).

Is it agreed that the committee proceed to clause-by-clause consideration of Bill S-237, An Act to amend the Criminal Code (criminal interest rate)?

Hon. Senators: Agreed.

An Hon. Senator: On division.

The Chair: Shall the title stand postponed?

Some Hon. Senators: Agreed.

An Hon. Senator: On division.

The Chair: Shall clause 1 carry?

Senator Tannas: Mr. Chair, I would like to propose an amendment. I move:

That Bill S-237 be amended in clause 1, on page 1, by replacing line 15 with the following:

“plus forty-five per cent on the credit advanced under an . . . .”

The Chair: Thank you very much. It is moved by the Honourable Senator Tannas:

That Bill S-237 be amended in clause 1, on page 1, by replacing line 15 with the following:

“plus forty-five per cent on the credit advanced under an . . . .”

As it does not need to be seconded, on debate, Senator Ringuette.

Senator Ringuette: I was wondering if Senator Tannas could justify this amendment.

Senator Tannas: We heard from a number of stakeholders, and obviously from credit counsellors and people who represent consumers. They would just be allowed to continue under the highest number I heard was in practice from any of the representatives who came, including the associations. I think it was clear to all of us that there is a lot of work needed in reviewing the activities.

I am comfortable, and my concern was that we do something that would immediately dislocate consumers today who are on a treadmill. We don’t want to dislocate consumers suddenly and inadvertently. This needs more time and more review. The government should be on this. This should not be an unregulated wild west where this number is the only thing underpinning the whole industry.

To me, this number allows us to take what is in effect a 21 per cent reduction of the whole number of 60 per cent down to 45 per cent, and to put a stake in the ground that change is coming.

The Chair: Thank you, Senator Tannas.

Is there any other debate on this point?

Senator Ringuette: Obviously I don’t agree because our discussion, specifically that coming from Senator Tannas, was with regard to the 60 per cent being established in the 1980s. At the same time, the Bank of Canada overnight rate was at 18, 19 and so forth. As far as the wording of this being a casino, I certainly agree.

I don’t agree with this percentage. I think it’s still too high, relatively. I have spoken with Senator Tannas, and I will endeavour to meet with the Quebec government to seek all the arguments on the situation that are happening currently and have happened in Quebec that resulted in their consumer interest rate being at 35 per cent.

We can move on division, and at third reading I shall propose a further amendment based on the Quebec information.

The Chair: Is there any other debate on this point?

Senator Stewart Olsen: Just in support of this amendment, I think that it really is a start so that everything can be evaluated and looked at without too much of a shock. I am bringing it right down to what I understand, so people will understand.

I also think this rate would probably have a much better chance in the House of Commons for the Liberal government to look at it and perhaps support it. I think if we try to be too extreme it may not get the attention I think the whole issue that you’ve uncovered here deserves. I commend you for that, but we don’t want to shock them. We want them to look at this and hopefully support it. That would be what I have.

Senator Tkachuk: I am supportive of the amendment. I think that the reason this industry exists, as we heard yesterday, is because of the interest rate being allowed to go up that high. Otherwise, it wouldn’t even be there.

I do agree with the witnesses. I think the banking industry has basically taken the lower end of the social strata of the country and they aren’t providing banking services for them.

The 1980s were a way different time, and this industry didn’t exist at the time. The banks were charging up to 24 per cent. I am very supportive. I think this will give a chance to actually get the bill through the House of Commons.

Senator Wetston: We had an extensive discussion of this yesterday. You will recall that I was completely nonplussed by the comments and the conversations because I still couldn’t figure out the economics of what happened between 1980 and today with the 60 per cent interest rate and an 18 or 19 per cent interest rate at that time in the country; how we were able to maintain that over these years; and the arguments about the fact that the banks no longer lend to this vulnerable sector.

We’ve had the financial crisis. We’ve heard issues around the fact that capital crime rates are very high for the banks today, and it’s not an area of activity that they are prepared to participate in.

The only reason I am giving this summary is because I am still completely unclear about what I need to be able to say about this is the right rate versus that is the right rate.

I heard Senator Ringuette say she wants to get more information, particularly from a government that has probably done a great deal of research and consumer study and said that 35 per cent seems to work. That, to me, is an important consideration because it does represent a government that spent a lot of time thinking about this issue. I can tell you, from my experience, that the Quebec government spends a great deal of time on consumer protection issues.

