| Spring 2012
Urgent: Write now to support better
banking laws, and a strong public interest review
process for proposed bank mergers and takeovers
BACKGROUND (See Action Letter below)
The bank mergers proposed in 1998 were stopped, but TD
Bank was allowed to take over Canada Trust in February
2000, banks and other financial institutions continue to
provide poor service to many Canadians, and bank mergers
will likely be proposd in the future.
The federal government released a policy paper on
financial services at the end of June 1999, and introduced
draft legislation in the form of Bill C-38 on June 13,
2000, but Bill C-38 was derailed by the fall 2000 federal
election.
Bill C-38 was re-introduced as Bill C-8 in February 2001,
and was passed by Parliament in June 2001.
Bill C-8 contained some good measures, but left some key
gaps in bank regulation (For details, see Comparison
Between Bill C-8 and CCRC Recommendations).
In late 2006, the federal government introduced Bill C-37
(which passed in April 2007) but it contained a couple of
ineffective measures that only slightly increase bank
accountability in Canada (For details, see the CCRC's Analysis of Bill
C-37).
In 2011, Bill S-5 was introduced, but all it did was
strengthen a couple of measures and increase penalties
from $250,000 maximum to $500,000 maximum (which is much
too low).
The federal government has an ongoing review of the Bank
Act -- so please let the government know you want
Canada's banking law strengthened to prevent and penalize
gouging and abuse of customers, businesses and communities
by Canada's big banks.
In addition, the federal government has an ongoing public
consultation process on the review process for bank
mergers.
Below are suggestions for pushing the government to close
these gaps in your letter to Prime Minister Stephen
Harper, Finance Minister Jim Flaherty, opposition party
leaders, and your MP. Also, it is very helpful if you
include examples in your letter of poor service you have
received from banks or other financial institutions.
ACTION LETTER
(Please copy and send the letter to the addresses below, and please add to the
letter your personal examples of unfair treatment you have
received by Canada’s big banks and/or ways in which you
think the banks act irresponsibly or unfairly)
Dear Prime Minister Harper / Finance Minister Flaherty /
Opposition Party leader / Your MP:
The federal government strengthened bank accountability by
including some good measures Bill C-8 (passed in June 2001).
However, some key gaps were left that made it difficult to
ensure banks and other financial institutions serve all
Canadians fairly and well and use our money responsibly, and
Bill C-37 (passed in 2007) did little to close these
gaps. In 2011, Bill S-5 was introduced, but all it did
was strengthen a couple of measures and increase penalties
from $250,000 maximum to $500,000 maximum (which is much too
low).
Canada's big six banks reported record annual profits in
2011 totalling $25.46 billion (up 19.8% from $21.15 billion
in 2010), but still the federal government continues to fail
to require the banks to do anything to ensure better service
and prices for customers, and more responsible lending and
investing, even though during 2009-2010 the government
offered the banks the largest subsidy ever of up to $135
billion (most of it by having CMHC purchase mortgages from
the banks).
As a result of the subsidies, and interest rate and fee
increases imposed by the banks in the past couple of years,
the banks have not only recorded record profits, they have
also given their executives more than $10 million in
bonuses.
I'm writing to urge you and the federal government to make
the changes needed to ensure our big banks meet our needs,
lend and invest our money responsibly, and remain
Canadian-owned and controlled.
The following key changes must be made to ensure better
Canadian big banks (See details :
- Facilitate the creation of a Financial Consumer
Organization (FCO) to help consumers (as recommended by
the Task Force on the Future of the Canadian Financial
Services Sector and a House and Senate committee in
1998), and an Individual Investor Organization (IIO), by
requiring banks and other financial institutions to
enclose an FCO information pamphlet in their mailings to
customers, and an IIO information pamphlet in their
mailings to shareholders, with both pamphlets inviting
people to join the watchdog groups at a nominal annual
membership fee;
- Require banks and trust companies to provide detailed
information on loans, investments and services to
customers, as required in the U.S (to track whether
banks are fairly meeting the needs of individuals and
businesses on a community-by-community level and, as in
the U.S., to require corrective action if banks are not
fairly meeting customer needs);
- Empower the Competition Bureau and Financial Consumer
Agency of Canada (FCAC) to conduct an audit of profits
from service charges and credit card interest rates, and
reduction in competition community-by-community across
Canada, and savings from closing branches and firing
tellers, over the past 15 years, and require banks to
cut charges and open branches if past profits were
excessive;
- Prohibit any future service charge or credit card
interest rate increases if the bank can't prove the
increase is justified;
- Require banks and trust companies to disclose the
profit/loss record for any branch proposed to be closed,
to allow for a full review of the reasons for the
closure;
- Require banks and trust companies to prove that they
have a fair, responsible and very good service, lending
and investment record every year for the past 10 years
as a mandatory condition for any financial institution
bidding on federal government contracts;
- Require the Financial Consumer Agency of Canada
Commissioner to conduct "mystery shopper" audits of
financial institution compliance with laws at least
every 3 years, and to disclose the name of the financial
institution and the terms of settlement whenever the
Commissioner finds that an institution has violated the
law (currently, the Commissioner can only disclose the
name of the institution if the Commissioner prosecutes
the institution), and change the complaint process to
require all financial institution to be covered by the
Ombudsman for Banking and Investments (OBSI) and allow
consumers to complain to the OBSI directly at any time
without having to go first to their bank's ombudsman;
- Give customers access to the money they deposit by
cheque as soon as the cheque clears, and;
- Given that each of the big banks makes billions of
dollars each year, increase the maximum penalty for
violating the Bank Act from the too-low amount
of $200,000 to the more effective penalty of $50
million.
