THE STANDING SENATE COMMITTEE ON BANKING, COMMERCE AND THE ECONOMY
EVIDENCE
OTTAWA, Wednesday, September 23, 2026.
The Standing Senate Committee on Banking, Commerce and the Economy met with videoconference this day at 3:18 p.m. [ET] to study the subject matter of those elements contained in Divisions 1, 2, 3, 6, 7 and 8 of Part 4 of Bill C-31, A second Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025; and, in camera, to examine and report on access to credit and capital markets for small- and medium-sized businesses as the basis for growth and improved productivity in the Canadian economy.
Senator Clément Gignac (Chair) in the chair.
[Translation]
The Chair: Honourable senators, I would like to welcome back all our colleagues after this summer break, as well as the thousands of people watching us on CPAC or on the sencanada.ca website.
My name is Clément Gignac. I am a senator from Quebec and the chair of the Standing Senate Committee on Banking, Commerce and the Economy.
Before we begin, I would like to remind senators and participants to consult the cards on the table for guidelines to prevent audio feedback incidents. Thank you all for your cooperation.
Before we continue, I would like to ask my fellow committee members to introduce themselves.
[English]
Senator Varone: Toni Varone, Ontario.
Senator Pupatello: Sandra Pupatello, Ontario.
Senator Fridhandler: Senator Fridhandler, Alberta.
Senator Henkel: Senator Henkel, from Quebec.
[Translation]
Senator Ringuette: Pierrette Ringuette from New Brunswick.
[English]
Senator Yussuff: Senator Yussuff, Ontario.
The Chair: Thank you, colleagues.
An order of reference was adopted in the Senate on June 10, 2026, authorizing this committee to examine and report on the subject matter of those elements contained in Divisions 1, 2, 3, 6, 7 and 8 of Part 4 of Bill C-31, A second Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025.
While the bill is being studied at the House of Commons, the Senate Chamber has tasked this committee to undertake what is known as a pre-study.
[Translation]
Usually, when we study government bills, we invite government officials first to explain the bill and answer our questions.
We are changing things up a little.
In this case, your steering committee decided on a different approach. Officials from the Department of Finance and the Department of Innovation, Science and Economic Development Canada have been invited for tomorrow’s meeting. They will join the Bank of Canada and the Canada Mortgage and Housing Corporation.
Today, we will count on expert witnesses who have agreed to appear by video conference to enlighten us and explain the bill.
[English]
I wish to welcome, from Torrie Law, Dr. Virginia Torrie, Lawyer, and, from IMPACT – Transforming Natural Resources Management, Mr. Sasha Caldera, Campaign Director, Beneficial Ownership Project.
Both are appearing by video conference. I’ll just remind you that if you have any technical problems, let us know and we will temporarily suspend to resolve the issue.
I think you have prepared opening remarks, so I will invite you to start. Welcome.
Virginia Torrie, Lawyer, Torrie Law, as an individual: Thank you, chair and members of the committee.
My name is Virginia Torrie. I practise banking and insolvency law, and I am a former law professor. I appear here in my individual capacity. I do not act for banks and have no financial or institutional interest in these amendments. I will focus on Divisions 1, 2 and 3 of Part 4, and I will offer some comments, as well, on Division 8.
I support Division 1. It would prevent the issue of specified share-related instruments in bearer form and allow existing instruments to be exchanged for registered documents. Because bearer ownership is difficult to trace, the change improves transparency and aligns federal financial institution law with earlier corporate law reforms.
It would be interesting for officials to clarify whether they believe many legacy instruments such as this remain outstanding. In my experience, the use of these instruments is quite rare, so it would be interesting to have their thoughts on that.
Turning to Division 2, this division, in my view, requires more information in order to formulate a response or recommendation. It would bar actions against the Crown, the minister, financial regulators and others for good-faith acts or omissions under three financial institution statutes. Protecting officials from tactical litigation may be sensible, but I have not found a public explanation of the claims these amendments address or why existing protections are inadequate.
I’d point out that there are narrower models. Section 215 of the Bankruptcy and Insolvency Act requires court leave to sue specified insolvency officials. Ontario’s Securities Act protects individuals working for the regulator while preserving the organization’s liability and judicial review. Division 2, in the proposed amendment, would protect the Crown and minister and cover acts and omissions across three federal statutes.
I feel that it is important to point out that the Bank Act and the Trust and Loan Companies Act do not create general damages actions for every statutory breach, so I would encourage the committee to ask officials what problem has arisen, why immunity of this breadth is needed and whether judicial review and other public law remedies remain available. I believe further explanation along these lines is needed to assess this division fully.
Turning to Division 3, I support its objective of improving smaller institutions’ access to deposit distribution. A smaller bank may sell a guaranteed investment certificate through a brokerage affiliated with a larger bank, for example, and fair access helps competition. The bill requires non-discriminatory treatment but leaves the meaning of “non-discriminatory” to future regulations. The covered products also extend beyond brokered certificates.
Regulations should, in my view, distinguish improper favouritism from legitimate differences in product terms, risk and cost. Ideally, draft regulations should be available for assessment before this division takes effect. It would also be important to ensure that this amendment does not inadvertently encourage platforms to reduce their range of third-party products that are offered.
Finally, turning to Division 8, I support this division. I can speak from personal experience. Despite more than 10 years working in insolvency law, I have recently seen online advertising that left me genuinely uncertain whether the advertiser was regulated. The Superintendent of Bankruptcy has documented a pattern of misleading claims, unnecessary fees and improper solicitation in recent months and years.
In my view, this bill appropriately directs courts to consider the advertisement’s overall impression, as well as its literal words. Further, the superintendent does not need to identify that someone was actually deceived in order to obtain an order, and the proposed remedies and higher maximum fines, I believe, are proportionate. Thank you.
The Chair: Thank you. I will now invite Mr. Caldera to give his opening remarks. You have the floor.
Sasha Caldera, Campaign Director, Beneficial Ownership Project, IMPACT – Transforming Natural Resource Management: Mr. Chair and committee members, thank you for inviting me to speak today.
My name is Sasha Caldera, and I am the Campaign Director of the Beneficial Ownership Project at IMPACT. IMPACT is a natural resource governance organization based in Ottawa whose mission is to tackle conflict minerals and illicit financial flows. We have staff and operations in Africa and in Canada. In 2003, we were co-nominated for the Nobel Peace Prize.
For the past eight years, I have been leading a coalition of three civil society organizations to improve corporate transparency in Canada. Our partners are Transparency International Canada and Canadians for Tax Fairness. We were successful as Canada implemented a publicly accessible and searchable beneficial ownership registry that is free of cost as of January 2024. We also saw policy victories across various provinces in Canada.
Today, I’m pleased to share my thoughts concerning Bill C-31, Part 4, Division 1.
A bearer instrument is like cash. Whoever holds the paper owns it, and no one else knows who that is. For that reason, the Financial Action Task Force, or FATF, has long identified bearer shares and bearer share warrants as tools for hiding ownership, money laundering and tax evasion.
