THE STANDING SENATE COMMITTEE ON BANKING, COMMERCE AND THE ECONOMY
EVIDENCE
OTTAWA, Thursday, December 4, 2025
The Standing Senate Committee on Banking, Commerce and the Economy met with videoconference this day at 10:33 a.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 am a senator from Quebec and chair of the Standing Senate Committee on Banking, Commerce and the Economy.
I would like to begin by acknowledging that the land on which we are gathered is the traditional, ancestral and unceded territory of the Anishinaabe Algonquin Nation.
I extend my welcome to all of you, both those who are in the room with us and those listening to us online at sencanada.ca.
Before proceeding any further, I would kindly ask my fellow committee members to introduce themselves.
[English]
Senator Pupatello: Sandra Pupatello, an Ontario senator.
Senator Fridhandler: Daryl Fridhandler, Alberta.
Senator Loffreda: Good morning. I’m Senator Tony Loffreda. Welcome to our committee this morning. Glad to see you.
[Translation]
Senator Henkel: Hello and welcome to our committee. Danièle Henkel from Quebec.
[English]
Senator Yussuff: Hassan Yussuff, Ontario.
Senator McBean: Marnie McBean, Ontario.
Senator C. Deacon: Colin Deacon, Nova Scotia.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Martin: Good morning. Yonah Martin, all the way on the West Coast, B.C.
[Translation]
The Chair: Thank you, colleagues.
Today we are continuing the pre-study of Bill C-15, currently at second reading in the House of Commons.
We have received an order of reference 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.
Today’s meeting will be divided into three panels. We will first spend 60 minutes with senior officials from the Office of the Privacy Commissioner of Canada, whom I would like to welcome. We welcome Mr. Philippe Dufresne, Privacy Commissioner of Canada, and Mr. Marc Chénier, Deputy Commissioner and Senior General Counsel.
Also with us this morning are senior officials from the Competition Bureau Canada. I welcome Mr. Anthony Durocher, Deputy Commissioner, Competition Promotion Branch, Ms. Josephine Palumbo, Deputy Commissioner, Deceptive Marketing Practices Directorate, and Mr. Matthew Chiasson, Senior Policy Advisor, Competition Promotion Branch.
I understand that some of you may have short opening statements. Following your remarks, the senators will ask questions.
I would invite our representatives from the Office of the Privacy Commissioner of Canada, Mr. Dufresne and Mr. Chénier, to present their opening remarks.
Philippe Dufresne, Privacy Commissioner of Canada, Office of the Privacy Commissioner of Canada: Thank you for the invitation to appear before you today to offer my views on the privacy implications of Part 5, Division 23 of Bill C-15, the Budget 2025 Implementation Act, No. 1. I am accompanied by Marc Chénier, Deputy Commissioner and Senior General Counsel.
I will limit my remarks today to the proposed amendments to the Personal Information Protection and Electronic Documents Act, or PIPEDA, providing for a right to data mobility to facilitate information sharing across all economic sectors.
[English]
I recognize the importance of the bill’s policy objectives and the importance of the right to data mobility in today’s digital economy. Data mobility would give Canadians greater control of their personal information by allowing them to make decisions about who they want their information shared with. This would make it easier for them to switch service providers and choose which organizations they want to engage with. It would also help promote competition and innovation by allowing individuals to take advantage of new business models, like consumer-driven banking, and encourage new players in the markets, thereby helping support small- and medium-sized organizations.
Allowing individuals to control where their information is going helps to build trust in today’s data-driven economy. For this reason, I support efforts to introduce a right-to-data mobility in PIPEDA, a right that already exists in many jurisdictions around the world.
Specifically Bill C-15 would add a new Division 1.2 to PIPEDA that would require an organization upon an individual’s request to disclose the personal information that it has collected from them to a designated organization. This right would be subject to regulations and would only apply if both organizations are subject to a data mobility framework.
PIPEDA would also be amended to provide the Governor-in-Council with powers to make regulations on data mobility frameworks, standards for safeguards and matters related to interoperability.
[Translation]
As many aspects of the data-mobility framework would be clarified in the regulations, including those related to standards, safeguards and interoperability, it will be important for my office to be consulted by the government in the development of those regulations.
Thank you, and I look forward to answering any questions that you may have.
The Chair: Thank you.
I believe it would be simpler for the discussion to move directly to the questions about this division. In that case, if you agree, colleagues, I will limit each intervention to two minutes. After that, we will hear from the representatives of the Competition Bureau Canada, and then questions will be directed to the witnesses you choose.
[English]
Senator Marshall: Thank you for being here this morning. You mentioned you looked at Division 23, and by your speech, you’re giving the impression that you don’t have any problems with it, but you did mention the fact that you haven’t seen the regulations yet and the devil’s in the details.
Can you tell us, from a general perspective, how you review the legislation? What type of people do you have working in your office? How much detail? It sounds good on paper, but perhaps in actual fact it won’t be as good as what we think it is going to be.
Our personal information is everywhere. It’s in the banks and the health care boards.
What sort of review do you do in order to come to the conclusion that you don’t have any problem with Division 23 and whether you’re going to have any concern with the regulation? Just looking for some reassurance as to the depth of your review.
Mr. Dufresne: Thank you. We look at all pieces of legislation with potential privacy implications, whether it be in this context or in national security. As you rightly point out, privacy touches so many fields in our world. This is why we are working — in my office — more closely with other regulators. And the theme of cross-regulatory collaboration is extremely important.
Privacy is linked to many areas, competition, broadcasting, national security. We’ve actually created in Canada the Canadian Digital Regulators Forum, which includes my office, the Competition Bureau, the CRTC, the Copyright Board. We work carefully together and we look at pieces of legislation to see what the impacts are in our respective areas.
In this case, we look to these provisions to see if privacy will be protected. Will there be safeguards? Will there be a right for organizations to properly give their consent? Will the information be treated appropriately.
A lot of that here will be done in the regulations in terms of safeguards, in terms of which organizations. What I’m saying is that it will be important — if not essential — for my office to be consulted in the drafting of those regulations. We do that in other areas, in the context of banking, sharing information with one another to prevent fraud and terrorism financing, for example.
The Chair: Senator, you can go on second round.
Senator Martin: I may only have time for one question and it is regarding safeguards themselves. I know that the regulations are forthcoming but, from a privacy perspective, what specific safeguards need to be in place before the new data mobility right is activated?
How would these safeguards reduce the risk that Canadian financial and other personal information is exposed or leaked as it moves between organizations?
Mr. Dufresne: We need to ensure the information is disclosed in a secure way? How will the information be protected? How will the consent be confirmed? What protections will be put in place to avoid privacy breaches, personal information being disclosed inadvertently? How will this be managed in terms of the parameters for technical means to ensure interoperability and collection? This needs to be seamless, user-friendly and secure. Canadians need to have trust that their personal information will be protected.
That’s what we see in other countries. For example, in Australia the privacy regulator, my colleagues are directly consulted in the drafting of regulation for comparable provisions.
This is an area where it touches economic aspects, banking aspects, but there is a privacy aspect because you’re talking about personal financial information of Canadians. Our involvement in that process is going to be extremely important.
Senator C. Deacon: Thanks to all of you for being with us. I will break your rule and ask a question of both, because competition and privacy are so closely linked in our digital world.
Commissioner Dufresne, have you been approached by any other departments that would also like to give Canadians safe and secure access to their data in other areas? Has any other department come to you and said, “We want to know how to do this. It’s being done for open banking.”
Mr. Dufresne: We’ve been working, for instance, with the Department of Finance in the last Parliament leading up to the PCMLTFA amendments — so to fight money laundering and terrorism financing — and we have established codes of practice. Other specific areas we have not been engaged, to my knowledge, in terms of additional sharing of information.
Senator C. Deacon: Thank you, Commissioner Dufresne. To the bureau, how important is it that we look at data rights, data privacy, data security —
The Chair: Senator, I have done that on purpose. At the end there will be a chance for both to answer the question, if you don’t mind. Hoping not to be rude, but I am trying to be equal and consistent.
Senator Ringuette: Thank you. I understand your responsibilities, and so forth. However, if within this framework our personal information resides outside the country, you have no jurisdiction. How will this be managed to provide a sense of security for financial information to consumers?
Mr. Dufresne: There are a few ways where this could be done. One, this could be provided for in the regulations in terms of particular processes if the information is going to leave the country. That’s one area.
Another area — and this is something I have recommended — is to amend privacy laws generally and to deal with the issue of cross-border sharing of data. Right now we have a requirement that, by contract or otherwise, you have to have similar protections. There may need to be more than that in terms of privacy impact assessments, or greater safeguards if data is going to be going to other countries. You are right; we cannot control what other governments are going to do but we can set parameters, expectations and review processes. That could be done in regulations, it could be done in law reform for privacy.
Senator Ringuette: Second round.
The Chair: Thank you, colleagues, for your understanding this morning.
Senator McBean: More broadly, how will data mobility be defined? Which organizations are going to be subject to it?
Mr. Dufresne: This will be defined in the regulation, so sections 10.5, 10.6 talk about the regulation specifying the organizations that are subject to data mobility frameworks, and also the regulations may distinguish among different classes of activities, information or organizations. It may not be one-size-fits-all. You might have different provisions for different sectors.
My understanding is that the goal is for the banking sector to be the first with the open banking, but there may be different sectors. It is not a given; that is up to the Governor-in-Council, hopefully with our input, looking at what are the different types of rules that can apply.
Ideally, you have a nimble system that’s flexible enough and tailored enough, but we need to make sure that privacy is always protected.
Senator McBean: As Senator Marshall said, the devil can be in the details. Are you at all concerned? You say “ideally” and it is coming down in a privacy framework. Do you have any red flags or yellow flags about how the system is going to be created?
Mr. Dufresne: Well, I am setting out my expectations publicly that the government will consult my office. And in doing that we’ll be reaching out to them if Parliament adopts this legislation to establish those links.
I presume that the government will be open to doing this, if they are not I will raise it at that time.
Senator McBean: Please do. Thank you.
Senator Yussuff: Thank you, witnesses, for being here and for the work you do on behalf of the country.
My question is more specific. I understand what you want to see safeguarded but, despite your best intentions, there will be breaches. When the breaches happen, what are the penalties for those who breach that? We are seeing this more frequently, systems are being hacked and consumers are left and told, sorry, we did not know. You are supposed to figure it out. Well, you can’t figure it out. It’s my personal data. And financial data has far more dramatic impacts on people’s lives, especially if it gets into the wrong hands of criminals, not just in this country but throughout the world.
When drafted, what penalties should the regulation impose to ensure those who are responsible know their obligations and that there are stiff penalties for not follow the regulations?
Mr. Dufresne: In terms of open banking, the bill talks about the liability aspect, holding the banks liable for the cost and the impact. That is dealt with there.
From a privacy perspective, you identified a big gap in the current legislation. We need to have stronger financial consequences. Right now, I do not have the authority to issue orders or financial consequences for privacy breaches.
