THE STANDING SENATE COMMITTEE ON BANKING, COMMERCE AND THE ECONOMY
EVIDENCE
OTTAWA, Wednesday, December 3, 2025
The Standing Senate Committee on Banking, Commerce and the Economy met this day with videoconference at 3:30 p.m. [ET] to study the subject matter of those elements contained in Divisions 4, 9, 10, 11, 12, 13, 14, 15, 16, 17, 22, 23, 37, 39, 43 and 45 of Part 5 of Bill C-15, An Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025.
Senator Clément Gignac (Chair) in the chair.
[Translation]
The Chair: My name is Clément Gignac. I’m a senator from Quebec and chair of the Standing Senate Committee on Banking, Commerce and the Economy.
I would like to welcome the many people with us today, as well as all those watching us on CPAC or online at sencanada.ca.
Before we begin, I would ask all senators and witnesses here present to consult the cards on the table in the committee room for guidelines to prevent audio feedback incidents. Please keep your earpiece away from all microphones at all times. Do not touch the microphones. Their activation and deactivation will be managed by the console operator. Finally, avoid handling your earpiece while your microphone is on. Earpieces should remain in your ear or be placed on the designated sticker at each seat. Thank you for your cooperation.
Before proceeding any further, I would like to ask my fellow committee members to introduce themselves.
[English]
Senator Pupatello: Good afternoon. My name is Sandra Pupatello. I am a senator from Ontario.
Senator Fridhandler: I am Daryl Fridhandler from Alberta.
[Translation]
Senator Henkel: Danièle Henkel from Quebec.
Senator Ringuette: Pierrette Ringuette from New Brunswick.
[English]
Senator Yussuff: Hassan Yussuff, senator from Ontario.
Senator McBean: Marty McBean, senator from Ontario.
Senator C. Deacon: Colin Deacon, senator from Nova Scotia.
Senator Wallin: Pamela Wallin, senator from Saskatchewan.
Senator Marshall: Elizabeth Marshall, senator from Newfoundland and Labrador.
[Translation]
The Chair: Honourable senators, as you know, an order of reference was adopted in the Senate on November 26, 2025, authorizing this committee to examine and report on the subject matter of those elements contained in Divisions 4, 9 to 17, 22, 23, 37, 39, 43 and 45 of Part 5 of Bill C-15, An Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025. As the bill is currently at second reading in the House of Commons, the Senate has undertaken what is known as a pre-study.
We are beginning this study today by welcoming officials from four departments and agencies of the federal government that deal with the divisions at study. Thank you for your patience. We are hearing from witnesses from the Department of Finance Canada, Innovation, Science and Economic Development Canada, Housing, Infrastructure and Communities Canada, and the Financial Transactions and Reports Analysis Centre of Canada, also known as FINTRAC. I would like to welcome all the witnesses and thank you for accepting our invitation to appear before us.
If the senators agree, I suggest that we begin our work with Division 4 and work our way up to Division 45. When a division is called, I will announce it and will ask that the relevant witnesses come forward to the table and place their tent cards in front of them.
Respected witnesses, I would ask you to clearly state your name into the microphone for the record.
If any witnesses wish to speak briefly on a division, please indicate so. Otherwise, I will give the floor to the senators to ask you questions.
[English]
We will start with Division 4, an amendment to the Canada Infrastructure Bank Act, so I invite the official who would be involved that division to introduce yourself and let me know if you have any opening remarks. After that, we’ll proceed with the questions and answers.
Welcome.
Kathryn McCauley, Director General, Alternative Finance, Policy and Operations, Housing, Infrastructure and Communities Canada: Good afternoon. I’m pleased to appear before the committee today to speak to Division 4 of Part 5, page 298, of Bill C-15, which proposes to increase the Canada Infrastructure Bank’s maximum statutory capital, which can be found in section 23 of the Canada Infrastructure Bank Act, from $35 billion to $45 billion.
Since its creation in 2017, the Canada Infrastructure Bank, or CIB, has committed almost $18 billion through loans and repayable investments across 106 projects, representing a total capital value of $54 billion.
For every dollar the CIB invests, it leverages roughly $1.40 in private and institutional investment, as well as approximately equal contributions from other orders of government and public partners. Of these projects, 84%, or 89, are currently under construction, and 8 are complete and operational. As repayments are received, the CIB reinvests both principal and interest into new projects, maintaining a revolving approach to investment.
The CIB is currently committing capital at a rate of approximately $3.5 billion per year. As of September 2025, in its second-quarter financial results, the bank had reached financial close on $2.2 billion in new investments this year.
Increasing the CIB’s total statutory capital to $45 billion would allow it to scale up annual investments to between $4 billion and $5 billion per year, surpassing the initial capital appropriation of $35 billion in early 2029 as expected.
The increase also provides the financial flexibility needed to continue advancing projects, including those with longer lead times, as well as to support Budget 2025 commitments, such as making investments in projects referred through the Major Projects Office, or MPO.
[Translation]
Thank you, Mr. Chair. My colleague Marie-Joie Brady and I would be pleased to answer the committee’s questions.
[English]
The Chair: Thank you. Colleagues, I realize not all of you want to ask questions on each division, so I propose that you let me know and I’ll go around like that. For the other division, I’ll do the opposite.
Senator Fridhandler: I’m doing some simple arithmetic. They’ve got $18 billion out and they currently have a capitalization of $35 billion, which leaves them with $17 billion. Now you want to put it to $45 billion, which leaves them with $27 billion, and you’re telling me they hope to accelerate to $4 billion to $5 billion a year. That’s over five years today that we’re looking to increase. I don’t understand why we need to be doing this now.
Ms. McCauley: Thank you for the question. You’re quite right that the CIB has roughly $18 billion in investments made, to date. It also has a very healthy pipeline of projects. It has advanced discussions on those projects, and it has projections that see it investing all of its capital in 2029. Increasing the CIB’s statutory capital limit to $45 billion now allows it to advance in discussions that have longer lead times and avoid choosing shorter-term projects over longer-term ones. It allows for a signal to the marketplace that it can engage in those discussions, as well as engage in projects of national interest that might be referred from the Major Projects Office.
Senator Fridhandler: I have a brief supplement. Not only does my simple arithmetic lead me to believe there’s $27 billion available, but I haven’t accounted for the revolving opportunities as well. I’m just making the comment that this is a huge increase along with the revolving capital. That’s all I have to say on that.
[Translation]
Senator Henkel: Thank you for being here, ladies. The capital increase for the Canada Infrastructure Bank, CIB, is supposed to accelerate housing. How do you define a high‑impact infrastructure project in rental or affordable housing? What guarantee do we have that this money will actually go to the housing crisis rather than to projects that are already capitalized?
Marie-Joie Brady, Director, Policy, Partnerships and Engagement, Housing, Infrastructure and Communities Canada: Thank you for your question.
We define an impact housing project for the bank in terms of infrastructure that facilitates housing. So, the bank invests in drinking water, waste water and transit projects that promote housing. It does not invest directly in houses or rental housing.
The way to ensure that the bank continues to facilitate that is through its housing infrastructure initiative, which helps promote this type of large-scale project, and the proposed funding will enable the bank to invest more in this type of project.
[English]
Senator Loffreda: Thank you for being here. The infrastructure bank has spent 50% of its statutory envelope thus far. You are telling us the pipeline is very healthy at this point. Why is it healthy at this point? And the second question is this: Why is public investment needed to that extent? I’ve always said wealth is created by entrepreneurs, and if it is a project for the public good, why would we need public funding and not private investment?
Ms. McCauley: Thank you very much for the question. Maybe I’ll answer the first part of your question, which regards — and I don’t want to put words in your mouth — why is it healthy now and perhaps was not before.
The bank scaled up its investment significantly since 2022, and we’ve seen it achieve roughly $3.5 billion in annual disbursements following an initial ramp-up period. As a result of those considerable efforts to engage with various proponents of infrastructure projects across Canada over that time, those projects, which are complex in nature and take time to move forward, are now coming to fruition and being readied for investments. I’ll answer the second part of your question, which regards the need for public dollars to attract private capital.
Infrastructure is a great investment for the private sector. However, there are some types of risk that the private sector is reluctant to take on in terms of making its investment. The CIB is able to bridge those gaps and crowd in private capital so that fewer public dollars are required for a project to proceed. They do this in repayable loans or other investments, which represent less cost to the taxpayer in terms of delivering that infrastructure.
Senator Loffreda: Thank you.
Senator Ringuette: I have a quick question. You mention in your overview that that these loans — or investments, I should say — are repayable over time, but we’re not only talking about loans here. I believe we’re also talking about corporate shares.
So how is the portfolio divided with respect to repayable loans, the scale of time to repay these loans and the shares that you purchase that would only pay dividends over time? These are two different investment structures, so when can we have an overview of that portfolio?
Ms. McCauley: Thank you for the question.
You’re quite right: The CIB has a broad suite of tools that it’s able to use to make investments in infrastructure, which includes both loans and equity positions. To date, the CIB has predominantly used loans as its primary tool. What it has been able to find is that, through the various constructs of the loans that it issues, it is able to account for the vast majority of risks seen by proponents and solve the problem at hand and the gap to be filled.
That means it’s now receiving principal and interest on those investments, which are used to both make new investments on a revolving basis as well as pay for the operations of the CIB on a self-sustaining basis.
