BANC - Standing Committee

Banking, Commerce and the Economy

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37-1 37th Parliament, 1st Session (January 29, 2001 - September 16, 2002)
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Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce

Issue 16 - Minutes of Proceedings

OTTAWA, Wednesday, May 30, 2001
(18)

[English]

The Standing Committee on Banking, Trade and commerce met at 3:45 p.m. this day, in Room 505, Victoria Building, the Chairman, the Honourable Senator Kolber, presiding.

Members of the committee present: The Honourable Senators Angus, Chalifoux, Hervieux-Payette, P.C., Kelleher, P.C., Kolber, Kroft, Meighen, Poulin, Oliver, Robichaud, P.C., Setlakwe, Tkachuk and Wiebe (13).

In attendance: From the Parliamentary Research Branch, Library of Parliament, Economic Division: Mr. Alexandre Laurin, Research Officer.

Also in attendance: The Official Reporters of the Senate.

APPEARING:

The Honourable Jim Peterson, P.C., M.P., Secretary of State (International Financial Institutions).

WITNESSES:

From the Department of Finance:

Frank Swedlove, General Director, Financial Sector Policy Branch

Gerry Salembier, Director, Financial Institutions Division, Financial Sector Policy Branch

Rhoda Attwood, General Counsel, Legal Services

From the Office of the Superintendent of Financial Institutions:

Normand Bergevin, Director, Legislation and Regulations

Alain Prévost, General Counsel

Pursuant to the Order of Reference adopted by the Senateon Wednesday, April 25, 2001, the Committee continued its examination of Bill C-8, An Act to establish the Financial Consumer Agency of Canada and to amend certain Acts in relation to financial institutions.

Mr. Peterson made a statement and with the other witnesses answered questions.

It was agreed, - That the submissions received by the following be filed as an exhibit with the Clerk of the Committee:

Jim Roache

Julie Burch, Program Manager, Women and Rural Economic Development

Garry Loewen, Executive Director, North End Community Renewal Corporation

Ron Grant, President, Future Forestry Services Co-operative Ltd.

Melanie Conn, Director, Women Futures CommunityEconomic Development Society

Terry Hand

Jerry Botti, General Manager, Community FuturesDevelopment Corporation of Nadina

Walter Hossli

Senator Poulin moved, - That the Committee proceed with clause by clause consideration of Bill C-8.

The question being put on the motion, it was - Resolved in the affirmative.

It was agreed, - That the title stand postponed.

It was agreed, - That clause 1, the short title, stand postponed.

It was agreed, - That clause 2 carry.

It was agreed, - That clause 3 carry.

It was agreed, - That clauses 4 to 6 carry.

It was agreed, - That clause 7 carry.

It was agreed, - That clauses 8 and 9 carry.

It was agreed, - That clauses 10 to 12 carry.

It was agreed, - That clause 13 carry.

I was agreed, - That clauses 14 to 16 carry.

It was agreed, - That clause 17 carry.

It was agreed, - That clause 18 carry.

It was agreed, - That clauses 19 to 21 carry.

It was agreed, - That clause 22 carry.

It was agreed, - That clause 23 carry.

It was agreed, - That clause 24 carry.

It was agreed, - That clauses 25 and 26 carry.

It was agreed, - That clauses 27 and 28 carry.

It was agreed, - That clauses 29 to 31 carry.

It was agreed, - That clause 32 carry.

It was agreed, - That clause 33 carry.

It was agreed, - That clause 34 carry.

It was agreed, - That clauses 35 to 571 carry.

It was agreed, - That clauses 572 to 583 carry.

It was agreed, - That clauses 584 and 592 carry.

It was agreed, - That clauses 593 and 594 carry.

It was agreed, - That schedules 1 to 3 carry.

It was agreed, - That clause 1, the short title, carry.

It was agreed, - That the title carry.

It was agreed, - That the Bill carry.

After debate,

It was agreed, - That the following committee and minority observations be appended to the report on Bill C-8:

OBSERVATIONS ON BILL C-8

COMMITTEE OBSERVATIONS

1. When future legislation is brought about establishing a consumer complaints body, and following the recommendation of the Joint Forum, the Senate Banking Committee believes, that in addition to the provisions for monetary penalties for lack of compliance with relevant Acts, the government should consider other penalties against financial services institutions andindividuals working for them.

2. The Committee has, in the past, recommended that the maximum ownership levels of large banks by a singleindividual or entity be raised to 20%. The rationale behind this recommendation was to increase the possibility of acquisitions, strategic alliances and joint ventures, both foreign and domestic, which could enhance the competitiveness of both the institution and the financial services sector as a whole. Bill C-8 does not reflect this rationale. The Committee therefore believes that the Minister should institute a policy restricting all such holdings to those which have the potential to enhance the competitiveness of the bank.

3. The Committee believes that the Minister has struck a balance for the immediate future regarding the Canadian Payments Association and the potential to designate payments systems in the future. The Committee, however, believes that the next review of the financial services sector should contain the designation of additional payments systems with the intent of increasing competition in the business of electronic payments.

4. Following the testimony of the Credit Union Central and CS CO-OP, the Banking Committee remains convinced that the consultation process, with a view to establishing a national co-operative bank, should continue. To this end, the Banking Committee would like a letter of commitment from the Minister that a timetable for this process will be established as soon as possible.

5. Further to the testimony heard, the Committee strongly urges that draft regulations made pursuant to Bill C-8 be tabled in the Senate and then referred to this Committee for consideration prior to publication in the Canada Gazette.

MINORITY OBSERVATIONS

1. A minority of the Committee suggests that the Minister exercise its power to revoke the widely-held requirement for large insurance companies under section s. 407 of the Insurance Company Act, and that the Minister reconsider its policy of "big banks shall not buy big converted mutual insurance companies" because a policy such as this is unfair and anti-business. This should ensure that there is a level playing field between large converted mutuals and other large insurance companies.

2. Regarding the Merger Review process, in order to remove the politics from the process, the Minister's discretion should be removed from the merger process, allowing the process in the guidelines, as set out, to take place, with proper analysis completed by the different responsible bodies. The minority believes that if the Committee was able to remove the ministerial discretion from the process, to be purely a review body, the merger should not be laid before either House of Parliament.

It was agreed, - That Bill C-8 be reported to the Senate without amendment, but with, in appendix to the Report, observations and the letter from the Honourable Paul Martin, Minister of Finance concerning Bill C-8.

At 5:55 p.m., the committee adjourned to the call of the Chair.

ATTEST:

Denis Robert

Clerk of the Committee