That was made evident last year in a joint investigation with the United Kingdom. They issued a $1-million penalty or some such to 23andMe, and I could not. I’ve been calling for law reform in that sense. I am optimistic that this will be coming, and that will be very important to strengthen the regulation.
Senator Yussuff: Thank you.
[Translation]
Senator Henkel: Welcome to the committee. The bill states that entities remain responsible even when they use third-party providers. However, the banking technology chain often involves four or five layers of subcontracting, which are sometimes outside Canada, as the senator indicated.
How can your institution actually audit these complex chains? Do you currently have the powers and resources needed to fulfill this responsibility?
Mr. Dufresne: Thank you for the question. Clearly, the current legal framework needs to be strengthened. As I mentioned, at this time, I do not have the authority to impose financial consequences. The system for sharing data outside Canada is not as rigorous as it could and should be. I hope there will be legislative amendments in that respect.
In the meantime, to address this challenge, I am working very closely with my international counterparts, because no country can tackle this issue alone, and Canada is no exception. There is a very strong community of privacy commissioners, even regional ones, in Asia, Europe and around the world. This year, I was elected president of the Global Privacy Assembly. This means that Canada and my office play a leading role in strengthening this cooperation, both in investigations and in the development of policies and recommendations.
The Chair: We also congratulate you on that nomination. It brings prestige to Canada and is a great source of pride. Thank you.
[English]
Senator Loffreda: Thank you all for being here.
Mr. Dufresne, could you elaborate on the most significant gaps that Parliament should address? More precisely, my question is on data minimization rules. The Personal Information Protection and Electronic Documents Act is built on consent, but consent in today’s digital financial environment is often broad, bundled and not fully understood by consumers. Do the amendments in Division 23 improve the quality, transparency and meaningfulness of consent? If not, where should Parliament go?
To wrap it up, we have open banking, real-time payments, increased connectivity. Should the government consider further data minimization rules for consumer protection?
Mr. Dufresne: Thank you for the question. I think that data minimization, in particular with respect to personal data, is key. You are right to highlight it, and we need to continue to highlight it. We need stronger provisions there.
It’s difficult for Canadians — for anyone, even experts — to consent and to understand the complexity of all of those provisions. A positive step, for example, is that in the open banking bill here, we are talking about consent being simple, understandable, meaningful. This type of strengthening for consent is important. There is room to do that in the regulations, in this section. We need to do more about that in global law reform to ensure that consent is clear, easy, user-friendly and that, otherwise, there is this sense of necessity and proportionality.
To give an example, we did an international sweep with competition authorities and privacy authorities looking at websites and apps to see if they were using deceptive design practices, tools and psychological tricks that make it harder to understand what is going on and that make it harder to protect your privacy. We found that these were used across the board — complex policies, nudging techniques and so on. We really need to continue to push against that and say, let’s make it easy for Canadians to understand and to protect their privacy.
Senator Fridhandler: You spoke about your concerns about sanctions and your capacity to sanction. In these amendments to the act, everything is deferred to the regulations, which gives parliamentarians very little direct oversight. Are there items, aside from sanctions and whether they could be integrated, that should be in the framework of the legislation itself, as opposed to in the regulations?
Mr. Dufresne: In the context of this specific legislation, the only area which, again, doesn’t need to be in the bill itself but it should be an expectation and understood, is to consult the privacy regulator in the development of those regulations.
More broadly, we need to look at law reform for privacy legislation in the private and public sectors. This new regime is made subject to my authority to review and to receive complaints, so it will be impacted by the overall privacy regime. That overall regime needs to be improved to have a stronger recognition of privacy as a fundamental right, stronger recognition of the importance of children’s privacy and stronger enforcement mechanisms.
One key point is the ability of my office to collaborate more broadly with other regulators. I mentioned that we are doing it already in Canada with the Competition Bureau and with the CRTC as much as we can, but there are limits. For instance, I don’t have the authority to collaborate in terms of investigations. I have the ability to collaborate in terms of guidance and overall policy but not to investigate. I could do that more easily with the U.S. Federal Trade Commission than I can with the Canadian Competition Bureau, which is an obvious gap.
In this world where we will give more powers to the Bank of Canada, where there will be financial regulators, a general proposition should be that my office has the power and the mandate to collaborate with any regulator whose mandate dovetails on privacy.
[Translation]
Senator Dalphond: I’m looking at the regulations and I see that you can be contacted by filing a complaint. You can then prepare a report on the complaint. If there is no follow-up on the complaint, the person can initiate court proceedings. However, you do not go before the court on their behalf, but the person concerned must hire a lawyer and bear all the burden, is that correct?
Mr. Dufresne: I also have the possibility of seizing the court in certain cases. However, the challenge lies in the fact that it is a de novo process. This means that independent of the conclusion drawn by my office, the process starts over. The evidence must be resubmitted and new arguments presented. The process is therefore long and costly. That is why one of the main recommendations for privacy reform — which will not happen here, but which I hope will happen soon — is to give my office the power to issue orders and impose fines in appropriate cases. We can then proceed to a judicial review, as you know, and of course, all these checks will be carried out.
The current system is too slow. A decision is made and nothing is done until the Federal Court makes its decision, which adds to the delay. Let me cite the example of a very concrete case. In the case involving the pornography site Pornhub and the company Aylo, it was discovered that there was not enough protection and that images were being published on pornography sites without obtaining the consent of the individuals involved. That’s a terrible consequence. As we speak, we are before the Federal Court because the organization refused to follow my recommendations. The delay causes the victims to suffer even longer.
[English]
Senator Pupatello: I have two brief questions. The first is around data storage and the localization of data storage within our country as it relates to open banking. Do you have a position? It is mentioned in the budget in terms of assisting and funding that, but do you have a position generally around where it’s stored and as it relates to open banking in particular?
Second, what role does your office have in the financial literacy piece that the Bank of Canada is maintaining and will continue and, in particular, what areas around privacy should the public be aware of? Do you participate in the delivery of the public education piece?
Mr. Dufresne: Thank you. In terms of data localization, certainly, the more things are in Canada, the more power we have over it and the easier it is to apply Canadian laws. When things happen in other countries that impact Canadians, we will still have jurisdiction, but it raises different types of challenges in terms of enforcement of those decisions.
This is why we need a regime, and that could be done through those regulations. It could be done through law reform of the Privacy Act. That would make sure that, if data were leaving, there would be a framework. It doesn’t mean that data can never leave Canada, because that would harm intercommercial or international trade, but for certain types of data you might need stronger safeguards.
In terms of the education and financial literacy, I don’t believe we’re currently doing work with the Bank of Canada on this, but I see this as an area where we should be doing it if the bank is going to be taking on a role in the open banking. We have a general mandate to promote privacy, and as indicated at the outset, privacy is being impacted more and more by other domains, so the cross-regulatory collaboration is increasing, both here at home and internationally. We’re playing an increasingly greater role on that, and I can see this specific example as one where we’ll want to be involved.
The Chair: What I propose, colleagues, is I will offer an opportunity to the Competition Bureau to provide opening remarks and go with the first round and they will have enough time. In that case, I will be fair to both. We’ll have a second round at the end if it’s possible.
I will invite Ms. Palumbo and Mr. Chiasson to give your opening remarks. Welcome.
[Translation]
Matthew Chiasson, Senior Policy Advisor, Competition Bureau Canada: Good morning, Mr. Chair and honourable senators.
Thank you for welcoming us here today. My name is Matthew Chiasson and I am a Senior Policy Advisor at the Competition Bureau Canada.
I’m joined today by my colleagues Anthony Durocher, Deputy Commissioner, Competition Promotion Branch, and Josephine Palumbo, Deputy Commissioner, Deceptive Marketing Practices Directorate.
[English]
In our view, competition is critical to building a stronger, more affordable economy.
Budget 2025 contains a set of competition-related measures, which are described in the budget as early but meaningful steps to increase competition and drive down costs in key sectors with more to come. The government has also indicated that it intends to be hawkish on competition, with all parts of government involved. Needless to say, we strongly support this direction.
You have invited us to speak specifically about Divisions 9 and 43 of Bill C-15, which are the changes related to the Consumer-Driven Banking Act, and to some of the greenwashing provisions contained in the Competition Act, respectively. I’ll briefly address each of these in turn.
First, with respect to consumer-driven banking — sometimes called “open banking” — the proposed reforms are consistent with the bureau’s long-standing advice. They will strengthen competition and innovation in our financial sector by creating a framework within which consumers can safely and securely share their data. This will make it easier for consumers to switch providers and access new innovative services, which means that banks will have to work harder to keep customers happy.
You will see that competition considerations are expressly hard-wired into this legislation — in the purpose clause, in the Bank of Canada’s listed objectives as the regulator and in various aspects of the regime. Of course, many details will be set out in follow-on regulation, and the bureau will continue to provide independent competition advice as needed to support the rollout of this important framework.
Second, with respect to the greenwashing provisions in the bill, we understand that the proposed changes are intended to provide more certainty to the marketplace while maintaining protections against false or misleading environmental claims.
If these changes become law, businesses making environmental claims will still need to be able to back them up with adequate and proper substantiation, but this substantiation will no longer need to be based specifically on an internationally recognized methodology. If these changes come into effect, we will update our guidelines accordingly.
The changes also remove the ability of third parties to bring greenwashing complaints directly to our competition tribunal under this amended greenwashing provision. However, they can still bring such claims under other deceptive marketing provisions with different tests.
[Translation]
Before answering your questions, I want to clarify that the law requires the Competition Bureau to conduct its investigations privately and to protect the confidentiality of the information we obtain. This obligation could prevent us from discussing certain aspects of our investigations, or even the very existence of certain investigations.
Thank you. We look forward to your questions.
The Chair: Thank you, Mr. Chiasson.
Colleagues, thank you for your understanding this morning, as we have a rather busy schedule. I will invite you to limit your remarks to two minutes.
Senator Dalphond: Welcome. I will go directly to Division 43, the amendment to the Competition Act.
I believe that the Senate’s opinion was taken into account, because last year we recommended removing the reference to international standards. Witnesses had expressed their concerns regarding certain standards, particularly concerning the quality of aluminum or iron, which was controlled by Russia or other countries, while we wanted to establish standards that we could influence. I understand that we were heard.
Mr. Chiasson: Thanks for that question. Yes, that is true.
Senator Dalphond: I just wanted to thank you for following up on our report. That’s all, thank you.
Mr. Chiasson: Thank you.
The Chair: Thank you for highlighting the fact that the Senate can play a role by conducting a careful second review. We did a bit of promotion for ourselves this morning.
[English]
Senator Fridhandler: [Technical difficulties] Division 43 and greenwashing controversy in the marketplace. I’d like your comments on the general necessity, based on the fact that we have disclosure laws under provincial securities acts that relate to companies and create liability frameworks generally, why we need another layer of regulation here.
Mr. Chiasson: I’ll allow my colleague Josephine Palumbo to respond to that. But maybe to clarify for the previous senator that these changes were adopted by Innovation, Science and Economic Development Canada, or ISED. I understand you will be speaking to ISED policy officials. We’re really the enforcer so we come at it from the enforcement perspective.