Canada dealt with this problem years ago. Federal corporations have had to issue registered shares since 1975. In 2018, Canada closed the remaining corporate side routes: bearer warrants and scrip. However, because banks, insurers and trust companies are governed by their own statutes, companion legislation needs to be introduced. This is what we see today in Division 1 of Bill C-31.
As of 2022, the Financial Action Task Force expects existing bearer instruments to be converted, immobilized or blocked until the holder is identified. It is worth noting that Canada has already undergone its FATF mutual evaluation, and the final report is pending. As of 2016, Canada received partially compliant and non-compliant scores for FATF Recommendations 24 and 25, pertaining to beneficial ownership of legal persons and legal arrangements.
I would ask the committee to consider three improvements to Canada’s overall legislative framework.
First, freeze and consider setting a deadline for old bearer instruments. As drafted, an existing bearer document is exchanged only if the holder asks. Someone who wants to stay hidden will never ask. British Columbia does better; until a bearer certificate is converted, the company must refuse to recognize the holder’s rights. The United Kingdom went further and decided that unconverted bearer shares lost their rights after a fixed date.
Second, require public notice. Institutions may not know who their bearer holders are, but they know such shares have been issued. They should publish a notice in the Canada Gazette and on their website, and write to any holders they know of so every holder has a fair chance to come forward.
Third, require an inventory and widen the wording. Each institution should confirm to the Office of the Superintendent of Financial Institutions or an equivalent regulator whether any bearer instruments remain. The ban should also cover rights to acquire any security, not just shares.
Finally, Division 1 completes federal coverage, yet most Canadian companies are provincial, and the rules there are uneven. Ontario, for example, still allows some bearer debt. I would encourage Canada to work with provinces and recommit to eliminating bearer share issuance and limiting old bearer instruments.
Thank you so much for your time. I am happy to take your questions.
[Translation]
The Chair: Thank you both for your opening remarks.
Before I cede the floor, I would like to acknowledge our colleague, Senator Dalphond, who joined us shortly before the opening remarks.
[English]
We will start with our deputy chair, Senator Varone.
Senator Varone: Thank you. This is in no particular order, but years ago, when I was working in the residential construction industry, one of my last projects was helping receivers and bankruptcy trustees remediate projects and bring them back to life. It gave me an inside look at how the trustees in bankruptcy actually work. My question is to Ms. Torrie.
How do you ensure that there is fair and equitable competition among the trustees? Having been on the inside, I know the devastating effect that a trustee can have on the creditor group. It can’t just be a billing docket for them to take all the proceeds and hand out 3% of the remaining money to all the creditors. Who’s fighting for the creditors?
I understand what they are doing in terms of trying to control those who are not licensed, but how do you make the licensing wider to protect more money for creditors?
Ms. Torrie: Thank you for your question. I’m happy to speak to that.
In essence, trustees go through training and are then regulated by the Office of the Superintendent of Bankruptcy, or OSB. The training is done by a delegated authority to the Canadian Association of Insolvency and Restructuring Professionals, and then the superintendent regulates trustee conduct. Trustees are meant to act in the interests of creditors rather than the interests of debtors. That’s how it is meant to operate. I have not worked in the construction industry, so I couldn’t speak to some of that practical experience.
For the sake of clarity — and you may have already intoned this in your remarks — the amendments are geared at practices that have developed over the last few years where people who are not licensed insolvency trustees, in effect, mislead debtors who are financially and emotionally vulnerable and don’t understand the intricacies. That has led to them, without realizing it, going to an unlicensed individual who usually takes a fee and then filters those cases along to actual licensed insolvency trustees.
The superintendent, after careful study, has developed a report documenting these sorts of issues. These amendments, as I read them, are very targeted to that particular issue that has evolved as bankruptcy rates have increased post the COVID-19 pandemic.
In terms of trustees, they are allowed to compete and advertise, but licensed individuals and firms must do so according to the superintendent’s regulations. If there is improper conduct, it can be reported, and enforcement actions can take place.
Senator Varone: I would like to go to the bearer share issue.
There used to be a saying that “cash is king” because you could hide behind cash. As much as you had it, it’s anonymous as to who owns it because it’s in your pocket, under your mattress or in your vault.
Are financial crimes the reason for these changes? Is Canada suffering an epidemic of bearer instruments that are flooding the market and feeding the illicit cash trade, so to speak? Why are we closing this loophole now? What prevents other countries from issuing their bonds that don’t have the same restrictions with us, and how do you bring that under control? They are available in just about every jurisdiction.
Mr. Caldera: Thank you for your question, senator.
The good news with respect to bearer instruments is, in Canada, they have been largely banned, which is excellent. Our team suspects that there are probably a lot fewer that are being held by individuals in comparison to previous years. This is just because a lot of corporations have restructured, and many have dissolved, so those certificates are no longer valid.
Much of the world has moved forward with respect to banning or limiting the use of these bearer instruments. About 10 years ago, through the OECD framework on tax transparency and through the Financial Action Task Force recommendations, countries sunset the ability for companies to issue these instruments and have placed restrictions on holding these instruments as well. More notably, in Europe, many countries have already stopped issuing these bearer instruments.
To your original point, what was the motivation? It is money laundering and terrorist financing. Because we don’t know who owns these documents, they could be passed along to an individual, and then they could be redeemed in any instance. Unknown to a company, someone can secretly own or control something like 10% of a company simply because they possess these bearer instruments.
In terms of the risk in moving forward, this was assessed in Canada’s most recent FATF evaluation. Because the provinces haven’t yet caught up with the federal framework, there are still gaps within the provinces themselves. This will likely be noted by the FATF once the report is released. We expect that report to be released sometime in the fall.
Senator Fridhandler: To both of you, let me follow up, maybe with Ms. Torrie first, on this issue of bearer securities that might be convertible.
It would be just as easy to take a registered security and pass it along with a transfer power of attorney, I believe, and still be operating in the off-market, unregistered form. Am I correct on that? What’s your solution? I would just give someone who doesn’t want to register and takes control of something a power of attorney to register if and when they want to and utilize that to transfer the registration down the road.
Ms. Torrie: Thank you for that question.
I am not familiar with the exact process that you have described. Perhaps my co-expert witness can speak to that.
I echo my co-expert witness’s remark that the point is to crack down and close loopholes with respect to terrorist financing and money laundering. In that vein, this is a continuation of earlier efforts that took place under the Canada Business Corporations Act.
Just closing loopholes and making it increasingly more difficult — a bearer instrument on its own would be simpler and easier and less transparent than what you have described there, with fewer hoops — I think that’s the thrust of the legislation.
As I said, perhaps Mr. Caldera can elaborate on that.
Mr. Caldera: Thank you so much.
Senator, it’s an interesting thought experiment with respect to these loopholes. One of our recommendations to hopefully circumvent any manoeuvrability on behalf of lawyers or other nefarious individuals would be simply requiring that the holder of these bearer instruments is not able to exchange or transfer these instruments. Also, I don’t want to say “their rights,” but the asset itself is frozen. Until they decide to convert the instrument and present a valid identification, then, at that point, the conversion can occur.