Senator Ringuette: In essence, the additional $10 billion that you’re seeking through this budget bill will be in addition to what cash flow you still have and the returns from your investments. How many billions of dollars are we looking at?
Ms. McCauley: In terms of capital that was repaid last year, the CIB received roughly $69 million in interest. There was also some capital repaid; however, those numbers don’t facilitate new large-scale investments. Therefore, over time, it is expected that the amounts received in both capital and interest will be adequate to fund more investments, so the investment horizon will be larger. But for the near term, a capital increase is required so as to enable the pace of investment that the CIB currently has and that is expected of the CIB in terms of contributing to the most recent budget commitments in terms of major projects and the alignment with new programming that is under way.
Senator Ringuette: Every shareholder, which is every Canadian taxpayer, should have a profile of the portfolio. That’s what I would like to see. Thank you.
The Chair: We’ll have an opportunity to provide some observations during our pre-study.
Senator McBean: I have two questions.
First, how will the increased funding ensure balance to regional development, including rural and northern communities? Second, what accountability mechanisms will attract the outcome of these major public investments? You were saying that, so far, eight or nine of them are done, so, to the shareholder question, how are we going to know the effectiveness of this investment in the future?
Ms. McCauley: Thank you for the questions.
In terms of regional distribution, the CIB can indicate that they currently have projects in every province and region of the country. That represents an achievement, because the CIB has always been an optional tool available to provinces and municipalities. In some cases, some public entities are less willing to work with the CIB because they prefer traditional modes of infrastructure financing.
On the second part of your question, regarding the accountability mechanisms, per the CIB’s legislation, in every investment it makes, three things must be present: revenue associated with the project, private capital that is attracted and that the project is in the public interest. So for the CIB to be able to deploy capital into a project, it has to satisfy those three tests. The government has established priority sectors for the CIB to operate in: clean power, green infrastructure, public transit, broadband, trade and transportation.
Among those, it has established public outcome benefits associated with each of those sectors. In a number of cases, that represents greenhouse gas reduction. In other cases, it reflects connections, either through connectivity to broadband services or for people in the case of public transportation. Then, when it comes to trade and transportation, it represents GDP growth in terms of economic activity.
The CIB looks at each investment to be able to determine how much capital it was going to deploy based on the public outcomes associated with that project. Over time, it looks at those projects and tracks them based on the performance results it brings forward in the regular reporting it does through both its corporate plan on an annual basis and its annual report.
Senator McBean: I heard you say that there are three factors going in. When a project is done, are you tracking if those were present? Is there accountability for what you wanted and projected at the beginning versus successful completion? All three partners —
Ms. McCauley: Right now, there are eight projects in operations, and the CIB provides updates on those projects through its annual reporting.
Senator C. Deacon: I have a question, chair, but I’ll wait until Division 9.
Senator Wallin: I have a question that comes back to Senator Fridhandler’s.
You didn’t spend the money, so you received more money. What was the issue? Why could you not spend your money, and why did you need more?
Ms. McCauley: Thank you for the question.
To date, the CIB has spent $18 billion in investments, and it’s in the stages of negotiating commitments for the remainder of that capital. In order to continue to advance projects across the priority sectors established by the government and engage with proponents around new projects, it needs a horizon of capital certainty. Based on what it has done to date and knows is in its current pipeline, it foresees capital scarcity.
Senator Wallin: Let me ask the question this way: Where did the demand for more money to spend or invest come from? Was this client driven — that you saw some kind of increased demand in the private sector — or did government decide you should have an increase because they were going to put the MPO in place and wanted another source?
Ms. McCauley: Understanding that the CIB is expected to work with the Major Projects Office to invest in projects of national significance as well as a number of new programming efforts that were announced in the budget — including the Trade Diversification Corridors Fund, the Arctic infrastructure fund, the first and last mile fund and the build communities strong fund — it is anticipated that the demand for CIB financing will continue to grow, associated with those initiatives. The CIB therefore requires additional capital.
Senator Wallin: So it was the top down, not the bottom up; this was government saying more funding is needed rather than the private sector letting you know that they needed you.
Ms. McCauley: It was based on an analysis of the pipeline of projects that were expected to come forward.
Senator Wallin: Thank you.
Senator Marshall: I have several questions.
Regarding the additional $10 billion you’re looking for, I would have expected to see it in the corporate plan, but I see now that your financial statements, as of the March 31, 2025, were actually qualified. The bank had not submitted its corporate plan for 2025-26 to 2029-30, which is required under your legislation. Can you explain that, especially since there’s a request for an additional $10 billion?
Ms. McCauley: The current proposed changes that will be reflected in the CIB’s upcoming corporate plans, likely for the 2026-27 corporate plan specifically, given the timing of the proposed legislation —
Senator Marshall: What about the 2025-26 corporate plan? The corporation is looking for the $10 billion now, so I would think it would be reflected in the plan, which is missing. But what you are saying is that government wants the $10 billion approved, and they will submit the required — well, they won’t even submit the required plan; they will skip over the required plan and submit one for the following year. That’s very strange.
Ms. McCauley: Under the legislation, it is required to submit a corporate plan every single year. The 2025-26 corporate plan is currently in the process of moving through approvals and is expected to be ready very shortly.
In terms of your question around why it was not included, that is because it is not enacted in legislation. There is a requirement to respect Parliament in terms of its decision making prior to reflecting it in the corporate planning process. It is a sequencing of requirements reflecting that necessary decision.
Senator Marshall: The auditors qualified their opinion because that plan is not available. I will leave it at that.
I have a few more questions. The extra $10 billion — is it anticipated that money will flow right away? Quite often, the request for the $10 billion might be in the budget but might not be drawn down until two or three years later. First, when do you expect the drawdown seeing that you have only committed $18 billion so far? Second, once it is approved, would the $10 billion be considered statutory? Third, would it be considered budgetary or non-budgetary?
Ms. McCauley: Thank you for the questions.
Once the decision is made to enact the legislation, the CIB statutory capital limit will be $45 billion from the current $35 billion.
Senator Marshall: When does the cash flow?
Ms. McCauley: It is based on quarterly schedules that the CIB submits to the Department of Finance, and that’s based on an aggregated amount of all their investments that require advances during that quarterly period. Another way of saying that would be that the CIB asks for funds when it needs to disperse them and makes a request for the Department of Finance to provide that from the Consolidated Revenue Fund.
Senator Marshall: So it is statutory. Is it also non-budgetary?
Ms. McCauley: Because it is statutory, the CIB doesn’t need to seek approval on an ongoing basis to have access to it.
Senator Marshall: Does it affect the government’s deficit, or will it be set up as a loan or an investment?
Ms. McCauley: The CIB makes investments — and these are not grants; these are all repayable — so on the specific question around how the Department of Finance reflects it in the Consolidated Revenue Fund in the Public Accounts, I think we would have to defer to the Department of Finance officials.
Senator Marshall: Thank you. I have one last question.
The government also tables its borrowing strategy for the year. Is that $10 billion they are looking for included in the government’s borrowing strategy? Would you know that?
Ms. McCauley: I would have to defer that question to Department of Finance officials.
Senator Marshall: Could you check and let me know?
Ms. McCauley: Yes.
Senator Marshall: Thank you.
Senator Martin: I have a question related to what I’ve been hearing.
First, $10 billion is a lot of money; it is quite an increase from $35 billion. What assurances can you give that it will unlock more private investment? Can you talk about that process?
Second, you talked about a corporate plan, but what specific targets and reporting will the government use so that Parliament can see whether the larger envelope is translating into more projects on the ground and better outcomes for communities? What will we receive after the fact?
Ms. McCauley: Thank you for the questions.
In terms of your first question around the level of private sector investment, I would say we’ve seen the amount of capital attracted to each project grow over time, but it is not a one-for-one relationship to every project. It represents the type of project and the requirements of the investors.
Right now, the CIB has roughly $1.40 attracted in private sector investment for every dollar spent. One of the things we’ve also seen over time is that as investments grow and more projects proceed, more private capital comes in because of the opportunity presenting itself.
In terms of your second question around accountability metrics associated with that, in the CIB’s regular reporting, both from a corporate planning perspective as well as in an annual report, it regularly reports across all key public impact metrics that it has used in making the investments that it has. Whether that is associated with the number of the GHG rejections associated with each dollar deployed, ridership increases in terms of public transit investments, the number of people connected to broadband in terms of the final mile of connection or the GDP growth associated with trade and transportation investments, those are all accounted for in both those documents. The CIB tracks its performance against its plans, as well, in terms of setting targets. It is clear when those targets have been met and when they have fallen short of them.
Senator Martin: I am curious how successful you have been in unlocking private investment. Investment seems to be leaving Canada, and that’s been a concern. We’ve heard reports of that. How has your approach to attracting investment been as of late?
Ms. McCauley: Thank you for the question.
The CIB, this year from April 1 to September 30, reflected $2.2 billion in investments, where using the CIB’s metric — that it calculates roughly $1.40 of private sector investment attracted to each dollar that it invests — indicates that private sector investment continues to be strong in Canada. The number of investments that the CIB made during that period was the highest number of investments it has made for a six-month period since its creation.
Using that evidence, I would say it sees a strong and robust pipeline for private sector investment.
Senator Martin: Thank you.
The Chair: Colleagues, we have quite a few officials waiting to speak, but at the same time, $10 billion is quite material. If any member wants to ask a second question, I will give you 30 seconds as well as one minute maximum for an answer.
Senator Fridhandler: I have two brief questions.