Josephine Palumbo, Deputy Commissioner, Deceptive Marketing Practices Directorate, Competition Bureau Canada: Let me start by saying that our mandate is to administer and enforce the law as enacted by Parliament. That’s our job. We don’t set policy. We don’t draft legislation. But we’re always committed to a transparent principle and evidence-based enforcement approach under the act.
With respect to securities legislation, we understand, of course, that securities registrations exist and disclosure obligations exist, but our concern does not focus on those provincial requirements for disclosures. Our focus is on false or misleading representations in the marketplace.
While, yes, securities regulators do require a certain degree of disclosures for purposes of their provincial regimes, our concern is focused on discouraging companies from making representations to the public that are false and misleading, and in this case with respect to environmental claims and the benefits that may or may not exist to consumers.
Senator Loffreda: Thank you for being here once again.
On new powers and enforcement, Division 43 appears to enhance the Financial Consumer Agency of Canada’s powers, including compliance supervision and potential penalties. Are these powers sufficiently strong to ensure banks and fintechs meet their obligations under the new consumer-driven finance environment? Do you require additional order-making authority? How will you coordinate with the OSFI, FINTRAC and Privacy Commissioner to avoid regulatory gaps in a system where one consumer transaction — only one — may touch multiple entities?
Mr. Chiasson: Thank you for the question, senator. That might be a question for our colleagues at the Financial Consumer Agency of Canada. The provisions in this bill don’t modify any of the penalties that the Competition Bureau can impose, but they do provide some measures for ensuring compliance with the Consumer-Driven Banking Act. From what we can tell, from our distance, they appear to be appropriate ones to ensure that these provisions are complied with.
Senator Loffreda: Thank you.
[Translation]
The Chair: I would like to acknowledge the presence of our colleague, Senator Youance. Welcome. The senator is replacing our deputy chair, Senator Varone. Do you have a question?
Senator Youance: Not at this time.
[English]
Senator Yussuff: One of the arguments the government laid out in regard to making the change necessary here is to try to deter what is called the “chill effect” of people launching complaints frivolously to create havoc. Could you give me an example of that?
Ms. Palumbo: This is with respect to the environmental piece.
Again, the framework under the current legislation would impose on businesses to demonstrate their substantiation with internationally recognized methodologies. Then we get into a debate about what is an internationally recognized methodology. We took a position in our guidelines that when we had two or more countries that recognized a methodology, we could consider that as valid substantiation.
Without this requirement, businesses have a lot more flexibility to bring forward how they establish adequate and proper substantiation. There’s no longer that limitation or that measure. So that will allow flexibility for businesses to support and show support for their claims with respect to environmental protections.
Senator Yussuff: Do you have a list that you’ll use as your methodology to compare with?
Ms. Palumbo: No, through our guidelines we established that we would be looking at a list of countries — two or more, whichever they are — and then we would have assessed them under that legislation.
When we’re looking at those two or more countries that would be recognized as valid methodologies, it wouldn’t necessarily be the actual countries that we would be looking at. We could also look at things like standard-setting bodies in those countries, regulatory authorities or industries, so we wouldn’t have been limited.
Without that measure of substantiation, you have a lot more flexibility, and we also have a lot more flexibility in terms of what will qualify for substantiation. It could be a nationally recognized methodology; it could be a municipal standard methodology; and we could also, perhaps, consider international standards as well. But we now have that flexibility to do that.
Senator Yussuff: Thank you.
Senator McBean: In the same vein, I understand from Senator Dalphond that we’re happy to have a more made-in-Canada solution to this, so we don’t have to be looking for the internationally recognized methodologies, but how is the government going to ensure that the environmental claims remain credible?
Ms. Palumbo: Prior to the implementation of these two new provisions that were passed last year in June, we had false or misleading provisions within our act that were general in nature, which would allow for the agency to review representations with respect to environmental claims. And, in fact, we were active in this space. We engaged in two such cases in particular, which involved publicly known businesses.
One was the Keurig case, which is about the recyclability of K-Cup pods and whether they are recyclable across Canada. Our investigation proved that they could not be recycled other than in British Columbia and Quebec, so the company had to make changes to their labelling and ensure that consumers knew the reality. That’s what this is all about. In my directorate, we focus on truth in advertising. That’s what we want. We want Canadians to know the facts so they can make informed decisions.
The other case was the Volkswagen case dealing with emissions testing. Both of those cases fell under the general false or misleading regime. So we have the law. We will continue to apply that law, but we now also have the benefit of these two specific additional provisions that we might consider applying as we analyze our investigations and complaints that come to us.
Senator C. Deacon: To build off my question to Commissioner Dufresne, because of the close link in the digital society between competition and privacy, and focused on Division 9 and Division 23, Canadians need safe, secure and value-added access to their data. In a number of areas, I’m disappointed that there’s no department saying, “Can we get this for consumers in the areas that our departments are involved in?” That’s not surprising, but it is disappointing.
Can you explain the importance of the Competition Bureau’s involvement in developing regulations relating to issues that involve data privacy and the use of data in marketplaces in Canada?
Mr. Chiasson: I’d echo something that Commissioner Dufresne spoke about in his remarks. Consumer trust is key, and for us, it’s a key component of an open banking framework or an open data framework. If there’s no consumer trust that their privacy will be protected and fraud risk will be dealt with, there will not be adoption, and if there’s not adoption, we’re not going to see the competitive and innovative benefits we’re hoping to see from these frameworks.
We’re totally aligned. They’re the experts in how best to ensure those privacy issues are dealt with, so we defer to them on that, but we totally support those efforts. Privacy issues can be competition issues, and competition issues can turn into privacy issues, so it’s critical we work together. There’s the Canadian Digital Regulators Forum and other fora where we collaborate with one another, and it’s critical for that to continue.
Senator C. Deacon: I have a quick follow-up question. From a legislative drafting standpoint, do you find that you are being brought in early enough to ensure that we’re shaping our legislation in a way that allows for this opportunity, which is so central to Canadians having safe, secure and value-added access to their data? Are you being brought in early enough, or do you have recommendations for us or observations for us in that regard.
Mr. Chiasson: Senator, I can say that it’s getting better.
Senator C. Deacon: You were a lonely group for a long time, and that’s to Canada’s deficit.
Mr. Chiasson: That’s right. I mentioned in my opening remarks that the government is setting the tone in terms of wanting to focus on competition. We’re seeing now an excess demand for the bureau’s input, and it’s coming earlier. That’s very much a positive thing from our point of view. We can influence things a bit more on the front end than on the back end, so it’s the start of something. We’re excited about it.
Senator C. Deacon: That’s great news.
The Chair: We are happy to hear that the government is listening. Thank you for your leadership, Senator Deacon. You’re a very credible voice around the table on that.
Senator Marshall: Thank you very much for being here this morning.
With regard to Division 9 and the consumer-driven banking, we’re not there yet — we still have a long way to go — but you were saying earlier in your remarks that you’re considered an enforcer. You have this legislation; we don’t have the regs yet. How are you preparing for your enforcement? Can you give us some idea about what you’re doing in preparation?
Mr. Chiasson: With respect to consumer-driven banking, enforcement responsibilities will rest with the Bank of Canada. We’re still in the picture as the Competition Bureau under our general law, but this is a fairly self-contained piece of legislation that sets out the do’s and don’t’s, and if there are contraventions, it’s for the Bank of Canada to enforce those. Our role in this is more that of an advocate, helping them to design and craft those regulations in a competition-friendly way providing our input into that. There will be regulations that will flow from this, and what we find encouraging is that the primary legislation hard‑wires some competition considerations into it. As they go to develop their regulations, they’re going to want to do that consistent with the purpose of this act, which recognizes competition.
Senator Marshall: Do you already have a relationship with the Bank of Canada with regard to this legislation?
Mr. Chiasson: I don’t think there’s a formal statutory relationship contemplated, but we do have a relationship and close colleagues that work there, and we will work with them.
Senator Martin: My question is related to the act being amended to prevent private parties other than the Commissioner of Competition from initiating competition tribunal proceedings regarding environmental claims. Are there any concerns that removing private access could leave legitimate complaints from smaller market players without any effective remedy? What safeguards would be in place to ensure effective oversight and accountability if private parties can no longer bring it to the tribunal?
Ms. Palumbo: Thank you for the question, senator. To date, we have no greenwashing private action that has been launched before the Competition Tribunal, so there is none that have been initiated to date. There are other options, so we don’t see this as an obstacle in the sense that smaller organizations can still register a complaint with the Competition Bureau. We can still initiate investigations through the agency itself under our section 9 provision, which is a six-resident complaint process, and which compels the commissioner to begin a formal inquiry. They can also file private action under the other provision. So it’s just B.2 that is being proposed to be removed from private access, but parties can still apply for private access under the other provisions that I enumerated earlier in my presentation.
There are still options available to ensure that people’s rights are being heard.
The Chair: Colleagues, we have been very efficient, so we have time now possibly to have a second round. We have 10 minutes left so what I propose is that since we have three senators who want to intervene in the second round, maybe three minutes each
Senator Marshall: This is for the Competition Bureau. I was kind of surprised in your opening remarks that you said you were here to speak at Division 9 and Division 43. Would you not have looked at Division 17, the section about supporting federal credit union growth? Would that not be an area that would be of interest to you?
Mr. Chiasson: Thank you for that question. I think we were just referring to the sections we were invited to speak to, but, no, we are aware of that as well, and I believe that falls under Finance’s responsibility. It really does not alter the role that the Competition Bureau would play as enforcers of the competition law in respect of credit union issues.
Senator Marshall: So you do have a role, and you are aware of that section?
Mr. Chiasson: Yes.
Senator Marshall: Thank you very much.
Senator C. Deacon: As we look forward to regulation of open banking, we’re also seeing the same body will be responsible for retail payments and stablecoins; we got some really good information from the Senior Deputy Governor when the governor and senior deputy were here that they’re really looking to streamline that process, because many of the same entities will be involved in all three areas. Do you have concerns, thought or advice as it relates to that new regulatory capacity at the bank? I think many of us are very confident and comfortable with the fact that they’re in that position, but regulating three new areas that are so central to the financial security and access to efficient financial services for Canadians. Maybe we can start with you, Commissioner Dufresne, and go to the bureau.
Mr. Dufresne: I think I share your confidence in their abilities, certainly, but I would say insofar as it touches upon new areas like data protection and privacy, that’s where that increased collaboration with other regular layers like my office is important and we will stand ready to assist them and collaborate with them as appropriate.
Mr. Chiasson: That would be a good question for the bank. I think we speak from our perspective and they are absolutely revered as an economic regulator in Canada, they move mountains with the resources they have, but if they say they need more, then that should be considered.
Senator C. Deacon: From your standpoint, you stand ready to help them to ensure the systems are implemented in a way that is pro competitive.
Mr. Chiasson: Absolutely.
Senator C. Deacon: And privacy protective. Thank you very much.