Canadians have made it clear in every poll conducted over
the past 15 years that they need, and want, better
banks. Please close these gaps by passing a law to
ensure that all financial institutions in Canada serve all
Canadians fairly and well, use our money responsibly, and
can be held accountable for poor lending, investment or
service records.
And please do not let Canada's banks take over any other
financial institution, or merge together, before you have
set up the Financial Consumer Organization and Individual
Investor Organization, and the strict bank lending,
investment and service disclosure and evaluation system
outlined above.
Please let me know what steps you are taking to introduce
bills to close these bank accountability loopholes, to
pledging in your party's election platform to close these
loopholes.
My vote in the next election will very much depend on
your response. I look forward to hearing from you.
Sincerely,
(put your name, postal address and email address here,
and send the letter to the addresses below)
********
DETAILS
about the 9 bank accountability proposals made in the
above letter:
- The Task
Force
on
the Future of the Canadian Financial Services Sector
recommended the creation of the Financial Consumer
Organization (FCO) in its September
1998
Report (See Recommendation #56(b) on page 208 of
the Report), and the House of Commons Finance Committee
and Senate Banking, Trade and Commerce Committee
endorsed the recommendation in their December 1998
reports. To see a summary of the FCO
proposal (on the Democracy Watch website), click here.
To see the
CCRC's full position paper describing the FCO proposal
in detail, click
here, and for more details, click
here). The creation of the Individual
Investor Organization (IIO) was recommended by an
Ontario parliamentary committee in September 2006.
To see a summary
of the IIO proposal, click
here.
- To see details about the U.S. Community
Reinvestment Act (CRA), click
here -- To see details about the $4.5
trillion in reinvestments that have resulted from the
CRA since 1977 (in a PDF-format document), click
here); and prohibit bank takeovers and mergers
(such as TD Bank's takeover of Canada Trust -- To
see the CCRC's review of the TD Bank takeover of
Canada Trust, click
here) if the disclosed information shows that they
do not serve all customers well -- To see the
CCRC's position paper describing how this bank
accountability system should work, click here;
- To see details about the proposal to audit on
cutting of banking branches and services, and prices and
interest rate hikes, over the past 15 years in Canada, click
here;
- To see details about the proposal to prohibit
any price or interest rate increases by the banks unless
they can justify the increase, click
here;
- To see details about the proposal to require
banks and trust companies to disclose the profit/loss
record for any branch proposed to be closed, click
here;
- To see the CCRC's position paper describing how
each bank's lending, investment and service record could
be evaluated regularly, click here; and to
see the CCRC's position paper concerning
evaluating bank mergers and takeovers and competition
issues, click here;
- To see details about the flawed powers of the
Financial Consumer Agency of Canada Commissioner to
disclose the name of financial institution's that break
the law, click
here and view subsection II(c);
- Bill C-37 (which passed in April 2007) only reduces
the cheque hold period from the usual 10 days to 4-7
days, even though 98 percent of cheques clear in one
day, and;
- Bill C-37 (which passed in April 2007) increased the
maximum penalty from $100,000 to only $200,000, a
meaningless penalty for Canada's big banks which each
make $15 billion in revenue each year.
THE ADDRESSES
Please send your letter for free (no postage necessary),
to Prime Minister Stephen Harper, Finance Minister Jim
Flaherty, Interim Liberal Party Leader Bob Rae, the NDP
and Green Party Leader Elizabeth May, and your own MP
all at the following address (NO POSTAGE NEEDED):
House of Commons
Ottawa, Canada
K1A 0A6
(To find your MP using your postal code, click
here)
OR send your letter by email to all the
federal party leaders, the Finance Minister, and key MPs
and Senators at:
pm@pm.gc.ca, harper.s@parl.gc.ca, bob.rae@parl.gc.ca, rae.b0@parl.gc.ca,
ndpadmin@fed.ndp.ca, may.e@parl.gc.ca,
may.e0@parl.gc.ca, leader@greenparty.ca,
info@greenparty.ca, media@greenparty.ca, fina@parl.gc.ca,
dwatch@web.net, indu@parl.gc.ca,
banking_banques@sen.parl.gc.ca
You can also fax your letter to Stephen Harper at fax:
(613) 941-6900 or Jim Flaherty at fax: (613) 995-5176.
NOTE: Email letters are not read as thoroughly, and are
not as influential over policy-makers, as hand-written
letters sent by mail or faxed. So please, if you have the
time, write a letter and send it by mail or fax to these
two ministers.
OR send your letter by fax or email individually
to:
Prime Minister and Conservative Party Leader Stephen
Harper
Fax: 613-941-6900
Email: <pm@pm.gc.ca>
Email: <harper.s@parl.gc.ca>
Liberal Interim Leader Bob Rae
Fax: 613-947-0310
Email: raeb0@parl.gc.ca, raeb@parl.gc.ca
NDP
Fax: 613-230-9950
Email: <ndpadmin@fed.ndp.ca>
Green Party Leader Elizabeth May
Email: <leader@greenparty.ca>
If you have time, also write to the:
House of Commons Finance and Industry Committees
6th Floor, 131 Queen Street
Ottawa, Ontario K1A 0A6
Fax: (613) 947-9670
Email: fina@parl.gc.ca
and indu@parl.gc.ca
and
Senate Committee on Banking, Trade and Commerce
Senate of Canada
Ottawa, Ontario, K1A 0A4
Fax: (613) 947-2104
Email: banking_banques@sen.parl.gc.ca
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