The extra $10 billion — is it actually advanced, or is it just a line that’s available? Second, you talked about the $18 billion that currently exists. I’m not quite sure how you described it, but I think, in one statement, you said that the $18 billion is already subject to negotiated deals. I want to clarify whether that is actually in negotiation or something that you have perceived to be on the horizon.
Ms. McCauley: Thank you for the questions.
The $18 billion represents legally binding agreements that are in place. Beyond that, in terms of your question — how much remains in terms of a pipeline — that’s not subject to public information, mostly because it has to do with commercially sensitive negotiations with proponents and where a number of these projects are quite large in this space.
Senator Fridhandler: I’m not asking about specific deals; I’m talking about an aggregated number. I don’t think that’s giving away anything sensitive.
The Chair: Can you provide a written answer to the question of Senator Fridhandler? Thank you.
Senator Loffreda: What is the performance of the $18 billion invested so far, with credit losses, performance and projections on the upcoming funds?
Ms. McCauley: Thank you for the question.
The CIB’s annual report speaks to the credit losses to date. These have been minimal. The CIB’s mandate allows for some degree of losses associated with attracting private capital over time where there is an acknowledgement that loss is present. But we have seen that those losses to date have been minimal and are expected to be minimal going forward, based on the types of risks that the CIB is being asked to take in attracting private capital.
Senator Ringuette: Can we have the regional breakdown of the investments to date? And can we also have the operational costs on a yearly basis for the bank? Thank you.
The Chair: Ms. McCauley and Ms. Brady, you had the winning ticket because you were first to testify, and I don’t see your name for the other division, so you are free to leave if you wish. We want to thank you for your testimony. We will move to the other division. We will await the written answers to some of the questions we asked.
For the next division, we will invite Ms. Hamel and Ms. Fraser. The next questions regard Division 9, repealing the Consumer-Driven Banking Act and enacting a new one. We welcome you.
I invite you to introduce yourselves and to let us know if you have opening remarks on that.
[Translation]
Judith Hamel, Director General, Financial Services Division, Department of Finance Canada: Good afternoon. My name is Judith Hamel, and I am the Director General of the Financial Services Division at the Department of Finance Canada. With me today is my colleague Kirsten Fraser, Director of the Financial Services Innovation Section.
With your permission, we would like to provide an overview of the proposed measures, including the changes made since the 2023 budget.
[English]
Kirsten Fraser, Director, Financial Services Innovation, Department of Finance Canada: I will give a brief overview. To start, consumer-driven banking, also known as open banking, refers to frameworks that enable consumers and businesses to share their financial data with approved service providers of their choice to access products and services. The legislation includes amendments to complete the consumer-driven banking framework. Broadly speaking, these include establishing a path or paths to entry for entities wishing to participate — accreditation — and baseline rules for all participants that address risks related to security, national security, consent and liability; streamlining governance and accreditation by transferring governance to the Bank of Canada and leveraging its existing supervision of retail payment activities; establishing competition as a key objective for the framework by including it as an objective in legislation; and establishing new pathways to entry for payment services providers.
[Translation]
Provincial participation must be supported by creating a process to designate certain provisions of the framework to be overseen by a provincial authority and reinforcing the importance of a meaningful technical standards body in Canada. Thank you.
[English]
The Chair: Thank you for your opening remarks. When I saw that in the BIA, I remembered some conversations here, possibly with Senator Deacon. I will refrain from mentioning my position on that one.
Senator Marshall: When can we expect to see the regulations? That’s usually where the nuts and bolts are, the details?
Ms. Fraser: I think the objective is to move on the regulations within the next year, with a view to completing them as quickly as possible. We have been preparing for that. Obviously, it is dependent on the passage of legislation and the Royal Assent of the legislation in order for us to move forward.
Senator Marshall: When will the regulations come into effect if they are not going to be done for another year? We’ve been talking about open banking for a long time. Is this the end? Do we just need the regulations and then we’re ready to go?
Ms. Fraser: Yes, the first step being that the legislation has to pass and receive Royal Assent. Then we move to regulations, and in that process, we will determine the coming into force of the various provisions of the act. Again, the government has been clear that the objective is to complete this within 2026 and move to accreditation and the commencement of the framework immediately thereafter.
Senator Marshall: So within a year?
Ms. Fraser: Yes. Again, this is contingent on the passage of the legislation. We can’t move forward on the regulations until the legislation receives Royal Assent.
Senator Wallin: We have that all drafted for you, so don’t worry. I am going to bequeath my three minutes to Senator Deacon.
Senator C. Deacon: Thank you, chair and Senator Wallin. Thank you, Ms. Hamel, and wonderful to see you here, Ms. Fraser. It has been a long road.
One of the things I am wondering about is the API. FTX is the main name I keep hearing with U.S. governance, and it is U.S.‑based. When we’re looking to have a sovereign Canadian system running our exchange of data and the open banking system, that presents a challenge. This is an open-source standard. Is there any consideration to setting up a Canadian governance structure that then takes that open-source standard and starts iterating on it for Canadian purposes and Canadian sovereign control?
Ms. Fraser: First, no decision has been taken with respect to the technical standard at this point. The legislation sets out the process for doing that, which is by order of the minister. The decision is made by the minister, and then an order is issued. It also sets out the criteria for doing so, and there were a number established in the previous iteration of the legislation, which included transparency, openness, good governance, fairness and the ability to safely and efficiently share data. This legislation before us now also introduces two other considerations.
These include the extent to which — and I am paraphrasing a little bit here — the entity exists in Canada from a legal and physical perspective. The other is that it is meaningfully Canadian and able to meet the objectives of the act. So those are reflective of what you are speaking to right now with respect to ensuring, as you say, that the standard is meaningfully Canadian.
Senator C. Deacon: That’s very good news, and it doesn’t surprise me, knowing how much work has gone into this — that this thought process is in place.
Looking forward a little bit with respect to write access — we are starting with read access and looking forward to write access where we start to get the competitive opportunities emerging more robustly in our system. We just saw, while Canadians are struggling, the biggest bank profits in history, yet again, and that lack of competition is something we need to address. Certainly, the Competition Bureau has been very strong on that.
The worry I have is that the write access, the way it is written, seems to be tied to the completion of Real-Time Rail. I have likened Real-Time Rail to the sign behind the bar in a British pub that says free beer tomorrow, and I fell for that for quite a while. The worry is that maybe we are seeing the Real-Time Rail process, because it has been so slow, superseded by reality, especially with stablecoin legislation coming in. That seems to be a limiting factor.
Ms. Fraser: Yes.
I think it’s important to clarify that, first, the budget sets out legislative amendments to bring about the next phase of consumer-driven banking by mid-2027; I believe that’s the government’s commitment. It also, as you said, aligns the use of the Real-Time Rail with that payment initiation. It’s important to note that they are aligned in the sense of the speed of payment and the role that speed of payment plays in a write-enabled consumer-driven banking framework. But I want to be clear that the two are not mutually exclusive. I think that’s a fair way to characterize it.
Senator C. Deacon: To be very clear, I hope we don’t delay write access because Real-Time Rail still hasn’t come forward to fruition and implementation.
Ms. Fraser: What I’m trying to say is that they are aligned with respect to the speed of payments that’s offered through a Real-Time Rail, but they are not mutually exclusive; indeed, we do see in other jurisdictions that write access or payment initiation is done in a number of ways, not simply on a Real‑Time Rail.
Senator C. Deacon: I got it.
Ms. Fraser: Certainly, from the speed perspective and the efficiency perspective, there is a logical alignment there.
Senator C. Deacon: Okay, super. Thank you.
I want to ask about the accreditation process. We saw in the U.K. that, when they finally launched their accreditation process, there was a backlog in the system because it wasn’t ready for the scale of responses from new participants. If we’re looking at 2026, one of the realities is that we have to be ready to ensure that accreditation is clear and everybody knows what they have to do and whom they have to deal with. I think it is great. We heard from the Senior Deputy Governor of the Bank of Canada that they are already thinking about this. However, from your standpoint at Finance Canada, do you feel that the legislation gives the Bank of Canada enough flexibility to be able to have a very seamless registration process that doesn’t have the glitches that have occurred elsewhere?
Ms. Fraser: It is a good question. Yes, I think it does.
The second piece is that we don’t have the criteria set out, because that will come through regulation. We are working closely with the bank right now in preparation for their new responsibilities, as is the Financial Consumer Agency of Canada, or FCAC, with respect to the work they’ve already been doing in this regard, including with respect to accreditation. Those conversations are happening now so we can be as efficient as possible in that endeavour.
The Chair: I will put you in second round. Maybe my extra three minutes will go to you, because we have a lot of champions around the table here, but we have a huge leader as far as open banking is concerned in Senator Colin Deacon.
Senator McBean: I understand that the regulations are not set, but how will the new act protect individuals’ data privacy, consent and liability when financial data is being shared with third parties?
Ms. Fraser: That is a great question.
There are a number of ways that will happen. The first, which we were speaking about, is accreditation. You want to be able to vet entities to know they are trusted and able to participate in that kind of a data-sharing framework.
Second, the legislation sets out common rules, and these cover consent, which has an element of privacy; liability; security; and national security. These are common rules that all entities participating in this system will be expected to adhere to. The legislation sets out the baseline for that. They include things, as I said, with respect to express consent, how that is to be managed by the entities and how they are to treat the data.