Senator Ringuette: The fact that this piece of legislation does not give you authority in regards to penalties is of concern, because I don’t see how you can introduce through regulation the mechanism of penalties at your office? Am I correct in my assumption?
Mr. Dufresne: You are. This would require law reform of the privacy legislation as a whole. The Minister of Artificial Intelligence and Digital Innovation, Minister Solomon, has stated they’re working on a piece of legislation to modernize privacy law, and I look forward to seeing that. And I have publicly stated that my expectation is that any law reform will include powers for my offices to issue orders and fines.
Senator Ringuette: That being said, this committee, for many years, has voiced its concern in regards to the current charter banks in Canada, about the fact that consumer financial data does not reside in this country. That is a serious threat and we’ve seen — I think two or three years ago — where there was a major breach of a credit evaluator. And still, we don’t have in the legislation penalties and your oversight.
So, what is happening? This is a brand new framework that’s still not in place and they’re looking at giving you some authority and so forth, and we have this old system that we’ve been complaining about, and there’s still no mechanism.
How can we move this further, because it’s desperately needed and has been needed for years?
Mr. Dufresne: Absolutely, the most important step is what Parliament can do in amending privacy law. That’s a given.
In the meantime, I’m using all of the tools at my disposal. I cannot make law. I can give input on regulations and work with the government there, but what I’m doing is working very strongly within Canada and outside of Canada to leverage the collective power.
For example, I did a joint investigation with my colleagues from the U.K. They have order-making powers and they have fine-making powers, so working with them, we did a joint investigation of the 23andMe data breach, and we were able to have joint findings, which included a fine, because they have that power. We’re working with the international community to build cross-border data rules, and working with the OECD to call on governments to respect the rule of law. I’m going to use all the tools I have, including promotion, but at the end of the day, Parliament needs to make the decision to give my office these powers so the real concrete impacts can be delivered.
[Translation]
The Chair: I want to thank you on behalf of the committee for expressing yourself so openly about this; it’s an important topic. Thank you as well, Mr. Dufresne, for using all the tools available to you to inform the government of your expectations.
Colleagues, during a pre-study, we can really influence the government to amend the current bill if necessary.
So, what I would like from you, Mr. Dufresne — because I don’t follow what you say every day or every week — is for you to send us in writing the relevant information that you feel the committee should receive, as well as international references. This would help us a lot, as we can prepare observations as part of our study. That would meet my expectations.
Senator Loffreda: My question is for Mr. Dufresne.
[English]
There is well-known tension in financial regulation, and sometimes consumer protection rules, even when well intentioned, can unintentionally create anti-competitive outcomes. From a competitive standpoint, do stronger consumer protection rules enhance market consistency or could inconsistent enforcement create distortions, and how do we mitigate that? Do you foresee areas where competition concerns may arise directly from consumer protection enforcement?
Mr. Dufresne: They can, and this is why we need to work together to make sure that we manage them and avoid them. This is one of the reasons why we created the Canadian Digital Regulators Forum, so that I’m not protecting privacy at the expense of competition and vice versa, so we can identify those issues. We’ve done work on synthetic media, “deepfakes,” to see what the privacy aspects are. What are the competition aspects? Things like algorithmic pricing; are you going to use privacy to take out competitors? How do we make sure that we’re reinforcing privacy and reinforcing competition?
One of the first statements I made as commissioner was to say that privacy is a fundamental right, but it’s also very much consistent with the public interest, with innovation, and with a strong economy. We cannot put Canadians in a situation where they have to choose between strong competition and strong privacy. They’re entitled to both, they can have both and that requires that collaboration, which we’re doing here in Canada and around the world.
[Translation]
Senator Henkel: Thank you, Mr. Chair, for asking for data and recommendations, as that’s what I was going to ask you to do, since you know the subject much better than we do.
I have two quick questions. First, I am convinced that you have already raised the issue that the government needs to be much stricter with Meta and GAFA, as the European Union, Australia, the United Kingdom, et cetera, are today.
I would be curious to know what response you received. What major obstacle is preventing the government from reacting yet when other G7 countries have done so?
Mr. Dufresne: The government had introduced Bill C-27 during the previous parliament; that bill was being studied in committee, but it died on the Order Paper. The Minister of Artificial Intelligence publicly stated that he was working on a new version and that a bill would be introduced soon.
I continue to encourage him to do that. This will certainly strengthen Canada’s hand and, in the meantime, I continue to use the tools available to us. We are currently before the Supreme Court in a dispute with Facebook on the issues of consent and data protection and their implications. These are the tools we have. Parliament has the opportunity to act. Statements are being made internationally. I chaired a meeting of privacy commissioners as part of the G7 this summer, and we issued a strong statement on responsible innovation, privacy protection beginning at the design stage for new initiatives, and the protection of children. We do it through promotion or litigation if necessary; I hope that Parliament will do it soon via legislation.
[English]
Senator Martin: As a supplementary to what Senator Ringuette was asking, I know that we will have to create a seamless system. With the new system, as it rolls out, you say you are using all the tools, but do you have the tools and resources to step in quickly if you see emerging problems?
Mr. Dufresne: We have the tools, but we need more tools.
For example, for some of the recommendations — I will share them in writing — we called on having more privacy impact assessments, faster notifications to my office, allowing more cross-regulatory collaboration, having stronger enforcement powers with sharper focus.
Certainly, we could use more tools. We’re using the tools we have now, working collaboratively, identifying the issues, prioritizing the issues and using those opportunities.
We were talking about data stored in other countries. We recently issued a decision on TikTok with my colleagues in Quebec, Alberta and B.C., and we specifically pointed out that this data is held in China. Canadians may not know that. The policies of TikTok have to be more explicit. They have to make it easy to understand and know so Canadians can make those choices.
Senator C. Deacon: Back to the bureau, you noted a concern that I have shared for quite a while. There is a single technical standard for sharing information. A single API may limit our flexibility, especially when that API is governed by an American body and we do not know whether it will suit our needs in Canada.
What is your advice to our committee? We have asked the Department of Finance, but what is your advice to our committee on the risks associated with having a single standard, especially one governed outside Canada?
Mr. Chiasson: As far as we understand, this legislation does not pick a standard. It sets out a framework that the minister can use to designate a technical standards body. If you look at the factors laid out there, senator, it includes whether the body is incorporated, formed or otherwise organized in Canada. It includes the independence of the body in exercising its powers and performing its duties. It requires this body to operate in a manner that is consistent with the purposes of the act, and the purposes of the act talk about fostering competition.
The ingredients are there, in terms of the factors that the minister can consider going forward with standards. We just want to see that those are carried out.
Senator C. Deacon: I concur. Thank you.
Senator Ringuette: This sets up a new system. As the Competition Bureau has stated, it is important that consumers have confidence in the system in order to use it.
Within the scope of Bill C-15 and within the means of this committee and the Senate as a whole, we can make amendments that do not entertain additional funds, taxpayer money. That is within our legitimate scope.
Mr. Dufresne, in regard to penalties and other necessary aspects to make this new system work, could you please provide us with all the elements that are needed in this framework so it can bring the consumer confidence in this new system? Can you do that fairly quickly?
Mr. Dufresne: We have made a number of key priority recommendations for overall privacy law reform. I will send that to the committee. That includes this enforcement power.
I see this as residing more in an overall privacy law reform than in this bill, but you will see the general orientations and concerns.
Senator Ringuette: Okay. We can act in regard to the scope of this bill. Whatever you send us that is not within the scope of this bill can be part of recommendations. Thank you.
The Chair: Thank you to our witnesses. I want to share with colleagues and the Canadians who watch us that this is a very important file. You have the support of all the Senate committee members here.
We have some external support as well. The Deputy Governor of the Bank of Canada recently mentioned that she hopes we will have more competition across the banking sector. This was a public statement made in early October of this year. We have the support not only of the members of the Banking Committee but the Deputy Governor of the Bank of Canada as well. It is important. Thank you for your open mind to help us.
A pre-study is more of an observation because we cannot really amend, but at some point we could influence the government. It is likely easier for them to amend a bill when it is a pre-study than afterwards. We will see. I’m optimistic by nature.
[Translation]
Thank you all for being with us today.
We welcome our second group of witnesses. We are continuing our pre-study of Bill C-15. I would like to indicate that we will spend about 45 minutes with our second group, as we will have a short 15-minute in camera session.
I would like to welcome our two guests from the Canadian Bankers Association, who are joining us by video conference. They are Mr. Charles Docherty, Assistant General Counsel and Vice President, Legal and Risk, and Alana Barnes, Vice President, Digital Policy.
As I mentioned, we originally planned for this group to have 60 minutes, but we need to reduce the evidence to 45 minutes. Since you are attending remotely, if there are any technical issues, please report them so we can temporarily suspend the meeting.
I understand that you have opening statements. I give you the floor.
[English]
Alana Barnes, Vice President, Digital Policy, Canadian Bankers Association: Good morning, thank you for the opportunity to address the committee on relevant aspects of Bill C-15, the budget implementation act.
I am joined today by Charles Docherty, Assistant General Counsel and Vice President, Legal and Risk, of the Canadian Bankers Association.
The CBA is the voice of more than 60 domestic and foreign banks operating in Canada and advocates for public policies that contribute to a sound, thriving banking system to ensure Canadians can succeed in their financial goals.
Let me begin by first addressing the topic of consumer-driven banking. Our members are fully committed to a resilient, consumer-centric framework that empowers Canadians to benefit from secure, robust, consumer-driven data exchanges while ensuring risks are properly managed.
For the framework to succeed, it must provide consistent consumer protections and experiences, foster trust by applying common rules to all participants and leverage existing legislative and regulatory frameworks where feasible to avoid operational complexities.
The other matter I wanted to speak about is the proposed consumer-targeted fraud amendments to the Bank Act. It is estimated that over 65% of reported scams originate through telecom or digital platforms with scammers using channels such as social media, SMS, phone calls or email. This is why the CBA spearheaded the development of a new, cross-sector initiative to address scams in Canada — the Canadian Anti-Scam Coalition. This coalition brings together many of Canada’s largest and most well-known organizations from the financial, telecom, technology, law enforcement and government sectors in an unprecedented, unified response that aims to make it much harder for fraudsters to succeed. By sharing intelligence, coordinating industry solutions and raising public awareness, the coalition enhances and augments the individual efforts of its members and helps to protect the finances, families and futures of Canadians.
Thank you for the opportunity to appear this morning and we look forward to engaging with the committee and answering your questions.
[Translation]
The Chair: Thank you for your opening statements. Colleagues, we have 45 minutes. I propose limiting our speaking time to three minutes each for the first round; if we have time, there will be a second round.
[English]
Senator Martin: Thank you. I have two questions. Banks will have to give customers new tools to fight fraud, like being able to turn off high-risk features and set their own spending limits. Who will be responsible for ensuring customers, especially seniors and newcomers, are clearly educated on these new fraud tools? And how will you ensure people who bank without using apps or computers still benefit from these stronger protections?