So, the best way is to ensure there is a freezing component. Right now, under the current legislative framework, new issuance is forbidden, but if you still have these bearer shares and there are colleagues or you happen to have an ambition to accumulate more, you can still do so.
Senator Fridhandler: Let me move to Division 3 and the deferral to regulations of the meaning of “non-discriminatory.” I would like to get a sense from both of you, but, Ms. Torrie, I think you identified the issue of what the meaning is and the deferral of that. I hate to give these blank cheques to the Governor-in-Council to make up a definition and not know what we’re talking about. I have no idea what “discriminatory” means in the context of what we’re talking about.
Can you speculate on what this might be?
Ms. Torrie: Thank you, senator.
Yes, you put your finger on one of the issues with this part of the bill, in my opinion at least, as drafted. To be perfectly fair, I don’t know that I would be comfortable with this as is, without seeing the regulations, because while I could make assumptions about what “non-discriminatory” is, there might be more than one way to achieve that objective. For instance, it might be non‑discriminatory to not offer third-party products. I could see language in regulations being loose enough that such could be a plausible line of argument. I’m not sure if it would succeed, but I would prefer to see a definition of what is meant by “non‑discriminatory,” at least an illustrative list, if not an exhaustive one, to better understand the mechanisms by which this policy would be implemented.
At present, the language is a little loose, and it does concern me that we’re not getting a very clear idea of how it would be implemented in practice and what would be offside.
Senator Fridhandler: There is a definition portion in the amendment, but it doesn’t include this item, which I think is the most operative part.
Division 8, which you commented on, deals with canvassing or soliciting relative to petitioning into bankruptcy. I just want to make sure that I have a comfort level. As a solicitor myself, I’ve often suggested to people that they go visit a trustee in bankruptcy. They always ask me for names because I think they’ve gotten themselves into such a bind in terms of debt or judgments against them that their only way out going forward is to petition themselves into bankruptcy.
I believe I’m comfortable with this language that it wouldn’t catch professionals who actually recommend but don’t get paid specifically for that referral or advice.
Ms. Torrie: Yes, that’s my reading of it. People actually approach me with the same kinds of concerns, so I can appreciate the concern there.
This is really geared toward mass or targeted advertising, in a YouTube video, for example, or on Facebook or through other means, but when you’re not charging a fee for that referral and you’re making that suggestion as a goodwill gesture, whether to a particular trustee you know or just to the OSB’s website, which gives a directory of all licensed trustees — and people can search by geography — that wouldn’t be caught up in these regulations.
[Translation]
The Chair: Thank you.
Senator Henkel: Thank you to both witnesses for joining us today. My first question is for Ms. Torrie. Under Division 1, some current bearer instruments may be converted or replaced by registered forms. What happens, for example, when an old bearer instrument is found in an estate or when the documents necessary to establish the chain of ownership are incomplete? Does the bill provide a sufficiently clear mechanism to resolve this type of situation?
[English]
Ms. Torrie: Thank you for the question. I hope I’ve understood it correctly as being about whether a chain of succession needs to be established.
From what I can see in the amendment, that’s not addressed. Further to my fellow expert witness’s point, just because these amendments are put into place, hypothetically, if I had a bearer instrument, I’m under no obligation to bring it forward, so that could also still circulate from one person to another because there is no sunset clause or mandatory need to bring it forward.
However, my understanding is that, as a general matter, no chain of succession is required to redeem a bearer instrument. That is why they provide a device for purposes like terrorist financing and money laundering — precisely because of the opacity. I hope that sheds light on the question.
[Translation]
The Chair: Is that okay?
Senator Henkel: Yes. Based on your expertise, does Bill C-31 provide enough safeguards to prevent the elimination of bearer instruments from simply pushing firms into a parallel system, for example, through shell corporations or other opaque corporations?
[English]
Ms. Torrie: Thank you for the question.
My reading of these amendments is that they are really quite narrow, targeted and designed to just bring certain federal statutes in line with other changes that have taken place, such as under the Canada Business Corporations Act. Thus, from what I can see here, it’s not a more comprehensive effort to deal with more widespread issues that might relate to terrorist financing, money laundering or other nefarious purposes; it is more the closing of a gap in legislation in order to bring Canada more in line with international protocols on this.
As I said, I think it could be more tightly drafted. I think my fellow expert witness even talked to that, specifically about these regulations. But closing this loophole doesn’t mean there aren’t others, and it doesn’t mean we’ve comprehensively solved the problem, either. As I said, these are quite narrow and targeted. They can probably be improved if we wanted to tighten things further. Certainly, there’s probably room to do a more comprehensive review of this issue beyond just these federal statutes to tamp down on it even more.
[Translation]
Senator Henkel: Small financial institutions must have access to deposits to survive and to be able to lend and, above all, grow. It is essential. Do you think the changes proposed in Division 3 really improve their ability to develop and compete with major institutions?
[English]
Ms. Torrie: Thank you for the question.
I don’t think these amendments, on their own, solve that problem. These could be helpful in travelling in that direction, but, as I said, so much is going to hinge upon the definition of “non-discriminatory,” which we don’t have in the bill. Thus, I worry that, at this stage, the regulations could be drafted loosely, for example, and therefore massaged in ways that don’t seem to align with what is intended here.
It is important to think about how smaller financial institutions can become more competitive and grow, and we can have more competition in the industry more broadly. That would be a larger project. It’s also one that touches on federalism because many smaller institutions are provincially regulated, for example, credit unions. That ends up being a bigger question.
If “non-discriminatory” has a definition, in regulations or elsewhere, which is tightly drafted, that could help to level the playing field for them and give them access to deposits on a par with larger institutions, but much depends on that definition and how it’s drafted. Thank you for the question.
Senator Ringuette: First, I would like to say to Ms. Torrie that I will certainly raise the question because I don’t recall seeing in a piece of legislation such protection against civil action for the minister, the Crown and so forth. So that’s puzzling.
In this conversation, we’re assuming that bearer shares and bearer warrants are held by Canadians. What if they’re not held by Canadians? How would this legislation force these foreigners, who may be majority shareholders through bearer shares of a numbered company in Canada? For me, I see another picture. I’m not sure if that picture is correct, but I certainly would like for you and maybe for Mr. Caldera to try to appease my worries.
Ms. Torrie: Thanks for the question. I will speak just briefly about Division 2, which is about protection. I share your puzzlement, I guess. In the course of my career, I’ve never seen protection extending to the Crown and minister. I hesitate to say it, but, without some explanation, it feels like overreach. There could be a perfectly legitimate explanation, but I could not find a publicly available explanation. As I’ve pointed out, in the Securities Act and the Bankruptcy and Insolvency Act, there are other models for dissuading unmeritorious legislation. That probably bears more scrutiny.