We’ve been careful in terms of acknowledging that there is existing privacy legislation, both at the federal and provincial levels, that entities are already required to adhere to. We don’t want to overlap or duplicate that, so we’ve been careful in being streamlined about what these are, and they are additive to ensure the protection of consumers.
Senator McBean: That makes me wonder what is between the levels of privacy. Would there be some streamlining to create one rule, a highest or a lowest —
Ms. Fraser: That’s a good question.
The framework sets out common baseline rules that, across the country, every entity will be expected to adhere to. Entities are also required to adhere to any applicable legislation at the federal or provincial level. For example, if the legislation says you must renew consent every 12 months and a province said they have decided in their legislation that consent must be renewed every 6 months, then entities operating in that province would be required to adhere to the latter.
What we have in here is a set of rules that provide consistent protections for consumers across the country and provide a level playing field for all the entities that will be participating across the country.
Senator Yussuff: I have two points. One is that this will be a new system we’re adopting for the country. Public education will be critical for people to be able to access the system and use it with confidence and, equally, benefit from it, because we are going to bring in some competition. We want people to recognize that this could save them some money in some form or another.
What’s the built-in mechanism for public education?
Ms. Fraser: There are two pieces, I think. One is — and this is part of legislation — that accredited entities will be required to display information that they are accredited. That is an awareness mechanism and also a consumer protection mechanism so that, when I am interfacing with this app, I know that they are an accredited entity that is part of an oversight framework.
The second piece is that the FCAC will continue to maintain its role for financial literacy, including ensuring that Canadians understand how to safely share their financial data through a consumer-driven banking framework.
Senator Yussuff: In the current system, fraud has been highlighted far more than the bank has been acknowledging publicly. We are learning that more and more. What are the penalties for those involved in fraud? You are asking Canadians to trust the system. If you lose your information or someone fraudulently accesses your account or what have you, how do we penalize those who are not taking responsibility for the protection of the consumers in the first place?
Ms. Fraser: There are a few measures in the legislation that I will get to. First, however, the risk around fraud is significantly greater in a scenario where people are performing screen scraping, which is what is happening right now. That’s the sharing of banking credentials to access these services. We know it’s happening; we know roughly 9 million Canadians are using this, and it represents a risk to them and to the institutions they are using.
There are a number of provisions in here are intended to address, let’s say, fraudulent use of the system. First, there are rules or penalties around claiming to be a participant of the framework when one is not. There will also be rules around the use of screen scraping. The legislation actually places a ban on screen scraping to prevent entities from doing this. Once the framework is in place, that will come into force. That will be after consultation with entities about what the timeline and process for that will be.
Those are some of the measures that are in place.
With respect to consumers, I want to be sure clear that the legislation also points out that a consumer is not to be held liable for losses in the consumer-driven banking framework except in instances of gross negligence.
So there are protections in there for consumers using this.
Finally, the piece we are discussing now is a read-only system and does not have write access. So it does not give entities the ability to initiate a payment, but the government has obviously signalled a commitment to move in that direction. This framework speaks only to the ability to read or look at the data.
This is not to diminish the concerns about fraud at all, but fraud is less concerning in that read-only context.
Senator Yussuff: Have we learned anything from other jurisdictions that have enacted open banking? How can we enact those provisions to ensure we don’t make the same mistakes?
Ms. Fraser: Some have used the term “fast follower,” and I will let other people make judgments about that. We have benefited from being able to observe what has happened in other jurisdictions, including with respect to fraud. We are following closely what is happening in the U.K. There is evidence, in fact, that the system is protective, and the U.K. has payment initiation enabled. There’s evidence that fraud is lower within that framework than outside of it. We’re certainly looking to them.
Senator Yussuff: Thank you. So in my lifetime, we may be able to access the system.
Ms. Fraser: Yes.
Senator Ringuette: We’re talking about data risk and consumer protection. I may be naive, but I’m still surprised that all this system is not under the supervision of the Office of the Superintendent of Financial Institutions, or OSFI, and that brings on the slate of protection that Canadians know — or do not — deposit protection, the first-time business loan guarantee and so on.
So all these items will not be part of this new system; at least that’s not what I’m seeing. So what are you talking about with regard to consumer protection? I know it’s bringing more competition, but the other side of the equation is what exists with regard to consumer protection.
Ms. Fraser: That is a very good question. The thing we want to be clear about with this framework is that it deals with the sharing of the data and not the underlying products. That’s a very clear distinction because those products are regulated both federally and provincially, so there are existing rules at the provincial and federal levels that govern the products that are going to be used or adopted in the system.
What the legislation does is deal squarely with how are you sharing your data with that entity, what needs to be in place to ensure it’s being done securely and that you are protected in the event that something goes wrong.
Senator Ringuette: Who is supervising the rules?
Ms. Fraser: The bank.
Senator Ringuette: Which bank?
Ms. Fraser: The Bank of Canada.
Senator Ringuette: They’ve never been in a supervisory role. OSFI has always been supervising the banking system in Canada.
Ms. Fraser: I think it’s fair to say that the bank has a supervisory role with respect to retail payments.
Senator Ringuette: It has for two years.
Ms. Fraser: Yes. There is quite a bit of alignment here in terms of the activity and the entities that are going to be overseen. The legislation itself provides strong protection for consumers with respect to the data-sharing piece, which is additive, in effect, to the protections in place with respect to the products and services and the rules they’re governed under at the federal and provincial levels.
Senator Ringuette: I have concerns, but thank you.
Senator Loffreda: Thank you for being here.
You’ve mentioned national security a few times, and the act does include enhanced national security safeguards. What types of risks have the government identified to national security? How will these risks be mitigated in practice?
Ms. Fraser: I will first speak about the risks. Obviously, when you have people’s sensitive financial data moving, there are risks that are implicit with that which can extend to national security. The legislation sets out a number of provisions. I have colleagues here in case there are more specific questions that deal with the national security aspects of our work.
The first of these is that every entity that is going to be participating will be subject to a national security screen to determine whether they’re appropriate and eligible to participate in the framework. There are other mechanisms in there as well for the minister to order entities to do certain things with respect to national security. The minister has the authority to suspend or revoke with respect to concerns around national security, and so that is the general flavour of what is within the legislation as it concerns national security.
Senator Loffreda: What would be the economic impact of open banking? Who is accountable for timing, budget and so on?
Ms. Fraser: Obviously, there’s a certain component that we’re responsible for as the Department of Finance. The Bank of Canada, as the regulator, will also be responsible for a certain component, so there’s a bit of shared responsibility there.
In terms of economic impact, it’s an interesting question, because open banking systems are relatively nascent in other jurisdictions and there aren’t many attempts to quantify their impact. We know there are estimates in the U.K. I believe those are around $20 billion to $30 billion annually, though, again, they’re nascent.
Senator Loffreda: That is positive for us to follow. Are you certain about that positive impact?
Ms. Fraser: Yes.
[Translation]
Senator Henkel: Canada is known to be very fertile ground for regulation concerning international online scam networks. According to the Canadian Anti-Fraud Centre, fraud losses reached $638 million in 2024 with over 108,000 reports, even though only 5% to 10% of victims report their case. In Canada, banks have no legal obligation to reimburse fraud involving wire transfers or debit cards, unlike in the case of credit cards. Why is Bill C-15 still not creating a clear obligation to reimburse victims when the situation has become an epidemic and shows no signs of improving?
Ms. Hamel: There is another division that deals with measures to combat fraud.
[English]
The Chair: What I propose is you can answer that question when we deal with that division; otherwise, it will be hard to manage. Senator Henkel, now we are studying Division 9, which is about open banking. Your question is very relevant, but I propose to postpone. Do you have any other questions more related to Division 9?
[Translation]
Senator Henkel: We are talking about bank management, but the requirements that banks must have policies and procedures in place against . . . I’ll wait for the other division.
[English]
Senator Fridhandler: My first question is a narrow and technical one. The definition of “participating entity” is very specific, and a lot of these entities are massive conglomerates; for example, a bank will own wealth management, an investment dealer and an insurance company, and there will be, I expect, leakage of information.
I know there’s discretionary ability in here, but some of those subsidiary entities and affiliates are not identified as being part of the system proper here. Can you tell me what your intention is on who gets access to data and coverage?
Ms. Fraser: Yes, the legislation refers to participating entities broadly, so the idea is that an entity comes into the system to provide a service to the consumer, and because of the requirements around reciprocity — that is, the data must flow both ways at the consumer’s request — we don’t identify them as a data holder, a bank or a fintech. We identify them as participating entities who may at some points be providing information and at others be receiving information.
With respect to your question about subsidiaries, it would be a question around accreditation and how that entity elected to move forward with its accreditation application — so whether it included those subsidiaries.
There are rules in the legislation around the treatment of the data, which effectively say that you may only use the data for the stated purpose that you have identified and to which the consumer has consented. So you cannot give the data to your subsidiary or another party, unless the consumer has said, “Yes, I consent to you doing that.”
Senator Fridhandler: They would have to be accredited, too; otherwise, they’re not caught by the web of all the regulations as well.
Ms. Fraser: Correct. There will be case-specific situations as to whether an entity decides to include its subsidiaries or just one of its lines of business. As opposed to getting into the nuances of that, that’s probably the best way to explain it.
Senator Fridhandler: I have a question on sovereignty of data, to follow up on Senator C. Deacon’s. Canadians are concerned about sovereignty of data. You suggested this will get deferred to the regulations. I don’t see anything in the act that addresses that, which means we won’t have any oversight on that if it happens. I see it as a hole here, being absent from the statute proper. Am I correct in that observation?