Charles Docherty, Assistant General Counsel and Vice President, Legal and Risk, Canadian Bankers Association: I can address those questions. It’s still early in terms of the requirements. Many of the details will be provided for or addressed in the regulations. The government is currently consulting on those regulations.
Banks will work to ensure that the needs of their customers, including seniors or newcomers, are met. They will work to comply with these requirements. Exactly how that will be done is still open for further exploration as part of the regulatory-making process.
Senator Martin: Banks will be required to report data on consumer-targeted fraud to the Financial Consumer Agency of Canada, which will compile this information into annual reports on fraud trends.
What penalties will a bank face if it consistently fails to meet these new fraud prevention standards? Do you support creating clearer rules requiring banks to compensate customers when fraud occurs because the bank did not meet its obligations?
Mr. Docherty: I think the real focus here has to be on preventing scams before they occur. This is something that my colleague Ms. Barnes addressed in her opening remarks. That’s why the Canadian Bankers Association is spearheading the development and ongoing work of the Canadian Anti-Scam coalition, and that’s bringing together the telecoms, social media platforms, digital platforms, banks, law enforcement and public sectors to stop scams before they start.
We have likely all experienced phone scam situations. I received a call on the way to this appearance saying that a parcel had been blocked at the border. Certainly, this was a scam. If I had fallen for this scam, they might have obtained my financial details, and that is what we need to focus on.
It is often too late to prevent the scam once it reaches the point where a consumer has sent money to the scammer.
Senator Marshall: Thank you for being here this morning, even if it is on video.
We discussed Division 16 at this committee yesterday. It will take a while before the government is in a position to finalize things because the act probably won’t be enacted until February. Then we have to wait for the regulations. That will take a year to 18 months. Then we have to wait for legislation for the Financial Consumer Agency. Then we have to wait for the National Anti‑Fraud Strategy. Some of the senators used the words “disappointing” and “underwhelming.”
What will the bank do in the interim? Government moves slowly. We know that from the online banking that has been ongoing for a number of years. What will the bank do in the interim?
Many bank consumers are bearing the burden for falling prey to fraud. Will you wait until the legislation and the regulations, et cetera, are in effect, or will you try to get ahead of this and try to do something for consumers of your various banks?
Mr. Docherty: That is a good question. The banking sector already invests billions on an ongoing basis to develop best-in-class practices and technologies to identify and prevent scams. The banking sector will not sit down and wait for this process to take place. They’ve already taken a number of steps to stop and combat scams, both from a technology perspective and, as I mentioned, through leading the Canadian Anti-Scam Coalition.
Senator Marshall: We hear from customers of the various banks, consistently and frequently, that they do not feel their banks are looking after them or protecting them. In the meantime, we’re waiting for the government to act, and government just moves too slowly.
Are there concrete measures you will undertake in the near future that would benefit consumers and your customers? The bank needs to come forward and tell consumers what they will do. We will be waiting two, three, four years for the government to come with solutions.
Mr. Docherty: I am very sorry to hear that you are getting that type of feedback.
The banks are committed to combatting scams and fraud. Thy have multi-factor authentication procedures. They have one-time pass codes. They do employ a number of security measures already. They also work with their customers to help ensure they are educated about scams and are able to identify scams.
One important thing to note is that we have created, through the Canadian Anti-Scam Coalition, a Stand Against Scams website that provides a number of helpful tips on how to deal with, identify and report scams.
This problem occurs through various platforms, including SMS, phone calls, social media platforms. People are being socially engineered and tricked. Unfortunately, that is where the efforts need to be focused.
Senator C. Deacon: I would love to speak about something other than the Anti-Scam Coalition. You described half of the scams we know are happening under the auspices of many different organizations. That is where your coalition comes in. Let’s talk about what banks are doing, because that is the other half.
There are situations right now where false identification is accepted by banks and fraudsters are accessing people’s funds. What are the banks doing? That is what I want to hear specifically.
You talk about general investments in technology. Most of that is keeping up with regulatory changes and is not fundamentally advancing services, like we see in other countries, in Australia and the U.K. What are the banks doing today?
Detective Coffey at the Toronto Police Service sees 50 different reports per day of bank-related fraud. The numbers total what the Anti-Fraud Centre says is for the whole of Canada.
Why are you not providing OSFI and other regulators with up‑to-date data from our banks every day, week, month? Why is this once a year? You should be pushing for more. Why are you not?
Mr. Docherty: It is really a multi-pronged strategy. I don’t want to suggest for a minute that it is just the Canadian Anti‑Scam Coalition.
Banks have invested, as I mentioned, in multi-factor authentication, one-time pass codes, enhanced due diligence, know your customer. Someone can put a security alert on the credit file.
Senator C. Deacon: If that was happening appropriately, we wouldn’t have mortgage fraud and people all of a sudden finding out that they have a mortgage on their home that they never took out. What are you doing to deal with these scams today? Do not talk about things that were done a decade ago. What is happening today? And do not talk about the Anti-Scam Coalition because that is separate.
Mr. Docherty: All I can say, again, is that there are a number of tools and billions of dollars being poured into this issue by banks to combat scams. Many of them are technological. Many of them involve enhanced due diligence to ensure you are dealing with the customer.
The problem, with all due respect, is that people are bypassing those technologies, those enhanced due diligence efforts, by scammers tricking people into giving up their credentials, into giving the scammers access to their online accounts and into sending money that they don’t want to send. They are being tricked. That is why there needs to be a focus on where it starts.
Senator C. Deacon: What about the scams occurring at your own branches? Thank you very much.
Senator Ringuette: There are many divisions in this bill that relate to the state of your institutions, Division 10, Division 15. Were you consulted on all of these items before they were put forward in this bill?
Mr. Docherty: We were aware of a lot of the items in a general sense. For instance, we would have been consulted on some of these divisions, not specifically the amendments that you are actually seeing here, but we would have been consulted on some of the ideas or concepts that appear in the bill.
Senator Ringuette: Could you be more specific please?
Mr. Docherty: More specific. I am just looking at the act now.
More specifically, when it comes to Division 15, as an example, there would have been a consultation on not necessarily raising the amount of funds deposited by cheque but there was the possibility of — if the amount were raised — what the impacts could be.
Senator Ringuette: Were you consulted and agreeable to the scam reporting issue to the Financial Consumer Agency?
Mr. Docherty: We were aware of this possibility again, and we are —
Senator Ringuette: Is there a recommendation?
Mr. Docherty: In terms of scam reporting, we would consider it a very important part of combatting scams, and whether it’s the Financial Consumer Agency of Canada, or FCAC, or other entities, because there’s also the Canadian Anti-Fraud Centre, it was something that we were thinking about. Again, scams and scam reporting, it’s not just about banks, and we do believe that if you’re going to try to get a full, clear picture of the situation and what is going on, there should be reporting to an entity that maybe has a broad mandate, not just to deal with federally regulated financial institutions. Again, it’s early days, and we are reviewing the budget implementation act.
Senator McBean: I’m going back to a question that Senator Martin asked. She asked about what penalties the banks will face if they don’t meet the obligation to protect Canadians, and your response was the goal is to prevent fraud and scam before it happens. So I’m going to repeat Senator Martin’s question, and ask what penalties will the banks face if they don’t meet the obligation to protect Canadians?
Mr. Docherty: In terms of obligations to protect Canadians, there are penalties or administrative monetary penalty possibilities within the Bank Act today if a bank fails to comply with a consumer provision of the Bank Act. So that scheme or framework is in place already. It will depend on the nature of the violation and a few other factors, and that might be a question that is better placed to the Financial Consumer Agency of Canada.
Senator McBean: I’m wondering how often these penalties are affected. They seem a bit vague to you, but are banks often penalized?
Mr. Docherty: Banks are highly driven to comply with the legislation. They’re really respectful of their consumers, and so in the rare instances where there is a violation, they do get fined, and that is public information available on the FCAC website.
Senator McBean: Are you saying it’s rarely the banks’ fault that Canadians are being defrauded and scammed?
Mr. Docherty: Again, I can only speak to the statistics that are strongly suggesting that — and it’s true. Scams are starting with SMS texts that are fake, with fake websites where people are not selling what they’re claiming to sell, romance scams, social engineering. Those are all situations that create the vulnerability and lead to the scam, and we really do believe it’s important to stop the scams, prevent the scams before they start. It has been mentioned that it is the approach that’s being taken in Australia, and we do expect the Canadian Anti-Scam Coalition will achieve tangible results in lowering the amount of scams in Canada.
Senator Yussuff: Mr. Docherty, you wouldn’t be surprised that members of this committee are feeling a bit frustrated with your answers. So I’m not going to ask you that, but let me ask you one question, to go back to something under section 15 that deals with, of course, those who still use cheques, which is a significant part of the older population in the country. They write cheques and rely upon cheques for their income, quite often from government and other sources. The government is moving to increase this, of course, in regards to the amount that is held and access to this. Other jurisdictions seem to have moved much faster and at higher limits.
Why is it that it’s taking us so long to recognize that we can do better? For the people who are trying to get access to their money, this is really important, and we’re behind the eight ball when you compare the United States and the United Kingdom in regard to where they’re at in this development.
Mr. Docherty: It’s important to know that funds deposited by cheque are not guaranteed funds, so there’s always some risk associated with it. That’s really all I can say. I can’t speak to policy decisions that may — that are made at the government level in terms of the speed at which they might change the amount. All I can say is that they have taken steps or proposed to take steps to increase it in this bill.
Senator Yussuff: My colleagues have asked you about fraud. I think there’s a general sense publicly, and for those of us who have been looking at this issue, that there’s been far too much of it, and your answer about the Anti-Scam Coalition just doesn’t really cut mustard with us in regard to how slow the banks have moved to deal with some of the challenges that Canadians have been faced with, given that you are the institution that Canadians rely upon for so much of what they do every day in regard to their finances.
At the end of the day, can the bank collectively, along with other financial institutions, not have much greater transparency in how the country knows how much fraud is going on and, more importantly, what we need to do to mature these rules to ensure they’re dealt with in real time in protecting the most vulnerable of society here? Your idea is that you’re going to have a coalition. With all due respect, like-minded people sit around the table and say, “How do we protect our ass,” and I don’t know where that’s going to get us, but more importantly, it’s critical that we have a robust system that will help Canadians appreciate that we’re moving faster to deal with things that are very much a part of their reality — they lose a lot of money through fraudsters, and it looks like the institutions seem to be inept in trying to comply with measures that can protect them better.
Mr. Docherty: I don’t want to give the impression that banks aren’t standing behind their customers. They are, and they already have policies and procedures in place to address customers when they’ve been defrauded. If a customer experiences a situation, for instance, where someone has stolen their credentials or managed to hack onto a bank’s website and take over someone’s account — these are extremely rare instances, by the way — then the bank is going to make that consumer whole. That’s important to remember. And then your question or point about —
The Chair: I have to interrupt you. Sorry about that.
[Translation]
Senator Dalphond: Thank you very much, I know you’re in a bit of hot water.