On bearer instruments, you’ve also put your finger — and others have too — on one of the weaknesses of this amendment as drafted, which is that there is nothing to force someone with a bearer share to come forward, full stop. So these could continue to circulate from one person to the other, which really doesn’t solve the problem of their being used potentially for things like terrorist financing because it’s a valuable instrument in its own right, and my co-expert witness has highlighted some other models in other countries.
To the point about Canadian versus not Canadian, I’m putting on a federalism hat here, ad hoc. If it’s a Canadian company, the rules of Canadian corporate law — or banking law, in this case — or the Trust and Loan Companies Act would apply, no matter who the person is who holds it. However, you have made a good point, which is that perhaps these are circulating in a whole other country altogether. It goes back to that point that nothing really causes those documents to expire, for example, which would force them to come forward, and nothing forces them to come forward, other than, say, an expiry. That is a weakness in the bill, as drafted, insofar as we’re very serious tamping down on this kind of behaviour. Perhaps Mr. Caldera has more to add to that.
Mr. Caldera: Thank you, Ms. Torrie.
Senator, I share your concern. This is an issue that we’ve brought up to public servants and ministers, and it forms the core of our work with provinces and territories and the federal government to try to ensure that there is broader corporate transparency in Canada’s landscape as it pertains to companies and also trusts.
If a foreigner happens to own or control — directly or indirectly — shares of a federal company under the Canadian Network for Corporate Accountability, or CNCA, its ownership would be disclosed, and the extent of its ownership would be disclosed in Canada’s beneficial ownership registry. That’s if they own shares or even fractional shares.
However, if the shares are in bearer form, we don’t know. There is no incentive for any of these individuals to come forward because there is no sunset clause, as my co-panellist has mentioned. This is why we are recommending the inclusion of a sunset clause as part of the legislative framework, and that can hopefully incentivize many of these owners or holders of these bearer instruments to come forward and to convert their shares.
In the U.K., for instance, the timeline was quite ambitious. Individuals were given nine months. Given the composition of Canadian provinces and territories, perhaps a couple of years would be sufficient, but there needs to be some type of incentive for holders to come forward and to convert their shares.
Senator Yussuff: I have two questions. I’ll pursue where my colleague left off. If the government did require bearer holders to identify themselves, is there a reason why they wouldn’t do so, unless there is something that we are missing here if we were to propose an amendment such as the one that you’re suggesting?
Mr. Caldera: Thank you, Senator Yussuff. It depends. If you happen to hold bearer instruments, you could still exert control anonymously over other shareholders, for instance, and no one would really know. At least, the corporation wouldn’t know. That could be a problem. So, it’s really about addressing power and influence when we’re drafting transparency-oriented legislation.
With respect to the specific bill, it’s unlikely, but it still might be possible. It is within the realm of possibility that an individual in Canada — a Canadian citizen or perhaps even a foreigner — may have, over the years, acquired scrip, warrants or other kinds of bearer instruments for a Canadian bank. The chances of that are slim, but this is what Division 1 is trying to root out.
But if there is no incentive to come forward, or if there is nothing built into the legislation that freezes the ability for someone to acquire new bearer shares through colleagues or other networks and to transfer their shares, these instruments are still in circulation. B.C. is a great example that has, I believe, taken a stronger stance on these instruments. The U.K. is an excellent international example of strong legislation with a sunset clause.
Senator Yussuff: My next question deals with changes to the bankruptcy and insolvency legislation. Quite often, Canadians who find themselves in trouble rely on the guidance of credit counsellors to help them figure their way out. Would these amendments have a detrimental impact on those services provided to Canadians?
Ms. Torrie: Thank you for the question. If I heard correctly, your concern is about whether debt advisory services could be impacted if this bill were enacted. Based on my reading, those advisory services would not be impacted.
The legislation is drafted pretty tightly and in a targeted way to deal specifically with people who hold themselves out as a licensed insolvency trustee when they are not a licensed insolvency trustee and others who hold themselves out as somehow acting for the Superintendent of Bankruptcy when they have no affiliation. That was something that the superintendent considered in proposing the amendments and in their report because they wanted to be really sure, as I understand it, that they were targeting just this bad practice where consumers were duped into thinking they were speaking to someone who really wasn’t who they held themselves out to be.
Senator Yussuff: Thank you.
Senator Dalphond: I don’t have many questions, except one about the bearer form in practice. My question is for Mr. Caldera.
The bearer form, whatever the share certificate’s form, entitles you to vote and to receive dividends. So if you have a bearer form, how do you receive dividends? Do you have to show up at the company and show them the certificate in bearer form and ask for your dividends? Do you have to disclose your identity when you introduce yourself? I assume they don’t give you the money if they don’t have evidence that you are entitled to it, and they must make out a cheque addressed to somebody. And what about voting? You cannot come to a bank meeting, walk into the room and say, “I’m entitled to vote because I have these bearer forms.” Is that possible? Is this a real problem, or are we just closing a historical chapter of something?
Mr. Caldera: As far as I understand, if you happen to have a share certificate because you would own shares, you would be able to vote and receive dividends. However, for fractional shares or for scrips or warrants, you can’t do that because a scrip is essentially a voucher, similar to receiving stamps or a coupon, where you can collect vouchers and swap them for a share. There are no dividends or voting attached to them. A warrant is a right to buy shares at a set price at a future date, so you will need to exercise them. There are no voting or dividends attached to them.
With shares, depending on who issued them, shares may or may not have your name on them. You can have a series of these shares, and you would be able to vote or receive dividends, but these shares do need to be recognized by the corporation. At that point, you would need to identify yourself.
It really depends on what year these shares were issued. If you look at Canada’s past, there have been shares that did not have the name of the holder, whereas, perhaps in the 1980s and 1990s, you saw shares being issued with the name of the holder. It really depends.
To sum up, with respect to scrips, warrants or fractional shares, you cannot vote or receive dividends, but for a share certificate, you can. You would have to disclose your identity at that point.
However, there is another small catch. You could have a nominee appear on behalf of you and issue instructions to that nominee. The onus then falls on the corporation to ensure that the nominee is disclosing that they are acting on your behalf. That’s the other twist with respect to corporate transparency.
Senator Dalphond: I don’t expect a bank, which is a publicly traded company, to have some people show up at the annual meeting and decide to vote because they have a bearer form.
Mr. Caldera: Probably not.
Senator Dalphond: Maybe for a small corporation, but here we are only dealing with banks and insurance companies. We are dealing with real things, not shell companies that might be hiding transactions or laundering money. Anyway, I think it is important to close that historical chapter.
Mr. Caldera: I would agree.
Senator Dalphond: Thank you.
Senator C. Deacon: Thank you, chair, and lovely to see you all. I apologize for being late to the meeting. Thank you to our witnesses.
I may be repeating a question that you had earlier; my apologies if so. I want to dive into Division 3 and the extent to which there are safeguards from incumbents shaping the definition of “non-discriminatory” in ways that will be detrimental to smaller financial institutions. You were speaking about that, and I think Senator Henkel was asking questions in that regard. You spoke about levelling the playing field and ensuring that it is levelled.