Ms. Fraser: There are two pieces here. One is talking about the technical standard, which is more about the technical standards body that will set the instructions for how, technically, the data is shared. That’s the piece we were speaking about there — that body.
With respect to data sovereignty, again, I would point to the rules around how an entity can use the data that a consumer provides them or permits them to access. The final piece I would say on that is that the data sovereignty piece is bigger than just the framework itself.
Senator Fridhandler: I have a final question, which regards costs. There are a lot of costs for the Bank of Canada to gear up and do even their small piece. There are costs for participating entities. It seems as if nobody can charge costs for what’s going on here, in terms of operationalizing the system, but the bank, for example, under paragraphs 4(c) and (d), needs to promote the activities here.
Can you give us an indication of the cost to the Bank of Canada to operationalize this? Can you confirm that other people can’t charge for participation in the sharing of data?
Ms. Fraser: I can start with the question around the Bank of Canada. I want to point out that the Bank of Canada has existing staff and processes that can be leveraged to operationalize this framework. That’s part of the rationale behind the transfer to the Bank of Canada.
Additional costs related to this will be funded through a reduction of up to $19.3 million over two years in its remittances to the government’s Consolidated Revenue Fund. That’s the funding mechanism, if you will.
On the second piece, yes, the legislation sets out that data that is shared participating entities inside the framework must be shared without cost. So, yes, I can confirm that.
[Translation]
Senator Dalphond: How will this work when it comes to enforcement by provincial authorities? For example, credit unions like Caisses Desjardins participate in the network. Is it provided for in the legislation that the bank’s authority can be delegated to a provincial authority? And if there are offences, will the offences provided for in the legislation apply, and will the provincial authority send notices and offence reports?
Can you explain how this will work in terms of criminal enforcement and consumer protection? For example, would Quebec’s Consumer Protection Act also apply?
Ms. Fraser: I can start with the designated regulation.
A province will submit a request to the department for the designation of certain provisions to be subject to oversight by the provincial regulatory body. Once an agreement or memorandum of understanding has been concluded with the Bank of Canada and is in place, and a ministerial order has been issued, the designated provincial or territorial regulatory body will be given responsibility for overseeing the enforcement of the agreed upon provisions.
Next, provisions that may be designated relating to areas in which provinces were already serving provincial financial institutions, such as security, privacy, including consumer consent and authentication, liability, complaints, consumer protection, and provisions relating to accreditation, membership in the association, revocation, and national security, will remain under federal jurisdiction.
That’s how it works for delegation. The goal is for provincial regulators to work together with the Bank of Canada on enforcement.
I would like to add that we are working together with provincial representatives to establish a framework that recognizes that there are laws in place regarding consumer protection and to ensure that this framework does not duplicate provincial regulations.
Senator Dalphond: I saw that a number of regulatory powers were conferred on the bank and also on the minister. Depending on the situation, both can issue regulations. If the administration of the system is delegated to a province, will the province have to apply the regulations adopted by the Bank of Canada, or will it have to apply regulations that will be adopted, for example, by the Autorité des marchés financiers in Quebec?
Ms. Fraser: The objective is for provincial regulators to oversee the single regulatory framework. The goal is to avoid having too many regulations.
Senator Dalphond: In your suggestion, does everyone apply a single framework?
Ms. Fraser: Yes.
Ms. Hamel: Yes, but as Ms. Fraser said earlier, while recognizing that provincial authorities can add standards relating to data sharing or privacy and monitor as they should if they wish to do so.
In addition, the goal of these amendments is to ensure that the relationship between provincial regulators and the entities overseen, such as credit unions or caisses populaires, which already have relationships, is recognized. Another goal is to ease the administrative burden.
Senator Dalphond: Thank you.
[English]
Senator Pupatello: I have a quick comment and not a question. I want to congratulate you on the calibre of the people you bring forward to the committee. Kirsten Fraser and I worked together at Queen’s Park many years ago. I’m delighted to see you doing so well and answering questions so directly and fulsomely. I like to think that is due to great training by all your friends at Queen’s Park. It’s great to see you, Kirsten, and, of course, everyone here tonight. I always think that we have terrific people answering questions.
I want to comment about something in particular: that you elected to use the Bank of Canada, with its efficiency and all its expertise as the rationale. A number of questions have come up through the Banking and Finance Committees related to the bill. That same concept was questioned repeatedly around Build Canada Homes and creating a new organization when other organizations perhaps could have done exactly what you’ve done with the Bank of Canada in this regard. That’s only a comment. You can comment on that if you wish.
Ms. Fraser: I do not have much to add with respect to the Bank of Canada. The objective there was efficiency in the framework — given the existing oversight of entities that will likely be participants of the consumer-driven banking framework — and efficiency in getting the framework up and running. That was really the thinking and the rationale behind the transfer to the Bank of Canada.
The Chair: Thank you. As a chair, usually I refrain from voicing strong opinions, but in that particular case, I’m reminded of a strong discussion we had about 18 months ago. We talked about going to the FCAC. There is nothing wrong with the FCAC itself and their officials, but my comfort zone increased big time when I saw the Bank of Canada. Desjardins is in the loop because they are more involved with the Bank of Canada than with the FCAC. If the committee feels the necessity, we could invite Desjardins because they have a sense of the situation in Quebec regarding the regulators.
But with regard to the Bank of Canada, when Senator C. Deacon and I saw that, we had the same reaction: that finally, it will be more logical, and the expertise is there to deal with this.
Colleagues, since our two witnesses Ms. Fraser and Ms. Hamel have to be involved in Divisions 15, 16 and 45, I will try to be as efficient as I can. There may be a risk that we won’t be able to have all witnesses, but do you agree that I should invite our two witnesses to stay, and we will move directly to Divisions 15 and 16? I propose that Divisions 15 and 16 should go together, because these two divisions are about amending the Bank Act with regard to the amount of funds deposited by cheque to be withdrawn, and Division 16 is about the provincial customer file that Senator Henkel talked about. If you agree, if we are very efficient and if our two witnesses are free for the rest of the evening, then there will be no need to return.
Senator C. Deacon: I would like to ask one more question about open banking. I’d like to echo Senator Pupatello’s comments: You’ve done a tremendous job. It’s great to see you in this position. We’ve waited a long time for this.
I want to ask very specifically about the transition from screen scraping. There have not been any known data breaches using screen scraping that we’re aware of, but if we have a harsh transition, there’s a risk that delays could disrupt business quite substantially for a number of financial technology companies. We know there has been a lot of resistance from our principal banks in Canada regarding the implementation of this. I could see this being a challenge.
The other element I want to ask you to speak to is the completeness of the data that consumers would like to see transferred to a new entity and the control over that. Those are the final two things, because they’re quite central to the effectiveness of building the new system.
Ms. Fraser: With respect to screen scraping, I want to be clear that no other jurisdiction has done this yet. However, there is a very clear provision in the legislation that sets out that there will be a ban on screen scraping. The government has also been clear that that will happen in consultation with entities. So there needs to be a discussion of how that transition happens and what that time looks like. Further, since we don’t have other jurisdictions to look to for an example in this regard, are there circumstances in which we would continue to permit screen scraping? There’s a bit of a dialogue, discussion and consultation that have to happen there with respect to that, and that is the plan. The framework needs to be in place for us to get to that.
Regarding the second question on the completeness of the data, the scope is listed as chequing, savings and lending, and it’s fairly broad in that respect in covering a number of financial products. It is data provided by the consumer about those products. That’s the way it’s defined in the legislation, with derived data being outside of that scope. So that is the broad scope of the legislation. There will need to be discussion with the Bank of Canada in the course of the drafting of regulations to sort out what precisely that looks like. That will come from guidance and from regulation.
Senator C. Deacon: If I’m interpreting what you’ve said correctly, saying that derived data is outside is a pretty clear line, so it’s everything up until derived data. That’s good to hear. Thank you.
The Chair: Ms. Hamel will stay with us. Ms. Fraser, thank you for your testimony.
I suggest that we go to Divisions 15 and 16 and pull them together, because they’re more or less related. It might be more logical.
I want to welcome Mr. Whalen. I don’t know if you have any opening remarks regarding Divisions 15 and 16 before going to questions and answers.
[Translation]
Ms. Hamel: We can make opening remarks to provide the committee members with context.
[English]
I’ll start with commencing access to the “Funds Deposited by Cheque” measure, which will increase the amount of deposited cheque funds that can be immediately withdrawn from a retail deposit account, from $100 to $150, and will eliminate the existing distinction which currently permits banks to hold the initial amount for an additional business day when a cheque is not deposited in person, for example, when using an ATM or an app on your phone.
This change reflects increases in the cost of living since cheque rules were introduced in 2012, and while cheque usage has decreased from that time, many Canadians, including vulnerable segments of the population, continue to be paid by cheque. So early access to adequate funds reduces consumers’ need to draw upon alternative financial services to meet day‑to‑day needs. These changes will be brought into force on a day to be set by the Governor-in-Council once regulations have been developed.
The Chair: Let’s look at Division 16. After that, we’ll go to questions and answers around the table.
[Translation]
Ms. Hamel: Division 16 is the first step of the national anti‑fraud strategy announced in Budget 2025. Legislative amendments to the Bank Act are proposed to enhance fraud‑related consumer protections in the financial sector.