[English]
I’ll ask you another question. It is about the upcoming annual report of each bank regarding consumer-targeted fraud. The bill proposes that these reports be kept confidential.
Will the banking associations be agreeable to accept that a summary be made public of these reports, which are done by each separate institution, so that the authority receiving the report will publish a summary of these reports? Would you be opposed to that?
Mr. Docherty: That’s something I would have to take back and discuss with the membership. I can’t answer on behalf of them without running that by the members of the association.
Senator Dalphond: Can I suggest that this is information that is relevant for the customers and to know that some institutions are performing much better, for example, on mortgage fraud, and that some institutions don’t have any and others have 1%.
So if consumers were aware of that, don’t you think it would be relevant information in the choice of consumers, because we’re all there to serve the consumers as best as we can.
Mr. Docherty: Right. It might be relevant information. Certainly, I’d like to think that a lot of banks — and they do — combat scams and frauds to the best of their abilities. They stand behind their customers, and it’s important to remember that.
Senator Dalphond: Thank you for considering it.
The Chair: Your suggestion could be an official request from the Banking Committee to have much more information from an individual bank when possible. We’ll discuss that.
Senator Fridhandler: I wanted to also follow up on Senator Dalphond’s comment. Maybe it’s just a matter of leaving it for the committee, because I know you’ll have to take it back to your members, but I think the frequency of an annual report is insufficient, and in fact, if not monthly, at least quarterly, there should be transparency for consumers on what is going on in the banking world to create better competition. It will probably inherently improve the practices of the banks generally.
I don’t know if you want to comment on that. I’ll move on to another question. I’ll take the heat off a little bit and go back to open banking. Out of interest, the act is specific on participating entities, and whom this will apply to. Yet there’s a lot of discretion. Are you aware of the intentions of your members, because many of them are multi-faceted conglomerates in the insurance business, investment banking, brokerage or wealth management, but they’re not giving direct recognition in open banking on data. Yesterday we heard that it would be a matter of discretion within the banks’ applications on what they’re trying to seek here.
Can you tell me what the intentions are of your members relative to accessing open banking, other than banks proper?
Ms. Barnes: Thank you for your question. Our members are very supportive of the consumer-driven banking framework. The way it works is that certain banks will be mandated to participate, provided they meet a certain threshold, otherwise, other participating federally regulated financial institutions or provincially regulated institutions can opt into the framework along with other entities, as well as payment-service providers. The framework itself sets out accreditation criteria for the various entities to participate.
In terms of the scope and application of the act itself, the act sets out the products which will be included — chequing accounts, savings accounts, loan accounts, and non-registered and registered investment accounts — and derived data is out of scope. The sharing of data is applicable to what is set out in the act itself, and then regulations will clarify exactly what that entails. It would be up to the individual banks that are opting to participate — compared to those that are going to be mandated — whether they want to participate or not.
A lot of this will matter and factor on understanding what the common rules will be, along with the selection of the technical standard body and the finalization of regulations, to understand what is expected of financial institutions in order to opt into the framework.
[Translation]
Senator Henkel: Hello, ladies and gentlemen.
I would like to know if you were consulted on Division 16. Was your association consulted before the law was drafted and before we received the document?
[English]
Mr. Docherty: Yes, as mentioned earlier, there would have been some high-level consultations. We did not see these specific provisions in advance, but we were aware of the fact that the government was considering these types of measures.
[Translation]
Senator Henkel: Were you truly consulted? Did you, in some way, make high-level recommendations? If so, I’d like our committee to have access to the recommendations you made concerning Bill C-15.
[English]
Mr. Docherty: That is something that I would have to look into, to confirm for you.
[Translation]
Senator Henkel: What you’re telling me is that you want to check if you made recommendations, or if you have the right to share those recommendations with us?
[English]
Mr. Docherty: The right to send them to you, yes. I would just have to ensure that is something that we’re able to do.
[Translation]
Senator Henkel: I have another question.
Fraud by false representatives is based on deception: the victim believes they are speaking to their bank. Some organizations advocate for consumers who propose that the law state that the disclosure of a code by deception automatically constitutes an unauthorized transaction.
Do you support this legislative clarification?
[English]
Mr. Docherty: Again, it’s important to deal with the situation at its source. Prevention and education are important in this situation, because you want to lower the number of scams. You want to ensure that consumers don’t fall for scams. That’s where many resources need to be focused.
[Translation]
Senator Henkel: Again, you’re saying that it’s really up to consumers alone to be educated and to know if it’s fraud. What do we do with seniors and people with disabilities, for example?
[English]
Mr. Docherty: The banking industry is among many organizations that are focused on trying to educate — and do educate — seniors, for instance. We have a Your Money Seniors program, in which free sessions are held, where seniors can attend, and part of that involves frauds and scams and how to identify them.
Senator Loffreda: I’m always happy to complete the round. Thank you to our panellists for being here. In the event of unauthorized access, data breaches or application programming interface, or API, failures, what is the view of the Canadian Bankers Association, or CBA, on who should bear liability — the bank, the third-party provider or both? Let me be more specific on that: Do you support a zero-liability standard for consumers in cases of unauthorized transfers or data misuse? For the sake of our listeners, a zero-liability standard means that consumers would never be financially responsible for losses resulting from unauthorized transfers, fraudulent transactions or misuse of personal financial data, even if the fraud occurred through a third party provider, a fintech app or elsewhere in the data-sharing ecosystem created by Division 9.
If I can go on just for a minute, a zero-liability standard would incentivize stronger technology, enhance authentication and greater investment in fraud prevention systems across the banking sector. You heard our committee. We’re concerned about fraud. We have to incentivize greater investment in that sector.
Canada doesn’t have a statutory zero-liability requirement, but Visa, Mastercard, American Express and Interac all do. Given that these networks already provide it, why can’t banks emulate these platforms, which would enhance the resources put towards preventing fraud?
Ms. Barnes: I can start by responding to that question as it relates to consumer-driven banking.
We’ll look at it from a different perspective. First, putting Canadians’ data and ensuring it’s secure is a key priority for our member banks. The act itself sets out security requirements for safeguarding that data. All participants will be required to meet security standards.
Second, the act also addresses liability flows with the data. The participating entity that is responsible or in control of the data is responsible. In other words, that liability flows with the data, and that’s certainly very much a principle that we support.
The other aspect is that when you are using third-party service providers, you are accountable and responsible for that data. That’s another element addressed in the act itself.
Finally, with the use of API and secure standards, that also ensures a secure way of transacting and communicating between entities.
The act additionally addresses that consumers are not held responsible for financial losses as a result of the sharing of data, and that is established in the act itself.
Senator Loffreda: Will we ever get to a zero-liability standard, which would protect consumers? I don’t have the time to get into it here, but other countries have adopted it, and fraud has decreased by the adoption of such a standard.
Ms. Barnes: We’ll continue to work with the government and Finance Canada on addressing how that liability provision applies, as well as in discussions through regulations. It is protecting Canadian consumers when they’re sharing their data, and that’s applicable to all participants.
Senator Loffreda: Thank you.
The Chair: For the benefit of the committee, it would be very useful to share any data, if you have it, on international cooperation, because that will help us big time.
We are on the second round. Colleagues, we have about 12 minutes for our second round, so please limit yourself to two minutes.
Senator C. Deacon: You’re going to go back and see if there’s any interest in public disclosure. I hope you understand that consumers put their money in banks hoping that, at some point, the bank will be protecting those funds. You keep referring back to all of the scams that occur outside of banks, not the half that occurs within the banks and within the banks’ control.
I will focus on complete information in terms of this reporting. We know the Toronto Police Service gets 50 reports a day. I know of several instances where the banks never even reported the fraud inside their own fraud departments, inside the bank.
First, how do we know there’s a complete reporting of fraud inside the bank and that the customer is involved in somehow signing off on that to ensure the reporting is complete and know those data are being reported regularly? Annually, in a confidential disclosure, does nothing for consumers and does nothing to incentivize the banks to act more, rather than waiting for the whole ecosystem to act. How do we make sure the information is actually complete?
Mr. Docherty: I can take that question.
Banks investigate claims of fraud when they are reported to the bank. That’s something I’m certain of. They’re always investigated, because the bank wants to understand what happened, identify the trends and stop the fraud. Part of that always involves contacting the consumer and figuring out what happened.
So that is —
Senator C. Deacon: When we don’t see that happening, who gets involved? Because I know for a fact of several instances I’ve been informed of where the bank did not do that. The fraud occurred, and the bank did not report it to their fraud department. The branch, three months later, still didn’t report it to the fraud department. I had to get involved to help that individual to ensure the issue was resolved. The bank was absolutely uninterested in addressing the situation, which the consumer had no involvement with. This fully occurred at the branch.
Mr. Docherty: Right. I’m sorry to hear about that particular instance. I can’t speak to it, and we can follow up and provide more information on this topic.
Senator Ringuette: I guess this is an additional thing that you will have to follow up on with your members, because they don’t seem to care to come in front of our committee themselves, although we could compel them eventually.
The issue is in regard to your third-party ATMs. A few months ago, a senior in my area had her Interac card stolen, and within 24 hours, without knowing her PIN, an ATM withdrew $5,000 out of her account. As far as I know, you have a working relationship with all these ATM providers across the country. How do you scrutinize them in regard to scams? Because, as far as I know, they are under your umbrella in terms of scams. Can you answer that?
Mr. Docherty: I can’t speak to exactly what happened in the case of that consumer. Was it the ATM provider? Was it a fraudster who somehow shoulder-surfed or grabbed her personal identification number? There are a lot of different circumstances that could have led to the very unfortunate fraud you described.
In terms of banks and relationships with ATMs, my understanding is that the ATM connects to a network, and it’s not necessarily that there is a relationship between the bank and the ATM provider. It would be that the ATM connects to the network, and the network that it connects to would have rules around the operation of that ATM.
Senator Ringuette: What is that network? Because ATMs give direct access to each and every one of you.
Mr. Docherty: In the case of bank-owned ATMs — I think you mentioned it was a third party ATM; is that the situation we’re speaking to? Was it an independently owned ATM?
Senator Ringuette: I’m sorry, but whether it’s an independent ATM or one of your chartered bank’s ATMs, they still have access. Your members give them access. Who scrutinizes these ATMs in order for them to have access even though they allow scams?
Mr. Docherty: My understanding is that it would be the networks that would have rules around who can have an ATM that connects to that particular network.
I hope that answers your question, senator.
The Chair: I think you will not have satisfaction with their answers today. We have to drill a little bit more in the coming days and weeks.
Senator Yussuff: On the trail of my colleague Senator Colin Deacon’s question, I’m assuming that each of your members collect data in regard to fraud and how it’s reported. Is it possible for you to share that data with us? This is the section the government is proposing to amend to ensure there’s adequate protection going forward in regard to changes in this budget bill.
I assume each member’s organization has their own policy and standard by which they collect data so they can synthesize that? Is it possible for you to share the data in regard to what the banks are collecting on fraud and how that gets reported to the Canadian Bankers Association, so we can have a better understanding of what commitment you already have for collecting, monitoring and trying to use the data to improve the situation?