Pardon my cynicism toward the lobbying capacity of our biggest banks, but I find too much legislation in the past has been leaning in their favour, and I’m wondering what observations you have in that regard into the fact that the definition itself could be discriminatory toward smaller financial institutions. If each of you had any thoughts on that, perhaps starting with Mr. Caldera.
Mr. Caldera: Thank you so much for your question, senator. In this case, I don’t have any comment, and I would defer to my expert co-panellist.
Ms. Torrie: Thank you for the question, Senator Deacon. In preparing my remarks for this committee, I noted that there is no definition of “non-discriminatory” in the proposed legislation, and that gives pause because we can’t really assess how this would be implemented. Because it comes out in regulation, perhaps a draft of those regulations would be useful for evaluating. I share your concern that, at present, because it is so broad and so much hinges on regulations that we have not seen, this could break in ways that are actually disadvantageous to smaller companies, which would seem to go against what the legislation says. Really, to assess it properly, we would need to understand what they mean by “non-discrimination.”
Senator C. Deacon: Thank you very much. That says to me that we might want to make use of providing an observation related to this division of the bill. Would you have any advice to us in terms of how that definition might be shaped in order to minimize the risks of having a playing field that is not balanced, not level, that does not provide the opportunity for true competition, which has been a terrible problem in our country’s financial system for a long time?
Ms. Torrie: Yes, I’m happy to share a few thoughts here.
The legislation or regulations should make it clear, perhaps expressly so, that they should not be interpreted in a way that disadvantages smaller financial institutions.
One concern I had was one way to make this non‑discriminatory would be to not offer anybody else’s products on your platform, for example. That would actually limit smaller institutions’ access to selling their deposit products. That’s where more language is necessary to understand what “non‑discriminatory” means. I suggested at least an illustrative list; it need not be exhaustive, but maybe an illustrative list of what would be offside the regulations and examples of what would be okay.
There might be legitimate reasons for the sake of competition and transparency to differentiate products, not based on whose products they are, but based on things such as risk level or the type of product. There might be valid ways to categorize. My concern is that, in the present form, while it sounds good in principle, the proof will be based on what the legislation says.
Differentiating on things based on risk, customer suitability, product terms, et cetera could be valid. But this could also be potentially massaged in a way that leads to consumers having less choice about which deposit products to purchase because the affiliated platform has just been removed. Rather than have to navigate regulations, they have removed those products from the shelves entirely. That would actually reduce competition significantly.
Senator C. Deacon: You may be familiar with the “know your product” regulations and the guidance that was put in place in 2021. Within weeks, our financial institutions said, “We have an easy way to know our products; we will only sell our products and won’t sell any of the other mutual funds in the country.” Our biggest banks made that move literally almost within hours of that rule being established.
We have a precedent that they will act in a way that is decidedly of self-interest, so we need to protect against it. Is that a fair assessment?
The Chair: More of an assessment than a question.
Ms. Torrie: Was that a question for me?
Senator C. Deacon: Thank you very much.
The Chair: Thank you, senator.
Senator Varone: I’m going to go back to the bearer certificates. I’m puzzled by the connection between anti-money laundering and privately held companies. If you’re trying to curtail liquidity and the transfer of liquidity, that’s really something for the public realm as opposed to the privately held corporations that this will attach to as well.
Given the fact that the definition of bearer instruments is, “Possession equals ownership,” hasn’t that given rise to the explosion of crypto-currency? How do you control crypto-currency, because that’s where everybody is going to move in terms of money laundering? Are you closing one loophole to proliferate another? I don’t understand that. Can you explain?
Mr. Caldera: Senator, perhaps I will take a crack at it.
Your question talks a lot about risk. This proposed legislation aims to de-risk one loophole that has existed in Canada for several decades.
For private corporations, the vast majority of private corporations registered at the federal level are small and medium enterprises; they are not issuing bearer certificates. Larger, publicly traded companies have done so in the past. However, many of these shares have been registered, or owners likely have converted them, so the risk is quite low, but it is still there.
To address your question about how this intersects with anti‑money laundering, it is ownership control and influence because if you have these instruments, the corporation doesn’t know that you happen to exercise, at least on paper, control or influence. You can then influence other shareholders before a vote or for any other major decision that the corporation has to undertake. That’s why I have been suggesting there needs to be an incentive to sunset these instruments and require these holders to come forward.
With respect to crypto-currency, it is brand-new terrain. Bitcoin, for instance, happens to have a market capitalization of about $2 trillion. However, it is worth noting that gold and some of the largest companies still dwarf bitcoin. Liquidity is flowing through the banks, but a commodity like gold is still larger than bitcoin and other crypto-currencies.
With respect to forthcoming legislation, I would like to see Canada address the risks of crypto-currency in the future. That’s something we’d be happy to work with the government on.
The Chair: Thank you. To close the Q & A with this panel, Senator Ringuette.
Senator Ringuette: I still have worries about foreign ownership and what these foreign owners could do in an undisclosed way.
In May 2018, we prohibited the issuing of bearer shares, bearer warrants and so forth. Seven years later, now, we are saying that we’re prohibiting federally regulated financial institutions from issuing documents that give conversion privilege of these bearer shares. Are we going to have to wait another seven years to really deal with this issue and put in a sunset clause that could be shorter than seven years?
Mr. Caldera, that is probably a question up your line.
Mr. Caldera: Thank you for your question, Senator Ringuette, and for your concern. It is one shared by us.
We don’t recommend another seven years for a sunset clause. It should be much faster. There is a window of opportunity. Because provinces and territories are regularly convening with Canada’s finance minister in terms of building one Canadian economy, in line with Canada Strong and the impetus to streamline regulation in this country, I think we could do the same with these aspects of corporate transparency.
That’s why I strongly recommend that ministers recommit to eliminating bearer share issuance and introducing sunset clauses, specifically at the provincial levels. The sooner, the better. Seven years would be too long.
Senator Ringuette: Thank you.
The Chair: Thank you to our witnesses. It was very informative.
This is the upside and the advantage of having our experts before we receive Finance officials tomorrow, who will come here to explain some aspects of this to us; we will have additional relevant questions for them.
Thank you to our witnesses.
[Translation]
Honourable senators, we now welcome our second panel in this preliminary study of Bill C-31. Our witness will focus on Division 8, Part 4 of the bill, which deals with the Bankruptcy and Insolvency Act.
[English]
I wish to welcome Mr. Wesley Cowan, representing the Canadian Association of Insolvency and Restructuring Professionals.
I understand that you have prepared some opening remarks, so you have the floor for five minutes. After that, there will be time for questions and answers.
Wesley Cowan, Licensed Insolvency Trustee, Canadian Association of Insolvency and Restructuring Professionals: Good afternoon. Mr. Chair, Mr. Deputy Chair and members of the committee, thank you for the opportunity to appear today as part of your review of Bill C-31, Part 4, Division 8.