The legislative amendments proposed in Budget 2025 will require banks to have detailed policies and procedures in place specific to consumer-targeted fraud, including with respect to detecting and preventing suspicious transactions, staff training and remediating consumers.
Banks will also be required to obtain consumers’ express consent before enabling certain capabilities associated with their chequing and savings accounts, including transfer and payment capabilities. This is intended to limit their exposure to fraud in the event that their account is compromised. Consumers will also be able to disable features they do not want or need and adjust their transfer and withdrawal limits. These specific features will be prescribed in future regulations.
Banks will also be required to collect prescribed data on fraud and report it annually to the Financial Consumer Agency of Canada. That data will help fill existing knowledge gaps about the extent and severity of fraud and inform future policy-making.
[English]
The Chair: The rationale is that both divisions concern banking customers. It is a bundle.
Senator Ringuette: This flows from my previous line of questioning. Division 16 requires one to report fraud to the Financial Consumer Agency of Canada. Can you tell me whether in previous legislation financial institutions in Canada had a duty to report fraud to the RCMP? Shouldn’t that have been the first step?
Ms. Hamel: At the moment, they don’t have an obligation to report fraud, and this is setting up the obligation for them to report fraud occurrences.
Senator Ringuette: But the Financial Consumer Agency of Canada has absolutely no supervisory power. They’re a paper agency, period.
Ms. Hamel: The Financial Consumer Agency of Canada is responsible for overseeing the consumer protection provisions in the Bank Act. They will be in charge of overseeing the provisions that are included in this legislation along with the other consumer protection provisions in the Bank Act. It’s in that capacity — being the regulator for financial consumer protection — that banks will be required to report data on fraud to the agency.
The Chair: Do you give up?
Senator Ringuette: I give up because I find that, at the end of the day, we are kind of cherry-picking; there is no logic around how the system will flow and protect consumers at the end of the day. That’s my concern.
The Chair: Expressed with observations.
Senator Loffreda: My question is on Real-Time Rail payments and system efficiency. Do the amendments facilitate the introduction of a Real-Time Rail payment system in Canada? What are the timelines? How will Division 15 improve competition and efficiency within Canada’s payments ecosystem?
Ms. Hamel: I guess both provisions are being made in the context of a Real-Time Rail system being put in place in Canada, but they are not dependent on it. They’re independent from the Real-Time Rail initiative. Fraud protection measures will apply with or without the implementation of the Real-Time Rail and similarly for the access to funds deposited by cheque.
Senator Loffreda: Are they being applied or not? Are Real‑Time Rail payments — faster payments — becoming a reality? In the U.K., when they were launched, the frauds grew to the largest category of fraud losses in the country. It takes three seconds for a Real-Time Rail payment, and it takes almost a day to report the fraud.
So if that is the case, what mitigating factors are we putting in place for the benefit of the consumer, to protect the consumer, and not just be operationally efficient? Because many consumers are faced with fraud today. It’s a Real-Time Rail issue.
David Whalen, Senior Advisor, Consumer Affairs, Department of Finance Canada: Real-Time Rail means banks will have to consider the policies and procedures they need to develop in the context of these requirements — they will need to consider the immediacy and the irrevocability of Real-Time Rail payments in the context of developing those policies and procedures. That may include introducing some friction into the payment process, which is not really at the heart of Real-Time Rail, but it is a consideration that banks will have to factor in as they develop those policies and procedures.
Senator Loffreda: Are we are learning from the U.K., Australia and the United States? When we look to where similar amendments were put in place, we see that fraud skyrocketed. Are we learning from those best practices and putting in place some of those mitigating procedures? That’s what I want to hear.
Ms. Hamel: Certainly. However, amendments proposed in the BIA do not relate to the Real-Time Rail system. A Real-Time Rail system is being developed by Payments Canada and its members, and it will include mechanisms to protect and detect fraud, but that’s a separate issue from the legislation that we have in front of us.
[Translation]
Senator Henkel: I will repeat my question from earlier, but I will have two questions, if I may.
Canada is known to be fertile ground for all kinds of online scams, especially for international networks. According to the Canadian Anti-Fraud Centre, fraud losses reached $638 million in 2024, with more than 108 reports. That represents only 5% of reported fraud. In Canada, banks have no legal obligation to reimburse fraud involving wire transfers or debit cards, unlike in the case of credit cards. Why does Bill C-15 still not create a clear obligation to reimburse victims when the situation is only getting worse?
Ms. Hamel: The announcement made in the budget and by the minister in late October included proposed amendments to the Bank Act and an announcement by the government to develop the first national anti-fraud strategy in Canada’s history. Therefore, the measures proposed here would serve as the first building block of the National Anti-Fraud Strategy. Other issues and policies will be considered in the coming months while we at the Department of Finance work with other departments, as well. That may answer your question, Senator Ringuette. The idea behind the National Anti-Fraud Strategy is to have a multi-sector approach that includes departments responsible for law enforcement, and oversight of the telecommunications sector and technology companies, especially social media. So work is currently under way within government to develop a strategy involving all sectors.
Senator Henkel: Thank you.
Here’s a question that will underscore what I just asked. This is an example from England. England faced the same problems a few years ago. Banks are asked to create rules, procedures and policies to protect consumers from online fraud, so they are asked to create their own internal rules. Therefore, they are responsible for defining those rules themselves. How are these banks being held accountable today? How can you guarantee or manage the banks’ management of these rules, since they themselves create them to protect consumers?
England has shown that pushing and holding banks accountable in a very clear way has led to the fraud rate falling dramatically in just two years.
Ms. Hamel: We are in contact with our colleagues in other jurisdictions, including the United Kingdom, who are really leaders in this field. So we hope to be able to draw on their experience in developing the strategy.
Senator Henkel: Within a time limit, will you apply it immediately? Or are we still talking about applying these rules and laws and waiting to see how the situation develops over time?
Ms. Hamel: As part of the government’s announcement, the provisions or legislative amendments now being proposed are a first step toward developing a national anti-fraud strategy, with the idea of coming back with a more comprehensive strategy in the near future.
Senator Henkel: I’ll close with one comment. It’s so clear that this kind of fraud is very widespread in Canada. I can’t believe that’s not part of the importance of current and immediate regulation. That’s all.
[English]
Senator Fridhandler: I would love to have something unique to say, but I think I will continue with the piling on because I am completely underwhelmed by how this problem is addressed and how it exists. You just have a reporting system. For example, why wouldn’t the FCA have a tribunal where they can address complaints? I have seen this in my civilian life, where banks will point at one another when there has been wire fraud and say that they are not responsible, and no one will respond to it. The consumer who has lost tens of thousands of dollars is left sitting there.
I am shocked that we don’t know more about this in order to implement something more. I was very hopeful when I heard there was going to be an anti-fraud strategy, that somewhere there was going to be some engagement. I don’t see that with a reporting strategy. I think you’ve answered the question. I’m just making the comment that I think our observation will be that this is underwhelming in a gross way on this issue.
[Translation]
Senator Dalphond: The amendment to Division 15 will increase the amount from $100 to $150. That includes the cheque that I scan on my phone, send, and if I go to an ATM, I can cash the $150. Have there been any studies to see if there are any risks of fraud associated with this? Because with in-person deposits, obviously, there used to be some verification, and now there isn’t any.
[English]
Mr. Whalen: Cheque fraud is undoubtedly a real thing. There are existing rules in the Bank Act that permit banks to restrict consumers’ access to the first $100 currently, and we are proposing it would go to $150. This permits banks to hold those funds if they suspect that the account is being used for illegal activity or fraudulent purposes. Banks can also draw on exceptions if the account has been open for fewer than 90 days. There are exceptions. For example, if the cheque is stale‑dated — dated more than six months before the deposit — the bank doesn’t have to release the funds immediately.
Senator Dalphond: There are exceptions within the system. The next question is about fraud. I understand the comments of my colleagues. My question is a bit different.
They have to report annually, the section 1 annual report about fraud, but these reports have to be confidential and cannot identify the banks. Why can’t we identify the bank? Consumers would be in a position to know a certain bank has a lot of fraud while another has almost none. Then they would have better systems.
Mr. Whalen: You are correct. The requirement right now would be for banks to report annually on prescribed fraud data. That data would be set out in regulations to be developed. The way the legislation is written does permit the regulations to adjust how identifiable the data is. That will be hashed out through the process of developing the regulations.
Senator Dalphond: I invite you to consider publicizing the amounts and the names of the banks, not the individual clients. If one bank has, for example, a 1% rate of fraud and another has a 5% rate of fraud, I would like to know so I can do business with the safest one. Thank you.
Senator McBean: Why is the change from $100 to $150 being made? I heard you say that one of the benefits to consumers is it would change their habits and maybe stop them from using alternative sources to cash their cheques for those being paid through them. What led you to believe that a $50 bump would actually change people’s habits? How will this $50 help people in today’s economy?
Mr. Whalen: Essentially, the $50 would bring the immediately available amount approximately in line with increases to cost of living since the first amount rules were initially introduced in 2012. It would give consumers access to more funds immediately in line with cost-of-living increases in the 13 years since those rules were brought in.
Under the existing rules, banks are permitted to hold the balance of the deposited cheque funds, depending on the value of the cheque, for as long as eight business days.
Senator McBean: Has any research been done into consumer habits and whether that $50 increase is enough for them to make the decision to stick with a bank versus going to an alternative lender?
