Thursday, June 6, 2024

The Standing Senate Committee on Banking, Commerce and the Economy has the honour to table its

THIRTEENTH REPORT

Your committee, which was authorized to examine the subject matter of those elements contained in Divisions 11, 13, 16, 17, 18, 19, 20, 33, 41 and 42 of Part 4, and in Subdivision A of Division 34 of Part 4 of Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024, has, in obedience to the order of reference of Thursday, May 9, 2024, examined the said subject-matter and now reports as follows:

Part 4, Division 16

Division 16 of Part 4 would enact the Consumer-Driven Banking Act to establish the consumer-driven banking framework in Canada. It would also amend the Financial Consumer Agency of Canada Act to establish the position of Senior Deputy Commissioner for Consumer-Driven Banking, who would be the regulator responsible for the regime.

The committee underscores the importance of moving quickly and diligently with a consumer-driven banking framework, both to promote competitiveness in the Canadian financial sector and to contribute to a much-needed improvement in Canada’s overall productivity. While the committee recognizes this is the first step in the formalization of Canada’s regime, it has serious concerns regarding Division 16 and the potential unintended consequences for consumers.

The committee believes that a strong governance structure will be essential for the regulator so that Canadians can be confident when participating in the consumer-driven banking regime. The committee has serious reservations over the government’s decision to designate the Financial Consumer Agency of Canada (FCAC) as the regulator for consumer-driven banking, and questions why a more robust, independent regulator that has expertise in enforcement was not chosen. Specifically, the committee is concerned that:

•Having the FCAC as regulator could result in confusion for Canadians that use provincially regulated financial institutions, in particular when choosing the appropriate avenue for resolving complaints. Furthermore, provincially regulated financial institutions may be subject to additional, and potentially conflicting, regulations to participate in the consumer-driven banking regime;

•The FCAC may not acquire the required skillset in time to be a strong and effective regulator, given its traditional consumer awareness role and because its enforcement powers are relatively new; and

•Designating the FCAC as the regulator would limit consumer data portability to financial data and does not envision broader applications for other types of data, such as health care data.

With respect to the selection of the technical standards body, the committee strongly insists that the Minister ensure the body selected is aligned with Canadian interests and that it has a governance structure that conforms with the principles set out in the proposed act. To avoid a conflict of interest or a perceived conflict of interest, those serving on the technical standards body responsible for recommending and overseeing the use of the recognized technical standard should be independent from the interests of the entities managing the technical standard itself.

The committee heard testimony that recommends the removal of Division 16 of Part 4 from Bill C-69 so that further consultation can be done, particularly with provincial regulators, over the next few months. The committee asks that the federal government reconsider the merits of this proposal.

Lastly, the committee continues to be concerned that the federal government chooses to include substantive changes to Canadian law in a budget implementation bill, providing insufficient time to the committee to properly examine the bill and hear stakeholders’ concerns. As well, the committee wants to express its frustration with the pre-study process, as it does not allow the Senate to provide its traditional role of “sober second thought” when studying a bill that has not yet passed in the House of Commons, particularly in cases where amendments have been included at later stages of consideration.

The committee has no material observations regarding Divisions 11, 13, 17, 18, 19, 20, 33, 41 and 42 of Part 4, and Subdivision A of Division 34 of Part 4.

Respectfully submitted,