My name is Wes Cowan. I am a licensed insolvency trustee, or LIT, and as an LIT, I am federally regulated by the Office of Superintendent of Bankruptcy. I am appearing on behalf of the Canadian Association of Insolvency and Restructuring Professionals, or CAIRP, in my capacity as vice-chair of the board.
CAIRP represents nearly 1,400 members and associates working in consumer and commercial insolvency and restructuring across Canada. We were pleased to see that Budget 2025 included measures reflecting CAIRP’s recommendation to strengthen protections against predatory debt advisers. CAIRP supports the proposed amendments to the Bankruptcy and Insolvency Act and views Division 8 as an important step toward strengthening consumer protection, preserving the integrity of Canada’s insolvency system and addressing concerns associated with predatory debt advisory practices.
Why do these amendments matter? When Canadians experience serious financial difficulties, they are often under significant stress and may be vulnerable to misleading information or inappropriate advice.
Licensed insolvency trustees are the only professionals authorized under federal law to administer bankruptcies and consumer proposals. LITs are licensed by the Office of Superintendent of Bankruptcy through a rigorous licensing process and subject to oversight, professional standards, continuing education, ethics requirements and disciplinary processes.
Most importantly, licensed insolvency trustees have a statutory obligation to provide balanced information on all available options, ensuring debtors understand the full range of solutions available to them, and most LITs do so free of charge. However, in recent years, we have seen growth in an unregulated debt advisory marketplace here in Canada. These unregulated debt advisers sometimes charge substantial fees before a debtor reaches the federally regulated insolvency system.
The proposed measures in Division 8 appropriately target unlicensed actors who misrepresent themselves as licensed professionals. Often, they engage in misleading advertising or solicit debtors to commence insolvency proceedings. The Division 8 amendments provide the Superintendent of Bankruptcy with meaningful enforcement tools, including the ability to seek restitution for consumers and court orders to stop harmful conduct.
CAIRP supports the availability of enforcement mechanisms intended to address conduct captured by the legislation, as we believe these measures are aligned with the objectives of transparency, consumer protection and confidence in Canada’s insolvency system.
I have one final point before I conclude. CAIRP recently appeared before the Standing House Committee on Finance as part of the committee’s study of household debt in Canada. One of our key recommendations was for stronger protections against false and misleading advertising of debt solutions, along with clearer directions to trusted sources of advice. Google offers a useful model; in Canada, only federally regulated licensed insolvency trustees may advertise debt services on its platform. We believe similar standards should apply across other digital and social media platforms.
In closing, CAIRP supports Division 8 of Bill C-31. We believe these amendments will strengthen consumer protection, improve transparency, support confidence in Canada’s insolvency system and help address concerns that have existed for many years regarding predatory debt advisory practices and misleading debt-relief marketing. We believe Division 8 represents a constructive step in advancing those objectives.
Thank you. I would be pleased to answer your questions.
The Chair: Thank you, Mr. Cowan. I have to disclose that we have a hard stop at five o’clock, so I will allow 35 minutes for questions and answers. Colleagues, I propose that the first round be four minutes each rather than five, and we will start with our deputy chair, Senator Varone.
Senator Varone: On the previous panel, I asked a similar question with respect to the trustees themselves. My only experience, albeit limited, with trustees is that they thought of themselves first. Creditors came second. The billing in the dockets dwarfed whatever monies were left.
I’m looking for a way that offers more competition for Canadians. It is a monopolistic-type scenario where this legislation is beating back anybody trying — listen, I’m not in favour of anybody who is unscrupulous. I’m not in favour of anybody who is cheating Canadians out of funds, but there has got to be more competition, and I’m saying from the outside, whether it be lawyers or accountants. LITs just happen to have it all for themselves, and you are competing only amongst your own privileged group. Quite honestly, it is a privileged group because you stand above everybody else in that hierarchy of bankruptcy, so how do you address the issue of external competition versus internal competition?
Mr. Cowan: It is a great question, senator, and in terms of what we’re discussing here under Division 8, this is focused primarily on the consumer level. I think what you were referring to was more at the corporate level. We’re talking about receivership and that sort of thing. There are about a thousand or so LITs across the country who serve a variety of markets, and there is competition between them. The important thing here and what the proposed legislation is suggesting is that there is and needs to be regulation, and participants need to be held to account in the process so that things are fair and done properly.
To your earlier point, according to statements made by the Office of the Superintendent of Bankruptcy, who I understand you will be hearing from tomorrow, the trustees’ role is to balance the needs of the debtor and the creditors, and it is not, certainly, to be self-serving. There is a process by which trustee fees are, first of all, scrutinized by the Office of the Superintendent of Bankruptcy and by the court system, where the court weighs in. Anyone from the legal profession knows about the taxation of fees, and it gives the creditors an opportunity to object if they have a concern about trustee fees.
Senator Varone: Even accounting has bookkeepers, a lower-level person who is more cost-efficient. Is there any room for regulating — as opposed to eliminating — a lesser group that can advise people who are going through this kind of trauma?
Mr. Cowan: This is an area to which I don’t wish to speak to a great extent. It is not an area of strength for me. There are licensed and regulated credit counsellors in each province. These folks largely work for not-for-profit organizations that assist people in figuring out their financial situation.
As I said in my opening remarks, licensed insolvency trustees will consult with a debtor free of charge, generally, and guide them in terms of all their available options. Certainly, in my own career, many times I sent people in a different direction. They did not need formal insolvency services. They needed to refinance, re-budget or whatever the case may be. Our obligation and role is to give people proper advice, explore all the options and suggest alternatives. An insolvency proceeding is the last on the list. It’s a last resort. We don’t want people to do it if they don’t have to.
Senator C. Deacon: Thank you very much to our witness for an excellent opening comment. Building off Senator Varone’s question, you just started to go into some examples of how you ensure that competition is there because it’s so crucial to ensuring that excellent services are available to people.
It sounds like it’s very easy to identify an unlicensed person when someone who is knowledgeable examines their false certificate, but it’s getting to those who need help and making sure that they are actually aware of that. What do you do in terms of making sure there is an available list of licensed professionals? You said there are about a thousand in the country.
Mr. Cowan: That’s right.
Senator C. Deacon: It’s available, I’m sure, on your website. The point that struck me — and I’ll just leave this with you — is what we are doing to make sure that platforms other than Google are ensuring that the advertisements that people see are, in fact, leading them to a source of the list of licensed professionals that is helpful to competition. What’s happening now, and what recommendations do you have in that regard?
Mr. Cowan: Thank you for the question. As I alluded to in my opening comments, yes, Google is one platform which limits the advertising to licensed professionals. We have other platforms. Social media is a large enterprise, and people enter the internet through different platforms and that sort of thing.
Part of the reason the proposals in Division 8 are there is specifically because the OSB in particular wants to look at and target some of this advertising, which may show up on things like Facebook and other areas, which gives the person viewing it the impression that it’s a legitimate service, that it will give you good advice, that it will be professional and will be all the things that licensed insolvency trustees are required by law to aim for.