Mr. Whalen: We have done previous work in the context of the criminal rate of interest change. On January 1, 2025, there was a change to the Criminal Code which reduced the criminal rate of interest to 35% APR. One of the things we heard in the context of that work is that consumers need, in some cases, to use payday lenders and draw on high-cost instalment loans because they are not able to get at their money fast enough to cover their bills even within a week. That’s part of the rationale for increasing the amount from $100 to $150.
Part of the budget announcement as well was to look at the cheque-hold periods I had mentioned earlier on the balance of the funds. That will be undertaken through a regulation process looking at whether those current maximum hold periods are still appropriate and also looking at the value threshold. Right now, banks are permitted to hold deposited cheque funds longer for cheques valued at over $1,500. Does that threshold makes sense in 2025? That threshold was introduced in 2012 as well.
Senator McBean: If the point of this is to help people — it’s great that it’s come down to 35% — I would rather go to my bank and get all the money I earned. Obviously, we have to protect from fraud, but if people want their money, I would like them to not be paying 35% for the privilege of getting it.
Senator C. Deacon: I would like to dive in on this one because of the incrementality of it and the fact that we are still focused on the use of cheques in Canada. Most other countries have moved past this. Newcomers to Canada need to be taught how to use a cheque because they’ve never seen one before because their banking systems are so much further ahead than ours.
I struggle with this incremental change that doesn’t make a difference in the lives of those who are struggling the most and have the longest and most unjustifiable holds on their money because there is not a real-time payment system in place to have these cheques cleared immediately. I would be putting pressure on the banks to help people who need it the most.
The fraud issue is tied into Divisions 14 and 16. Given that OSFI doesn’t have the information on all fraud incidents in a real-time basis — not annually, but daily, weekly or monthly — how do they enforce their integrity and security guidelines? The FCAC is not a strong enforcement body; we know that already. A few years ago, this committee dealt with them possibly being the regulator of open banking, and I think you may have read the transcripts and got a sense of how supportive — or rather not supportive — we were of that decision.
It worries me tremendously that we aren’t doing something more substantial, such as reversing the onus, to build on what Senator Henkel said, so the banks must prove that the customer was negligent or complicit or pay up and settle on that for the customer. Right now, the customer is guilty until proven innocent. The bank, which has all the information, decides if they are innocent. We are in a situation where the British have already moved on reverse onus, and we are not doing anything substantial here; we are not doing it in a way that’s substantial to the regulator. The regulator truly is OSFI. This is a security and integrity issue. If the customers of our banks do not feel as if they will be safe with respect to their money — all of a sudden they have a mortgage on their house that they never took out? This is fundamental.
Why have you made the decision to not directly involve OSFI and have a more regular requirement on the banks? They can afford to do it. They have chosen not to take on this responsibility. It is modern-day bank robbery, but the customers are responsible. Why have you made this very lightweight choice thus far?
I am a little agitated, but it is really upsetting. I know too many people who have been robbed.
The Chair: Senator, we share your concern on this one. OSFI has been invited to testify next week, but if the witnesses would like, they may respond.
Ms. Hamel: As you say, it is hard for us to comment on why a decision was made.
Senator Ringuette: It’s a policy decision. I believe we are all on the same page.
Senator C. Deacon: Thank you for hearing me out.
The Chair: We share your frustration, Senator Deacon.
Senator Marshall: Regarding Division 15 and the $150, my colleagues have expressed the same opinions, so I won’t get into that.
Regarding Division 16, I share their opinions on that as well, so I won’t repeat anything — but there are a few things there. It seems as if it has not been thought through because, first, it is only applying to the banks. I’m looking at the timelines, and if the budget bill gets approved in February to the Bank Act, then we need regulations. I’m just thinking through now what has to happen. Regarding the regulations, the Treasury Board has perhaps not testified at the Banking Committee but has at the Finance Committee — because I asked how long it generally takes for regulations. My recollection is that they said a year or year and a half. So if the BIA is not approved until February, and then we need the regulations, that’s one year or more. We also need legislation for the financial crimes agency, so we will be waiting for that.
It seems like this won’t happen very soon. It seems like it is being done in stages.
My other question is this: What will be the cost to establish the new financial crimes agency? It was mentioned in the budget book, but that did not allocate a cost to it.
Ms. Hamel: I will first comment on the timelines.
You are right: It is a staged approach. Regulations will need to be developed to bring these provisions into force, but these provisions could be coming into force before other elements of the national strategy are legislated and coming into force. You could see a cascading of elements of the national anti-fraud strategy coming into force over time.
I am not an expert on the financial crimes agency. I don’t think funding was approved, as you said.
Senator Marshall: It is not in the budget book, and that’s where they would have it, so there is no money.
So the legislation for the financial crimes agency would also require regulations, would it not?
Erin Hunt, Director General, Financial Crimes and Security Division, Department of Finance Canada: Hello. It is my pleasure to answer the questions about the financial crimes agency.
You are right: There is no funding allocated in the budget for the financial crimes agency, although the Prime Minister, in advance of the budget being tabled, did note that, of the 1,000 RCMP personnel, 150 would be dedicated to supporting the investigation of financial crimes.
Senator Marshall: There is nothing for the agency?
Ms. Hunt: We understand that those funds would be supportive of the agency once the agency is stood up in spring 2026.
Senator Marshall: I can’t see the agency being stood up in 2026, based on what is there.
Ms. Hunt: The commitment is for the Minister of Finance to work closely with the Minister of Public Safety and the Minister of Justice to bring forward legislation to stand up the agency in spring 2026.
Senator Marshall: Okay. Thank you.
Senator Martin: My colleagues have asked some of my questions already. I’m very disappointed. They are regarding the mandatory fraud-detection policies that we hope that banks would put in place. I know of a recent situation where a major bank did not have any detection policy in place, and a lot of money was lost. I think the number — $640 million to fraud in 2024 — will be much higher in 2025. These cases are increasing.
I just have one question related to the consumers. With these amendments, are there specific protections or extra safeguards in these fraud provisions for high-risk groups like the elderly? Would you talk about what you have done with respect to looking at some of these very vulnerable consumers?
Mr. Whalen: The amendments themselves wouldn’t be particular to any segment of the population; they would be general application. The banks, in putting together their policies and procedures, could determine that it may be appropriate to have specific protections in place particular to certain segments of their customer base, but the law itself wouldn’t specify specific groups.
Senator Martin: I’m very disappointed again. Thank you.
The Chair: Colleagues, we have 20 minutes left. We have many witnesses and different divisions, so, Senator Deacon, do you wish to make closing remarks on this division?
Senator C. Deacon: Yes. You may want to speak to Detective David Coffey in the Toronto Police Service. He tracks 50 fraud incidents that occur a day at institutions in Toronto — $400 million in the City of Toronto. That is not the Peel region or York; that is just the city of Toronto. And that was $400 million to the beginning of November this year. He has accurate data on a daily basis; he gets 50 reports a day.
As we push the banks to finally live up to their responsibilities, it would be worthwhile for you to have that data and speak to that officer.
The Chair: The good news about the pre-study is that we have two months to lobby the government to change. It is complicated to amend a bill, but in the pre-study, if we work smart and use our brains around the table, we could influence the government to beef up some divisions here.
We have 20 minutes left. Ms. Hamel, you will be reinvited next week for some divisions, because, when we talk about cryptocurrency and stablecoins — we will need more than 20 minutes to talk about stablecoins, so you will be our guest next week.
I’m trying to understand if we can bundle Divisions 10 and 11. It is the same witnesses.
Thank you for your testimony, by the way.
I invite the people from the Department of Finance to come up for Divisions 10 and 11. Please introduce yourselves and mention if you have any opening remarks. Does it make sense to combine Divisions 10 and 11, and perhaps Division 13? How do you want to proceed? We have 20 minutes left.
Khusro Saeedi, Senior Director, Strategic Initiatives, Department of Finance Canada: Hello. With me is Timothy Huyer, Legal Counsel at Finance. I am able to speak to Divisions 10, 11, 12, 13 and 17. I’m happy to proceed in any fashion you would like, whether you want to do part or all of those today.
The Chair: Colleagues, is it okay that we proceed with those five divisions with opening remarks?
Mr. Saeedi: I’m here to speak to all five divisions. The five divisions relate to the financial sector statutes review. So the federal financial institutions statutes — the Bank Act, the Insurance Companies Act and the Trust and Loan Companies Act — all include a sunset provision that encourages a regular review of financial sector statutes. This review provides an opportunity to ensure that the financial sector framework keeps pace with innovation, new technologies and any other developments that could undermine the efficiency, utility, stability or integrity of Canada’s financial system. It also provides stakeholders an opportunity to provide feedback on the system and any ideas they might have to modernize, streamline or make the system more efficient.
The department launched a review of the framework in fall 2023; a series of engagements and consultations occurred with a wide range of stakeholders — industries, civil society, agencies and provinces — across Canada. The divisions that I am happy to speak to today were included in or came out those consultations, as is the case for several others you have heard about; the two you heard from my colleague Ms. Hamel on are also related to that review.
I’m happy to go through all the divisions all at once.
The Chair: How do you feel? Do you prefer opening remarks for each division? Go ahead, please.
Mr. Saeedi: Division 10 of the bill amends the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act to extend the sunset date — so specifically the period during which these institutions that are governed by the act may carry on business — from June 30, 2026, to June 30, 2033, effectively resetting the sunset date and setting a timeline for the next review, which would be seven years from the close of the previous review.