Mr. Docherty: We’re certainly willing to take that away and explore that possibility.
Senator Loffreda: Here is my concern, and maybe you agree with me. Canada does not have a statutory zero-liability standard under Division 9’s new consumer banking framework, and this, in my opinion, is a critical gap. Canada risks launching open banking and real-time payments without consumer protections that other jurisdictions deem foundational.
Would you take that back and look into that? I always say trust is the currency of every relationship. I think consumers should trust our banks that they’re doing the most they can do to protect consumers. We’re launching open banking. Other jurisdictions deem certain principles to be foundational, like the zero-liability standard I previously brought up. I can go through the list here. In the U.K., they have the most advanced, and consumers are not expected to bear losses if their data is misused by accredited providers.
I think there is a gap in Canada based on what we are doing right now and bringing forward. Would you agree or not agree? Could you elaborate on that?
Ms. Barnes: There are protections in place in the act itself where consumers are not held responsible for financial losses in the sharing of data. I’m not as familiar with the other jurisdictions that you pointed to, so I would have to familiarize myself with those comparisons that you have mentioned.
I think it is important to look at the sharing of the data as a whole. All participants are required to meet certain standards of security, privacy protections and rules. It is an all participants’ framework. Ensuring that those protections are across the board is another key element we strongly support.
Senator Loffreda: I think it is important and expected that — maybe yourself — I would like you to look into other jurisdictions.
The U.K., for one, has the world’s most advanced open banking system — CMA9 model. I said before and will not repeat that consumers do not bear the losses. Liability rests with the regulated payment service provider. There is effectively zero liability in the open banking system. So I think we should look. I will not go on with the other jurisdictions. I do not want to be too specific here. It is something we should look into. I think it is an observation that this committee should make for consumer protection. In an era where cybersecurity and frauds are becoming more and more of an issue, I think someone should speak for them.
Would you not take on that responsibility, look into it and share it with your association members?
Ms. Barnes: Again, certainly fully supportive of protecting consumers in the consumer-driven banking framework. There are liability provisions set out in the act itself, including protections for consumers.
The Chair: Thank you, senator.
I think for people listening it is important to understand that Senator Loffreda is the former vice-chair of the Royal Bank of Canada, and that adds a lot of credibility to the committee with other members who have a lot of expertise in different areas.
You have to probably expect to receive a letter that will drill down a little more regarding that and potentially invite each single bank to testify here. We will discuss that in camera in the coming seconds and minutes.
Colleagues, thank you. Perhaps we can have one last question from Senator Fridhandler and then we have to suspend.
Senator Fridhandler: You have spoken about how empathetic the banks are in dealing with consumer-targeted fraud, and you have spoken about the billions of dollars that you spend to address this problem, yet we have what a number of us view as a weak step in Division 16 on addressing this. I have to believe that you would like some more assistance from the government in addressing this issue. I would appreciate if you could advise us of other matters that need to be addressed in Division 16, in writing, that would help you — the banks — address this problem. I will leave that as a takeaway for you.
The Chair: Thank you, colleagues. Thank you to our witnesses for being with us. Maybe next time we will have an opportunity to have you in person here with us. But we always offer our witnesses the possibility of participating via video conference.
[Translation]
We will suspend the meeting for about fifteen minutes to meet in camera, and we will then resume the meeting to hear our last group of witnesses.
(The committee continued in camera.)
(The committee resumed in public.)
The Chair: I would now welcome the witnesses who are joining us today.
We welcome Ms. Elizabeth Wademan, President and CEO, Mr. Carlos Gallardo, Chief Financial Officer, and Ms. Tess Lofsky, Executive Vice President, General Counsel and Corporate Secretary, from the Canada Development Investment Corporation.
I understand that you have some opening statements. Thank you for your understanding, but unfortunately, we will only have 30 minutes instead of 45 minutes. We will do our best.
[English]
Elizabeth Wademan, President and Chief Executive Officer, Canada Development Investment Corporation: Mr. Chair, honourable senators, my name is Elizabeth Wademan. I am the President and Chief Executive Officer of Canada Development Investment Corporation, or CDEV.
[Translation]
I thank you for the opportunity to be with you today to speak about the Canada Development Investment Corporation, or CDEV.
[English]
As a federal Crown corporation, CDEV acknowledges it exercises a mandate across Canada, which is home to many First Nations, Inuit and Métis Peoples. CDEV operates across our country on unceded, Indigenous territories with long and rich traditions and is committed to truth and reconciliation with Indigenous Peoples.
CDEV is the go-to commercial and financial adviser to government and is a leading force behind Canada’s efforts to support Indigenous economic reconciliation.
CDEV is also importantly the steward of a diverse portfolio of critical Canadian assets.
While CDEV was initially created in 1982 to manage a large portfolio of divestitures, it has evolved to undertake a broader range of activities. Our mandate has expanded to provide a breadth of financial advisory services and expertise to support the country’s broader economic objectives.
In addition to the well-known assets that we manage, CDEV is frequently called in on a moment’s notice to provide advice across departments and analysis on highly sensitive financial matters. Today, we are the government’s commercial expert in complex financial advisory and structured finance, entrusted with the oversight of $75 billion of assets. Our private sector experience is unmatched within the federal system. Our nimble, high-performing team headquartered in Toronto is called upon to deliver innovative financial solutions that support the country’s broader economic objectives.
In the past year, CDEV has delivered outcomes that exemplify our leadership and impact. We issued a significant loaned Telesat’s Lightspeed project, Canada’s largest ever space program that will connect remote communities and fuel Canadian innovation in telecom.
We launched Canada Indigenous Loan Guarantee Corporation and, in less than six months of operation, issued the first loan guarantee of $400 million empowering 38 First Nations in British Columbia to become owners in critical energy infrastructure.
We executed the largest debt refinancing in Canadian history for Trans Mountain, saving $3.5 billion for Canadians.
We also realized a $44 million profit through the strategic divestment of Air Canada shares, demonstrating our commitment to value creation.
We rapidly established and launched the $10 million Large Enterprise Tariff Loan facility to support Canadian businesses through global trade tensions. This built on the critical loan facility we created during the COVID-19 pandemic to support large employers, including the airline sector.
Indigenous economic reconciliation has been an area of our focus for many years. Building on our experience with the divestment of Ridley Terminals in 2019, including a first-of-its‑kind transfer of a 10% equity stake to local First Nations, CDEV is naturally positioned to be the leader in Indigenous participation. We are responsible for delivering the inaugural $10 billion federal Indigenous Loan Guarantee Program and also ensuring appropriate Indigenous participation in Trans Mountain.
CDEV’s commercial expertise is ideally suited to support the government’s direction to take a strategic role in the economy. We welcome the proposed legislation in Division 22 of Bill C-15 to modernize our mandate and funding model, which will ultimately strengthen our ability to act strategically while maintaining the highest standards of oversight and accountability.
[Translation]
We are inspired by the government’s vision and the opportunity to help Canada prosper. CDEV is committed to promoting prosperity and long-term value, as a trusted adviser on which the government can rely to build a better future for Canada.
Thank you for the opportunity to speak before you today.
[English]
I look forward to answering your questions.
The Chair: Thank you for your opening remarks. Colleagues we have 25 minutes. What I propose is maybe for the first round, have two minutes each and, if we have time, we will go to a second round.
Senator Marshall: Thank you, Ms. Wademan and your officials, for being here today.
I am familiar with the corporation. I think it goes back to 1982. I was curious as to why we’re seeing this legislation now and who is the driving force, whether it is government or whether it is yourself?
Ms. Wademan: Thank you for the question.
We welcome this legislation. As I remarked, it modernizes and really codifies our mandate and provides us with more flexible funding going forward. It does not change our daily operations. In fact, it aligns us more with our peers in the federal Crown family.
This is legislation we support that is being put forward by the Department of Finance.
Senator Marshall: I read somewhere that it was setting up the corporation to receive funding for something and it would ensure that the corporation has the ability to efficiently receive capital. But you have received capital in the past. I am curious as to why you need the legislation, and what was the impetus for the legislation 45 years after the fact?
Carlos Gallardo, Chief Financial Officer, Canada Development Investment Corporation: Thank you for the question, senator.
I believe that this legislation provides a more efficient way of obtaining capital and sets us up for the future mandates to be executed quickly as the government requires.
You are correct that we have received funding in the past. Again, this legislation does not change anything of what we do. It does not change our mandate or extend our authorities in place today, or any of the reporting structures. We will still need to have a corporate plan approved by the Treasury Board. We will still report with the same reporting relationship to the Department of Finance. Any new funding, any new mandates will require that corporate plan and approval.
However, as Ms. Wademan has said, it does provide us a much quicker and a more visible way of obtaining that funding.
Senator C. Deacon: Thank you. You are responsible for the use of $75 billion worth of assets, I think is what I heard you say.
Can you provide me with your top five key performance indicators that you use to monitor the economic outcomes of your activities?
Ms. Wademan: Thank you for the question. This is an area we spend a lot of time thinking about.
We have a diverse portfolio which we are responsible for overseeing. Within those eight subsidiaries, each do have quite different mandates and different objectives. As a parent corporation, we think about our role of supporting economic growth and being fiscally efficient in doing so.
In terms of the KPIs, they really differ by individual entity from a CDEV perspective. We are very focused on optimizing our assets, driving value through good governance and being an active asset manager. We are also very focused on the first call and trusted adviser on critically important and sensitive financial analysis.
We are also focused on ESG and I, making sure that we have the right lens and the right metrics to measure ourselves on that.
For me, a big part is making sure that we have the right corporate culture to be able to continue to deliver a high‑performing team.
Senator C. Deacon: That wasn’t quite what I expected. I was looking for the economic outcomes, and perhaps by division. That is what you could follow up. I would like to understand what, for you, is effective deployment and use of those assets. Maybe that is something that you have to reflect on and provide by division.
Ms. Wademan: I would like to respond to that by citing a couple of specific examples. I mentioned the recapitalization of Trans Mountain and the balance sheet there, which resulted in $3.5 billion savings to Canadians. For me, that is applying a very commercial lens to derive a tangible fiscal outcome for Canadians.
We sold the stake of Air Canada shares at 96% of a 52-week high and that resulted in a $44 million profit for Canadians. Every situation we’re looking at, it is with the lens of trying to optimize the economic outcome. I’m happy to come back and go through a more detailed review, subsidiary by subsidiary, if that would be of help to you.
The Chair: Thank you for saving money for the taxpayers. I’ve been in the financial sector for a few decades so I can appreciate what you’re doing.
Senator Ringuette: I hope this will be a quick one. How do you interact with the Canada Infrastructure Bank? How do you interact in regard to projects, perhaps to shared investment? How do you interact with that entity that is requesting more billions?
Ms. Wademan: I’ll respond to that, and thank you very much for the question, it’s one we do get. The Infrastructure Bank has quite a different mandate to support infrastructure projects across Canada. We collaborate with them, depending on where the projects may be on their stage of development. Particularly on, for example, the Indigenous Loan Guarantee Program. That’s an area where they do have Indigenous funding, but they do not offer the same product that we would around being able to guarantee a federal loan.