These other platforms, while they may not necessarily voluntarily participate the way Google has — although certainly an objective of CAIRP is to try to find those avenues and encourage those platforms to do the same — this legislation will help at least to identify those actors and hopefully reduce their incidence so when people do go online looking for an appropriate person to help them with their debt concerns, they will find their way to a licensed insolvency trustee.
To your point, both on the Office of the Superintendent of Bankruptcy website as well as CAIRP’s website — we have the links there — you can find a licensed insolvency trustee in your area that you can approach.
Senator C. Deacon: Is there anything about the Google initiative that could be shared with us, just how they do that or the process that they go through, perhaps through our clerk, to help us? There is an opportunity to make another recommendation or observation here.
Mr. Cowan: I may be able to do that through people more informed than I am, sir, in terms of the mechanism. I went through that process. There was a point where Google was saying, “Look, there are just too many of these parties out there, a lot of whom seem to be unscrupulous, and we want to stamp it all out.” We had to make a concerted bid to have licensed insolvency trustees not be included in the broad-brush approach they initially took.
Senator Dalphond: Mr. Cowan, I understand from your testimony that you believe there is a problem of illegal practice, like we have in medicine, law and accounting, where normally the profession will sue these people because they are invested with the power to sue that illegal practice.
Who will do the prosecution here? Is it the association or is it the superintendent who will have to pick up and carry the hat?
Mr. Cowan: Based on the proposal in Division 8, it will be the Office of the Superintendent of Bankruptcy that will undertake those actions, but I would assume that they would be receiving tips and information from LITs and others about some of the concerning advertising that’s out there.
Senator Dalphond: You did not suggest that your association be invested with the power to exercise it, like professionals do in law, medicine or accounting, where it is the profession that carries the burden of suing. I understand it is the superintendent.
Mr. Cowan: Yes.
Senator Dalphond: Do you have to pay some dues or fees to the superintendent for the licence?
Mr. Cowan: Yes, there is a licensing fee.
Senator Dalphond: It would be a cost recovery through the licensing system, I suppose?
Mr. Cowan: I would think so, sir.
Senator Dalphond: My question is about the last provision of Division 8, “Solicitation — assignment or proposal.” Although the provision is that every person who is not a licensed trustee commits an offence or can be asked, a court can order the person to stop. But here that provision says:
Every person that directly or indirectly solicits or canvasses any person to make an assignment or a proposal under this Act . . .
. . . will commit an offence.
In Quebec, I have often heard on the radio some trustees’ offices say, “If you have financial problems and you cannot make ends meet, why don’t you come to us, and we will assist you to file for bankruptcy to get back control of your life?” Isn’t that something that could be indirectly soliciting or canvassing people to make an assignment? Because it doesn’t say “everybody who is not a licensed trustee.”
Mr. Cowan: Yes, it is broad. You’re correct, senator. It does say “every person,” so that includes a licensed insolvency trustee. One of the things that we’re expected to uphold as professionals is that it’s not our job to tell a debtor what to do. We educate the debtor about what their options are, and they make a decision if it would be better to file a bankruptcy or a proposal. Our obligation is to present all the options and have them make an informed choice.
It’s true that, in terms of advertising, there is an advertising directive as well that the superintendent has issued, and it’s up to LITs to adhere to those requirements, and this just strengthens those points.
Senator Dalphond: So that would be complemented by the superintendent’s instructions?
Mr. Cowan: Correct.
Senator Dalphond: Thank you.
Senator Yussuff: Thank you for being here. To stop these bad practices, there are deterrents in the legislation by way of fines and imprisonment. Do you think this is adequate? People are taking the risks, knowing full well they are breaching the legislation that currently exists in regard to being a licensed agent, and they’re not. Do you think this is enough to deter them from the practices they’re engaged in, given the lucrative reality of making a lot of money?
Mr. Cowan: As with any sort of disincentive, any legislation to do something, there is always that cost-benefit analysis for the bad actor. In this case, the amounts that are described in Division 8 are substantial, certainly more substantial than some of the amounts in the other parts of the Bankruptcy and Insolvency Act, which have been there for many years and perhaps are not inflation-adjusted. This would certainly be an excellent start toward deterrence, yes.
Senator Yussuff: Was there any advice to the superintendent about evaluating this within a period of time to see whether this is efficient and effective enough to curtail those unlicensed professionals from doing what they’re doing?
Mr. Cowan: I know that the Superintendent of Bankruptcy and the Office of the Superintendent of Bankruptcy have been concerned and active lately in addressing some of these issues. I think they will find this change in the legislation to be quite helpful, and I would defer to their comments tomorrow. I’m sure they will have more to say about that in terms of their objectives and strategy around this change.
Senator Yussuff: Maybe one last question: In regard to the volume of unlicensed professionals engaged in this, is there any data that your organization could provide that would give us some guidance as to the magnitude of the problem?
Mr. Cowan: I’m not aware of anything off the top of my head, sir, but I can certainly look into it. Sometimes it’s very difficult to determine who is behind the type of advertising we’re seeing and how many actors there are, but it’s certainly something that I think would be helpful in gauging the impact of this.
[Translation]
Senator Henkel: Thank you to the witness.
You mentioned earlier that amounts have been charged — and so I will describe them — for anyone who has a bad practice or offers services they are not legally entitled to offer.
Today, the applicable penalty is $5,000. That penalty has been increased to $100,000. Do you think this penalty or its increase is a deterrent for everyone? I also want to know whether applying this penalty over time — since we know that sometimes the law takes time to be applied — can really solve one of these problems.
[English]
Mr. Cowan: Thank you for the question. I do think that this proposal, and with these kinds of fines, is substantial. Depending on the nature and the degree of the offence — I mean, the legislation does say up to that amount, so ultimately it will be up to the court to decide how much the person may be fined — but it is certainly more substantial, and the ability of the superintendent to pursue these matters will be made easier by the legislation that’s being proposed.
[Translation]
Senator Henkel: I have another question about advertising. I know that, in general, some professionals are not allowed to advertise their services, or there are certain conditions.
I have noticed that the public is actually not well informed, the evidence being an incredible increase in these malicious ways of doing things. Also, some members of the public — so I’m talking about Canadians — are at a disadvantage and don’t seem to know yet where to go, for example, to find a regulated trustee, because they are not properly informed.
Here’s my question: Don’t you think it’s high time to differentiate — perhaps in this bill or division — between advertising to sell a product and advertising by an office or association, such as yours, to properly inform the public?
[English]
Mr. Cowan: Thank you for the question, senator. I completely agree. Certainly, one of the objectives of our association of CAIRP has been to try to raise awareness amongst Canadians of the LIT profession and what we offer. Most people, of course, don’t seek out these things and don’t explore these things on the internet just for fun. They do it when they actually have a financial problem, when they’re in distress. It’s in those moments of anxiety and nervousness that they will try to reach out on the internet or in other ways. And then, unfortunately, sometimes they don’t get good information.
This is true of a lot of things. Even just in general information, sometimes we’ve had people come in, and they had an opinion about how, let’s say, bankruptcy works, but they were reading an American site, so they weren’t getting good information that way either.