Division 11, which amends, again, the Bank Act, the Trust and Loan Companies Act and the Insurance Companies Act, reveals provisions relating to certain technical limits found in these statutes, with the intention to replace them with more flexible OSFI guidance. These limits, which concern borrowing and portfolio investments by certain financial institutions as well as commercial loans, real property and equity, have a prudential focus, which is more appropriately captured by guidelines by the regulator.
Division 12 of the bill again amends the Bank Act, the Trust and Loan Companies Act and the Insurance Companies Act to include a notice-and-access method of delivery of governance documents to financial institutions while retaining the right of the recipients of those documents to request delivery by mail, in paper. This aligns the federal financial institution statutes with the practices at the provincial level with respect to securities.
Division 13 again amends the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act to increase the equity threshold related to the public holding requirement — that is, a requirement that banks at a certain size threshold have 35% of their voting equity floated on a recognized exchange and be widely held — from $2 billion to $4 billion, and makes consequential changes.
Finally, Division 17, which I’m also happy to speak to, amends the Canada Deposit Insurance Corporation Act, the Bank Act and the Financial Consumer Agency of Canada Act to support the growth of federal credit unions, including changes to support their growth by amalgamation via asset acquisitions to make it easier for provincial credit unions to enter the federal framework. It also provides them flexibility to continue the operations that they may be conducting at the provincial level with respect to auto leasing at the federal level.
That’s a brief summary of the five divisions. I’d be happy to take questions.
The Chair: Thank you. I would propose two minutes each. We’ll see from there, and if necessary, they will be back, and we will invite them again to continue.
Senator Martin: Thank you. I will go to Division 17, regarding credit unions. I met with the association, and they highlighted the regulatory red tape that they face and the long wait times. My question is simply related to both: How will the proposed amendments reduce this red tape and shorten the end‑to‑end approval timelines for credit union amalgamation?
Mr. Saeedi: Thank you for the question. I’m happy to speak to that. There are a few ways in which the legislative amendments will reduce the burden on the growth of the federal credit union sector.
First, there’s an amendment that would state that the federal credit union no longer has to hold a member or shareholder vote when it’s amalgamating with a local or provincial credit union that has 25% or less the asset size of the federal credit union. That is to say, when the credit union that is provincial and is being absorbed into the federal credit union is relatively small, there will no longer be a requirement for a member vote.
I’d also note another measure, which is that there is transitional relief provided to provincial credit unions that are entering the federal framework, to account for the fact that there are differences between the provincial and federal, for example, investment rules or business power rules. That transitional relief will now be able to be extended not just to credit unions entering the framework or credit unions that are amalgamating — a provincial credit union amalgamating with a federal credit union — but will also now be available when a federal credit union is acquiring the assets and liabilities of a provincial credit union, so an asset transaction. That provides further flexibility for federal credit unions.
Those are two examples of how this legislation will streamline and reduce red tape for credit union movement.
Senator Martin: He will come back, so I can —
Senator Marshall: I have a couple of questions. For Division 10, you gave us some dates. When was the last review? I’m thinking about five years versus seven years. When was the last review?
Mr. Saeedi: The previous review concluded in 2019, so, depending on the timing of the passage of this legislation, six and a half years ago. The review prior to that concluded in 2012, so approximately seven years prior to that.
Senator Marshall: I was trained to be an auditor, so I’m very suspicious. From what you’re saying, it seems as if you haven’t been able to meet the five-year time frame; therefore, it has been changed.
Mr. Saeedi: I would say that there are a number of steps that have to be done in any review. Following the passage of the legislation itself, there is often a regulatory process. I think you spoke just now on how long that process can take. It depends, and it’s variable, but I think that’s a good estimate.
Quickly, subsequent to that, we have to see how the changes are absorbed. So we’d like to have some time to be able to see how the industry reacts to those changes before launching a new consultation process to gather new ideas, and subsequently draft and come to Parliament.
Senator Marshall: If the last one was 2019, and you want to move to seven years, then I would think that it would be in 2026, but based on what you’re saying, it might take longer than that because you’re going to do some sort of consultation.
Mr. Saeedi: The amendments we are bringing forward now conclude the timing between the 2019 and 2026 amendments. This next amendment after that — seven years, yes.
Senator Marshall: I’ll be quick. Regarding Division 14, again, I was trained to be an auditor, so I’m always suspicious. What was the impetus for the amendments proposed in Division 14? Who initiated that?
Mr. Saeedi: I’m not the expert on Division 14, but I see my colleague is coming to sit.
Senator Marshall: No, we’re going to stay. We’ll keep your plan pure. I’m okay, thank you.
Senator C. Deacon: I want to keep focus on Senator Martin’s topic of Division 17. Innovation Federal Credit Union had, I think, a seven- or eight-year approval process at OSFI. I’m hoping that was a trigger to finally start to revisit, because the conversion of our provincial credit unions to amalgamate and get federal licensing I think is pretty critical to giving them the ability to truly compete.
If that is the trigger for making this change, how much better do you think the system will be? What is your estimate? That was, I think, almost eight years. What do you think it will be now if Innovation Federal Credit Union were to start up today in the process?
Mr. Saeedi: The process involving a provincial credit union coming to the federal framework would usually always involve as a first step the credit union, through whatever process, starting with the Office of the Superintendent of Financial Institutions. I’m happy to speak to the process. I think if there are questions specifically about timing, if you do have a regulator —
Senator C. Deacon: All I am saying is you’re proposing allowing OSFI to change their process through this, so there must be a target in mind about how much it has improved. That’s all I’m trying to get at. If there isn’t, there isn’t, but I assume there would be.
Mr. Saeedi: We’re looking to reduce the red tape and the steps involved. The timing itself is not always related to a particular member vote. If a member vote were a critical step, that would be a reduction in timing. We can speak to a reduction in cost. Holding a member vote, mailing out the paperwork and going through the process — when the federal credit union is very large and the impact of the amalgamation is small in the federal credit union, that is an unnecessary burden. Timing and cost are both important. This probably speaks to cost.
Senator C. Deacon: Costs that are intended. So this is a first small step; that is what I’m picking up.
Mr. Saeedi: There is definitely an intention to continue to look at competition in the financial sector and the ways in which new entrants can be supported, so, yes.
Senator C. Deacon: That was my impression. I wanted to get confirmation that this is just a baby step in the process. Thank you.
Senator Ringuette: Just quickly, it was my understanding that, in the spring, a general memo was sent to every department with regard to being more efficient and fast-tracking the work moving forward. I’m looking at Division 10, and I’m saying, “Seven years to do a review?” — and in a period when we’re talking about open banking?
We’re not keeping up. You’re coming here and saying that instead of five years, you need seven. What is the issue?
Mr. Saeedi: I’m happy to speak to that. Seven years is the period between reviews. It doesn’t speak to the time the review would necessarily take. I would also say the review is far from the only tool used to update and reform the financial sector.
You’ve had colleagues from other parts of the Department of Finance speak to other important reforms, such as consumer-driven banking, today. Those continue to move forward. There’s a continued priority to update the framework to respond to developments in a fashion that is unrelated to the formal statutory review.
The review provides a different avenue to look at the issues in a different format. Rather than one particular initiative that comes forward, the review provides an opportunity for something to take place with stakeholder input over a different time frame.
I wouldn’t think this would reduce the speed of responsiveness. That will continue. But it does allow time for the reforms that are being put in place to be absorbed by the sector and to be reflected in the sector before considering another round of changes.
Senator Ringuette: But seven years? Again, I honestly believe that you’re off the track. Anyway, I will move on to Division 13.
In the overview notes that I have here, you said that the equity threshold is being increased from $2 billion to $4 billion. That’s a 100% increase in equity threshold. Then it goes on to say that this is just to help the new entrants get in.
Can you explain to me how doubling the required equity to get into the system will help them get into the system? Maybe my question or my answer is too long, but if you can’t answer, write it down and give it to us. I can give you a few hours.
Mr. Saeedi: The change in the threshold from $2 billion to $4 billion is a particular requirement that says when the banks hit a certain size, it has to float or sell 35% of its shares on an exchange. It doesn’t speak to the size that is required to enter. It speaks to the requirement that the share ownership has to become more dispersed or widely held once it becomes a certain size. This is on the basis that as an institution grows larger and more systemically important, it’s important to have public transparency and market oversight over an entity.
Senator Ringuette: Does this also apply to the credit unions?
Mr. Saeedi: This would apply to federal financial institutions, but credit unions are different in their membership structure. In some sense, they’re already widely held. It is possible, and the legislation allows for exemptions in particular situations where the requirement is achieved in a different fashion.
The Chair: Thank you.
Colleagues, it’s already 6:15 p.m. I don’t know if we should offer an apology or a thank you for the understanding of the other witnesses. They have been here for almost three hours, and we have not had an opportunity to hear from them. I am thinking about the Innovation, Science and Economic Development Canada, or ISED, officials and Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, officials who are here. You will be our guests next week at some point. We will need to figure out when because we already have other witnesses tomorrow.
I think you will be invited back as well because I’m sure Senator Loffreda has good, relevant questions to ask you, as well as other colleagues. We want to thank all the officials for your understanding. Some things we can control, as Prime Minister Carney mentioned, and some things we cannot. It seems, in this, case we need more time. Colleagues, we will see you tomorrow.
(The committee adjourned.)