The mandate is quite different, insofar as we’re really focused on being sector agnostic in terms of the financial advice we provide as a commercial financial adviser. They would offer specific products and we would come up with more creative, bespoke solutions for most instances.
Senator Ringuette: You mentioned Trans Mountain, which is an infrastructure project. There’s a slate of frontrunners up in the infrastructure agenda. Where do you lie in all of that? These discussions then?
Ms. Wademan: We’re absolutely involved in supporting certain key infrastructure projects, for example, Trans Mountain. The decision to acquire Trans Mountain was a strategic one, made in 2018, and CDEV ultimately purchased it and holds it in its own subsidiary business, then we provided the funding for that.
So I think it was very much based on a strategic decision by the government at the time, and we’re the ones that provide the oversight and the funding for that.
The Chair: You have some grey zones, possibly a second pipeline coming in Canada to B.C., so we’ll follow that file.
Senator McBean: What sectors or industry does the government expect CDEV to prioritize for investment? And what transparency mechanisms will govern these investment decisions to prevent conflicts of interest?
Ms. Wademan: Thank you very much for the question, senator. I mentioned we tend to be sector agnostic. We’ll put our commercial and financial expertise to lean into the sector that’s required and asked of us at the time. That can be a wide range from natural resources, to the airline sector, to critical minerals, to pipelines.
So the lens that we look at is how can our skills be helpful in trying to provide creative solutions to complex financial problems, irrespective of the sector. That said, I think there’s a very ambitious and important agenda right now by this government, which is focusing on building Canada and building infrastructure and getting large projects off the ground. We would naturally play a very important role around in some of those discussions.
Senator McBean: And then on preventing conflicts of interest; what transparency mechanisms do you have in how these decisions are being made and projects that are being selected?
Ms. Wademan: My answer around that is we don’t have an investment committee that decides where we’re going to deploy Canadian funds. This is very much in the direction and consultation with the Department of Finance. We’re the financial adviser and the in-house financial expertise to help execute on policy objectives.
Senator McBean: I understand. Thank you.
The Chair: Usually I wait before I intervene, but you have a board of directors, so those people, that aspect is where we have some concerns. Do they have to disclose if they have an interest? Could you elaborate a bit more?
Mr. Gallardo: We have full disclosure on all of our financial transactions. We have a set of subsidiaries that get consolidated. There are international financial reporting standards that we publish on a quarterly and annual basis.
We have a board, as has been stated. Some of our subsidiaries also have their own independent boards. The Canada Indigenous Loan Guarantee Corporation will have its own board; the Canada Enterprise Emergency Funding Corporation also has its own independent board, so does CDEV, so does Trans Mountain. Trans Mountain also publishes its financial statements. We publish consolidated, we publish for CEEFC, we publish quarterly and annual statements. They are under the public sector accounting standards. And CILGC, the Indigenous Loan Guarantee Corporation, will also publish under PSAS as well.
So there are obviously audits as well, quarterly reviews. We are audited by an external firm as well as the office of the Auditor General across the group. There is board reporting, regular cadence, and we have policies and procedures in place as well.
Senator Yussuff: Thank you for being here.
I’m familiar with most of the things you’re involved with, because in my previous life I used to represent a lot of workers in this country; I know the important role you played during the pandemic. Given the crisis we were dealing with and the magnitude of it, you came in to help many of the companies that needed a bridge to keep them afloat. We didn’t know if they were going to exist a week after that. So thank you for that work.
I’m very familiar with the Trans Mountain project. When the government made a decision — your political master — said “Hey, we’re going to buy this pipeline,” you had to be the backstop in providing the resources to that.
What we’re seeing now is the dividend starting to come in. As the pipeline is delivering product to the ports we’re receiving the dividends.
The bigger question I have is — in the context of your political masters making the decision that you have to involve yourselves, and given the context of your responsibility — had it not been for CDEV what would take your place in providing the support that was needed to help the economy continue to function?
Ms. Wademan: Thank you very much for the question. We do play a very unique role within the federal system, and we are very adaptable and very nimble and can move quickly across a range of different situations. That’s one of the reasons why we’ve continued to grow and why this legislation, presumably, is now being tabled. There is no other group like us in the federal system.
We largely consist of private sector people with very deep private sector expertise and commercial backgrounds. We bridge that crossroad of where private sector meets the public sector. That’s where we operate.
We see continued growth in our business as the recognition that our skills are unique and the value we add through commercial and financial expertise, adds tremendous value to a lot of the challenges Canada is facing.
Senator Yussuff: Given the legislation, that is going to shine a light much brighter on you. Do you feel you’ve got the wherewithal to better explain the value provided to the Canadian economy? Because from this point on it will be very much different from what it was in the past?
Ms. Wademan: Yes, and I’m excited by that opportunity. I think we provide something that is incredibly important to Canada. I think there’s tremendous value and impact in what we bring and I’m excited about that opportunity.
I recognize we have been in the background on many key files, files that you may know: The Trans Mountain or Canada Growth Fund or LEEFF, as you mentioned, but we’ve been in the background to all that. I’m looking forward to telling the story a little more and continuing to deliver results for Canadians.
Senator Yussuff: Thank you.
Senator Loffreda: Thank you for being here. Division 22 permits new flexibility in CDEV’s ability to incorporate subs and assume new responsibilities. What is your risk assessment framework to ensure taxpayers are not exposed to undue financial or operational risks?
We also talked about Trans Mountain. What lessons did you learn from large, complex assets such as Trans Mountain, and how will those lessons inform your risk approach under the expanded legislative authority?
Would you support enhanced public reporting? For example, disaggregated financials, risk summaries or project-specific updates to strengthen confidence in your expanded role so that Parliament and Canadians can better understand the performance exposures and progress of each major mandate created under Division 22?
Mr. Gallardo: Thank you for the question, Senator Loffreda. Please let me know if I’ve missed anything.
We do have an existing enterprise risk management framework today. It’s fully in place. It includes policy and frameworks. It outlines principles, governance and processes that CDEV follows. It is based on the ISO 31000 framework, but it also aligns with the Treasury Board of Canada Secretariat’s guidelines on risk management. More recently, we also introduced portions of the NIST framework on technology for that. That is in place.
We continuously look at our risks. Every time we have a new subsidiary and a new mandate, obviously we go through a risk assessment.
For Trans Mountain specifically, I believe, even though this predates all of us here today, Trans Mountain has its own enterprise risk management framework. It has its own risk group as well. We have oversight. It feeds into ours overall, as well as the owners and, ultimately, asset managers of that asset.
Some of the items that we had dealt with in the contracting of Trans Mountain that you’ve referred to in terms of lessons learned is the complexity of the different communities across the country and dealing with those communities as we were building the pipeline. There were large amounts of complexity as well while building the pipeline on the ground, as we were trying to make our way through.
Obviously, once that asset is operational, the risk outlook changes, so we’re now looking at it more from the operator of the pipeline, being Trans Mountain. Obviously, the carbon footprint. We’re looking at continuing to operate in a responsible manner. There’s always the risk of spills. You always have to be looking at this, given that you’re in a natural resources field.
For CDEV itself, we see ourselves as asset managers, so it’s always about the value of our assets as well and what some of those risks will impact. Hopefully, I’ve answered the first two of your questions.
In terms of enhanced reporting, I think it’s a combination of the amount of onerosity that perhaps disaggregated reporting would do. We are fully compliant with IFRS for consolidated entities. There is extensive disclosure as well in our financial statement notes. For those entities that we do not consolidate, such as CEEFC and CILGC, we will have disaggregated financial reporting as well.
Senator Fridhandler: Division 22 basically says you’re no longer a CBCA company. Here is this little 20-section statute that’s going now to govern you.
The market typically looks to something that’s much more robust governing corporations and corporate activities. I feel as if I’m in Senator Marshall’s shoes as an auditor here.
What is the rub here? You’ve been under the CBCA for 40 years, and you’ve operated some pretty big transactions, and it’s worked. So, yes, it looks as if it’s hiding something. There are a few sections in here that improve the government’s position on disclosure and a few other things like that. Some of this could have been done by a unanimous shareholders’ agreement, which you may have already, I don’t know, in CDEV, but even single shareholders have to take powers away from directors.
Back over to you. Why do we have this?
Tess Lofsky, Executive Vice President, General Counsel and Corporate Secretary, Canada Development Investment Corporation: You’re correct in that the CBCA the will no longer apply. However, the Financial Administration Act, the FAA, will continue to apply, which does have a fairly robust section dealing with Crown corporations.
To your point, if there is an inconsistency between the CDEV Act and the FAA, the CDEV Act would prevail. I think we would be joining our peers, other Crowns, who have their own legislation. We’ll continue to operate under the best governance practices that are articulated in the CBCA, but we’ll be under this new legislation, and we’ll have bylaws and policies in place that will govern our operations.
Senator Marshall: You’ve been fairly successful for the last 40 years. Do you think that where government is drawing you in closer, that is going to have a negative impact on your success in the future?
Ms. Wademan: Thank you for the question, Senator Marshall. We operate at arm’s length. We are a Crown corporation governed by an independent board of directors reporting through Parliament to the Minister of Finance. We are here to be a trusted adviser and partner to government across departments to provide that financial expertise that helps achieve government’s policy objectives.
Certainly, from my purview, ensuring that we maintain that arm’s-length relationship is critically important.
The Chair: You can tell by our reaction that when it’s not broken, don’t fix it. We have a bit of surprise.
In my previous life, in my former trade, I was natural resources minister in Quebec. I want to congratulate you for what you’ve done, because it’s very important to involve First Nations in the development when we develop natural resources. I know you work very hard with all your expertise, and we appreciate that.
If we have a second pipeline, is it something that you will be more involved in, assuming it’s the public-private sector rather than just private money, or would it be the Infrastructure Bank, back to the question of our colleague Senator Ringuette? Is the Infrastructure Bank or more in your portfolio if, suddenly, it’s funded partly by government?
Ms. Wademan: Thank you, Mr. Chair. I do believe that there is an important part that the Canada Indigenous Loan Guarantee Corporation could play in any new build, pipeline or other, to help support Indigenous economic participation.
I don’t want to speculate on what role we could play or we would play on another pipeline. What I will say is that we support building things in Canada. We have a great track record of supporting complex, large infrastructure builds, and we would look to support in the way that we’re asked to if that were to unfold.
The Chair: In Vancouver, this Monday, as a matter of fact, I met LNG Canada. They have their own shareholders, but we talked about phase 2.
This is normally more in your portfolio. I know we cannot speculate, but normally, it’s more logical to be in your portfolio if anything happened with the Infrastructure Bank.
Colleagues, it’s already time to close up. It was a three-hour session. I want to thank you for your flexibility and understanding. I think we have had a very efficient session today.
I want to congratulate and thank our witnesses.
(The committee adjourned.)