So, absolutely, I would very much like people to understand and be aware of the licensed insolvency trustee and the insolvency options. Even if they don’t need it, maybe a friend or family member does.
Senator Ringuette: I have a few short questions, just to clarify. Who certifies the members of your association?
Mr. Cowan: It’s a good question. In order to become a licensed insolvency trustee, one has to go through a rigorous education program. That program is jointly operated between the Office of the Superintendent of Bankruptcy and our association. There is an experience requirement. There is a two-day written exam that a trustee must sit, and then there is an oral examination board that they must also sit. So it is a very rigorous process. It typically takes two to three years to go through the process to become a trustee, and you have to have the experience, the practical requirement, satisfied as well. It covers both the personal as well as the corporate insolvency scenario, so both sides of that.
Senator Ringuette: But who certifies you as a professional trustee?
Mr. Cowan: The Office of the Superintendent of Bankruptcy issues the licence that allows me to be a trustee.
Senator Ringuette: And then you are allowed into the Canadian association once you have that recognition?
Mr. Cowan: Currently, to become a full member of our association, you must be a licensed insolvency trustee; that’s correct.
Senator Ringuette: So there lies the link between your profession and the office of the superintendent. Okay, thank you. That’s what I wanted to clarify.
Mr. Cowan: You’re welcome.
[Translation]
The Chair: I would like to follow up on Senator Ringuette’s question.
Is that also the case in Quebec? I saw that some of your 400 members come from Quebec. We know that in Quebec, there’s the Autorité des marchés financiers and there are some professional associations, but is it handled the same way for your members from Quebec?
Finally, does the proposed change mean that the Government of Quebec will have to adopt the same change, or will it apply to Quebec regardless? Maybe I’ll ask the same question to the Department of Finance representatives tomorrow as well.
[English]
Mr. Cowan: I practise in Ontario, so I can’t speak a great deal about the Quebec experience. However, this is federal legislation, and the Office of the Superintendent of Bankruptcy is a federal entity. So, in that sense, those regulations, those expectations of LITs are the same across the country. I don’t know whether there would be anything that Quebec would have to do in addition to the proposed changes to align somehow with them. I can’t answer that. I’m sorry.
The Chair: But from coast to coast, all members are with you.
Mr. Cowan: Coast to coast.
The Chair: Okay, thank you.
Colleagues, we have been quite efficient and have 10 minutes left, giving us time for a second round.
Senator Varone: Mr. Cowan, at the end of your last answer, you talked about accredited credit counsellors. Has there been any discussion or thought process with respect to modelling insolvency trusteeship the same way Legal Aid has modelled itself for those Canadians who just can’t afford a lawyer? Is there room within that industry — and I know who you’re pushing out and who you want to knock out of the box. But it seems that there is room for a lower-level — I’m not going to say free for Canadians, but the price point is different. Probably the issues are much different; they’re much more personal. Is there room to model something after the Legal Aid organizations that are scattered throughout the provinces in Canada, dealing with trustees or dealing with insolvencies and bankruptcies?
Mr. Cowan: It’s a great question. Over the years, there has been some discussion about this, but there is nothing specifically in play right now, as far as I’m aware, in that respect.
Again, referring to my opening remarks, in my experience as a trustee and in the insolvency industry for the past roughly 25 years, if an individual — or, for that matter, someone with a business — comes in and says, “I don’t know what to do; I’m under water and need help with my debts,” the initial interview is completely without charge. We will actually come up with a practical solution or practical options for that person during that meeting, and they will go away informed and be able to make a choice about what they want to do.
In terms of cost, it’s not the same perhaps as if you go to a lawyer because you have to expect to pay something, and maybe a paralegal would be cheaper. From that point of view, the vast majority of members do not charge for the initial consultation, and you come to a practical end in that conversation.
Senator Varone: That’s the initial stage. I’m talking about the follow-up. I don’t think there are any “red tag” days for trustees in bankruptcy. You guys do pretty well. I’m just looking for support for Canadians who actually need to go through something but just can’t afford your services.
Mr. Cowan: Again, bear in mind that there is really no money advanced by the debtor until they actually start the legal process. At that point in time, they no longer have debts to pay because if a bankruptcy or a consumer proposal has been filed, they’re no longer required to pay their debts. They’re only required to pay whatever the bankruptcy legislation or the consumer proposal calls for. In that respect, in most cases, it’s relatively less arduous than what they were facing before they initiated those processes.
Senator C. Deacon: Thank you again for your excellent testimony, Mr. Cowan. It has been very clear.
I’m wondering about these nefarious folks. Is there evidence of them using this path of presenting themselves as registered experts to commit fraud with these individuals? Have you seen that path open? It certainly came to mind in one of your answers. Thank you.
Mr. Cowan: Yes, thank you for the question. I have. In my practice over the course of the last two or more decades, I’ve seen examples where someone goes to a debt consultant or adviser, and they pay a fee that is sometimes $2,000 or $3,000 for the advice they’re being given, and ultimately they will find their way to a trustee because they realize that there are no options available to them other than filing a bankruptcy or something like that. We go through the same process when we meet with them from start to finish to see what their options really are.
Often, we discover that the information and advice they’ve been given are incomplete or incorrect. That’s disheartening for the debtor because they thought things were going to work a certain way and it turns out that they’re not. Sometimes it’s even a situation where, because of something that has been overlooked or downplayed, the debtor will file a proceeding and only discover after the fact that maybe they shouldn’t have, but there was something the trustee didn’t know because they thought it was irrelevant or inconsequential, and that was because of the involvement of the debt adviser.
Senator C. Deacon: Have you found any impersonators operating from outside of Canada? That’s the other thing that came to mind. They could be earning trust and getting banking credentials from these individuals to learn more and pretend to be really investigating and taking care of them. Has that ever come to pass? Again, I want to make sure we’re considering all the ways in which prevention of this needs to reach perhaps beyond the fines and Canadian courts and the Canadian registrar. Thank you.
Mr. Cowan: Yes, it’s a question that has come up in my mind as well. Fortunately, to date, as far as I’m aware, I haven’t seen any evidence of bodies or entities from outside of Canada trying to do this. They seem to be in Canada. During the pandemic, we basically ended up being more of an online society. We’re doing things by video, phone and everything else that we weren’t doing before. Before the pandemic, most people who came to see me as a trustee came in person. Now, the majority of people come in by video or telephone. That means a bad actor could be in British Columbia talking to an Ontarian, or someone somewhere else in the country could be talking to someone in Quebec.
These things are concerning because of the scope and the fact that it is coast to coast, but I haven’t seen anything from outside of Canada yet, which is a comfort, at least.
Senator C. Deacon: Thank you very much.
The Chair: Thank you, Mr. Cowan, for your testimony, on behalf of my colleagues. We will take it into consideration. It was very informative.
Colleagues, before moving to the next portion, I would like to remind you that our next public meeting will be held tomorrow, Thursday, September 24, at 9:30.
(The committee continued in camera.)