If you suggest on division, I certainly appreciate and respect your point of view on that as you move toward getting more information and potentially bringing it back for third reading. I think that’s a very positive thing to do. On that basis, I would personally be able to say that we could proceed on the basis of this amendment, subject to your continuing to do that work because I think that’s very important.

The Chair: Senator Wetston, that’s very helpful. Thank you.

Senator Marwah: From my perspective, I am not sure 45 per cent is the right number or what the right number is, but what I do know is that, in my opinion, 20 per cent is far too low.

I don’t think 20 per cent will work in today’s environment. Too many legitimate providers of credit operate in the 25-30 per cent range, which I think provides a huge value to Canadians. Hence, between the two, I think 45 per cent is probably closer to being the right number than 20 per cent. At least it will work, and I plan to support the amendment.

Senator Galvez: I am here replacing Senator Wallin, and I just want to read one of her notes concerning this. She says that the interest rate proposed in the bill is too low and she feels that it will capture too many legal transactions.

The Chair: Thank you very much, Senator Galvez.

Hearing no other debate or no one else who wishes to speak on the point, is it your pleasure, honourable senators, to adopt the motion in amendment?

Some Hon. Senators: Agreed.

Some Hon. Senators: On division.

The Chair: Shall clause 1, as amended, carry?

Some Hon. Senators: Agreed.

Some Hon. Senators: On division.

The Chair: On division.

Shall clause 2 carry?

Senator Tannas: I have a new clause. I move:

That Bill S-237 be amended on page 2, by adding after line 14 the following:

“1.1 (1) Every five years beginning on the day on which this Act comes into force, a committee of the Senate, of the House of Commons, or of both Houses of Parliament that may be designated or established for that purpose, shall review the criminal rate.

(2) The committee shall submit a report on the review to Parliament that includes a statement of any changes to the criminal rate that the committee recommends.”

The Chair: Thank you very much, Senator Tannas.

Is it your pleasure, honourable senators, to adopt the motion in amendment?

Hon. Senators: Agreed.

Senator Ringuette: Because of the previous amendment of 45 per cent that I think is too high, I think the five-year review is also too high.

If we want to make sure to keep the attention on this issue and come to what is a fair criminal rate, I think that the review period should be two years, or at the most three. I find that five years is really too long a period to review whether or not the new rate is working accordingly.

Perhaps I could propose a subamendment.

The Chair: Let’s hear from Senator Tannis.

Senator Ringuette: Okay.

The Chair: I beg your pardon, Senator Tannas. Senator Dagenais?


Senator Dagenais: We do not all agree, but I was about to say that a five-year delay seems a bit long to me, given how volatile the financial markets are. I was about to suggest a three-year delay. This would allow us to revise the rate. The financial markets are more volatile these days. Senator Tannas suggests five years, and Senator Ringuette, two. I will meet them in the middle and suggest three years.


Senator Tannas: I originally proposed five years because, number one, we had no review before. Number two, as the Bank Act and other financial services bills and laws seem to be on a five-year rotation, I just thought we might as well get in the same rotation as the rest of the financial services industry.

I think Senator Ringuette and Senator Dagenais raise good points. Maybe, when we get this to a nice finely tuned number over a period of time and the industry has kind of calmed down and is working, then we can move it to five.

I am happy with three. I think that would be fine. I am in your hands, chair.

The Chair: And I am in the clerk’s hands.

Senator Tkachuk: If it’s unanimous, we can just change it to three years, right?

An Hon. Senator: It is a subamendment.

The Chair: I think we have to make a subamendment, apparently.

Honourable senators, are you prepared to adopt the subamendment to change five years to three years.

Hon. Senators: Agreed.

The Chair: I declare that carried.

The Chair: Is it your pleasure, honourable senators, then, to adopt the motion in amendment?

Hon. Senators: Agreed.

The Chair: Thank you.

Shall clause 1.1, as amended, carry?

Hon. Senators: Agreed.

The Chair: Shall clause 2 carry?

Hon. Senators: Agreed.

The Chair: Shall the title carry?

Hon. Senators: Agreed.

The Chair: Shall the bill, as amended, carry?

Hon. Senators: Agreed.

An Hon. Senator: On division.

The Chair: Does the committee wish to consider appending observations to the report?

Senator Tkachuk: Not really.

The Chair: Is it agreed that I report the bill, as amended, to the Senate?

Hon. Senators: Agreed.

The Chair: Thank you very much.

(The committee continued in camera.)