NEWS RELEASE

Monday, February 26, 2007

OTTAWA - Today, the Canadian Community Reinvestment Coalition (CCRC) called on federal Finance Minister Jim Flaherty to hold his upcoming meeting with representatives of Canada’s big banks in public, not behind closed doors, and to let  each bank know he wants answers at the meeting to 10 key questions about their operations, not just about bank fees.

The CCRC also called on the Senate Committee on Banking, Trade and Commerce to insist bank representatives answer the 10 questions when it holds hearings on Bill C-37 (which amends the Bank Act and other federal financial institution laws), and called on the House of Commons Finance Committee to also insist on answers to the 10 questions when it holds its upcoming hearings on banking fees.  The CCRC testifed last Monday before the House Finance Committee on Bill C-37 (To see the CCRC's submission to the Committee, click here).

The federal Conservatives’ Bill C-37 changes federal financial institution laws including the Bank Act, but the bill contains only one consumer protection measure (reducing the time period banks can put a hold on a cheque to 4-7 days) and no significant bank accountability measures.  As a result, Canada’s banking laws will continue to have key gaps that were closed 20 years ago in the U.S.

“If Finance Minister Flaherty is actually interested in holding the banks accountable he should meet with them in public, not behind closed doors, require them to answer questions not only about bank fees but also about their overall customer service, lending and investment records, and then take action to close key gaps in Canada’s bank accountability laws,” said Duff Conacher, Coordinator of Democracy Watch and Chairperson of the CCRC.  "Talk is cheap, cheaper than many bank fees, and many finance ministers and politicians in the past 20 years have talked about holding banks accountable but haven’t done enough to ensure banks serve all Canadians fairly and well with fair prices and interest rates."

The 10 key questions the Finance Minister and the committees should require the banks to answer are as follows (and if the banks refuse to answer the Minister and committees should require disclosure of the information):

On banking fees and credit card interest rates

1. How many new fees has each bank introduced in the past 15 years in each area of their operations, what are the new fees, and how many fees has each bank increased in the past 15 years in each area of their operations, and what fees have been increased?

2. How many fees has each bank decreased in the past 15 years in each area of their operations, and what fees have been decreased?

3. How much revenue and profit has each bank made from fees in each area of their operations each year for the past 15 years?

4. How much money has each bank saved in total over the past 15 years by withdrawing full service through shutting down branches and firing or shifting tellers to selling investment products and services?

5. Given that:

access to basic banking services is an essential service according to 90 percent of Canadians;

companies in other sectors providing essential services (for example, energy utilities) are required to justify any price increases in public hearings;

fees to use another bank’s or company’s machine have increased since 2000 even though the number of competitors and machines has increased (in other words, more competition has produced higher, not lower, prices);

even if the banks eliminated the extra charge (of about $1.50) they added in 2000-2001 to the $2.00 to $3.00 in account and Interac fees they were already charging for using another bank’s self-service bank machine, the banks could easily add another similar fee to another part of their operations, 

6. How much has each bank’s credit card division cost, and produced in revenue and profit, each year for the past 15 years, and given that bank credit card interest rates have remained for the past decade at historically high levels when compared to the prime lending rate, will the banks agree to an independent annual audit (for example, by the Auditor General) of the profit they make from their credit card operations, and agree to lower interest rates if the audit finds excess profit?

7. How much money does each bank spend each year on each of following three activities: 1. lobbying; 2. advertising, and; 3. donations (directly and through their foundations) and do the banks think it is fair that they charge their customers extra amounts for products and services in order to have this money to advance the banks’ agenda through lobbying, advertising and donations -- in other words, do they think it is fair that bank customers pay the banks’ costs of pushing the banks’ agenda?

8. Given that customers pay for all bank lobbying and advertising and donations, will the banks help balance the marketplace by working with the federal government to facilitate, by enclosing a one-page promotion pamphlet in their mailings to their customers, the creation of a national, customer-funded, democratically structured, customer-directed “Financial Consumer Organization” (To see the CCRC's position paper describing the FCO proposal in detail, click here) that will assist bank customers and lobby on their behalf? (NOTE: Creating such an organization using the pamphlet method was recommended by the Task Force on the Future of the Canadian Financial Services Sector recommended in its September 1998 Report (See Recommendation #56(b) on page 208 of the Report), and the House of Commons and Senate committees that reviewed the report endorsed the recommendation).

9.  Given that: 
• the Bank of Montreal, Royal Bank and TD-Canada Trust own and operate profitable, successful subsidiaries in the U.S. that are required to comply with the detailed service, lending and investment disclosure and grading system under the U.S. Community Reinvestment Act (CRA) and related laws; 
• access to basic banking services is an essential service according to 90 percent of Canadians;
• the closure, without any public interest review, of bank branches in mostly low-income neighbourhoods across Canada has created a two-tier system that essentially forces many people to use gouging cheque-cashing outlets and predatory lenders; 
• data gathered through the SME (Small- and Medium-Sized Enterprises) Financing Data Initiative is either very incomplete or shows some evidence of unjustifiable barriers that exist for some borrowers, and;
• it is very important to the overall health of Canada’s economy and society that all credit-worthy people, SMEs and other organizations get the financing they need to create businesses, affordable housing and other community developments,

On processing cheques and other transactions

10. Given that most cheques are processed in one day, and many other payments are processed by the banks much more quickly than the time periods they actually use to give customers credit for deposits or payments or other transfers, will the banks agree to a regulated sliding scale of time limits for holds on cheques and payment processes that is stronger than the 4-7 day cheque hold limit contained in Bill C-37?