CREDIT UNION CENTRAL OF ONTARIO
CANADIAN CO-OPERATIVE ASSOCIATION / CONSEIL DE LA COOPÉRATION DE L'ONTARIO
ASSOCIATION OF CREDIT UNIONS OF ONTARIO
ASSOCIATION OF CANADIAN PENSION MANAGEMENT
CONTENTS
Thursday 2 October 1997
Financial Services Commission of Ontario Act, 1997, Bill 140,
Mr Eves / Loi de 1997 sur la Commission des services
financiers de l'Ontario, projet de loi 140, M. Eves
Credit Union Central of Ontario
Mr David Agnew
Ms Lorrie McKee
Canadian Co-operative Association / Conseil de la Coopération de l'Ontario
Mr Claude Gauthier
Mr Brian Iler
Ms Judy Goldie
Association of Credit Unions of Ontario
Mr Thomas Robins
Association of Canadian Pension Management
Mr Ross Gascho
Ms Mary Ross Hendriks
STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS
Chair / Président
Mr Terence H. Young (Halton Centre / -Centre PC)
Vice-Chair / Vice-Président
Mr Wayne Wettlaufer (Kitchener PC)
Mr Ted Arnott (Wellington PC)
Ms Isabel Bassett (St Andrew-St Patrick PC)
Mr Jim Brown (Scarborough West / -Ouest PC)
Mr Monte Kwinter (Wilson Heights L)
Mr Gerry Phillips (Scarborough-Agincourt L)
Mr Gilles Pouliot (Lake Nipigon / Lac-Nipigon ND)
Mr E.J. Douglas Rollins (Quinte PC)
Mr Wayne Wettlaufer (Kitchener PC)
Mr Terence H. Young (Halton Centre / -Centre PC)
Substitutions / Membres remplaçants
Mr Bill Grimmett (Muskoka-Georgian Bay /
Muskoka-Baie-Georgienne PC)
Mr Bruce Crozier (Essex South / -Sud L)
Clerk / Greffière
Ms Rosemarie Singh
Staff / Personnel
Alison Drummond, research officer, Legislative Research Service
The committee met at 1004 in room 151.
FINANCIAL SERVICES COMMISSION OF ONTARIO ACT, 1997 / LOI DE 1997 SUR LA COMMISSION DES SERVICES FINANCIERS DE L'ONTARIO
Consideration of Bill 140, An Act to establish the Financial Services Commission of Ontario and to make complementary amendments to other statutes / Projet de loi 140, Loi créant la Commission des services financiers de l'Ontario et apportant des modifications complémentaires à d'autres lois.
CREDIT UNION CENTRAL OF ONTARIO
The Chair (Mr Terence H. Young): I'll call this meeting to order. We're here to hear from delegations on Bill 140, An Act to establish the Financial Services Commission of Ontario and to make complementary amendments to other statutes. Our first delegation today is from the Credit Union Central of Ontario. Good morning. You have half an hour to use as you wish.
Mr David Agnew: Thank you very much, Mr Chair, and I want to thank the committee for this opportunity to appear. I'm David Agnew, and this is Lorrie McKee sitting beside me, from the Credit Union Central of Ontario. We appear this morning on behalf of our approximately 340 member credit unions, our 5,000 employees in the credit unions, our 5,000 volunteers who serve on the boards of directors of our credit unions and the nearly one million Ontarians who are members of our credit unions.
You have had distributed to you a brief from us, and appended to it are some amendments. It's a very brief brief. We realize that time is of the essence not just this morning but for this bill, so we want to be very pithy in our comments. Lorrie will follow me with some details in terms of the amendments we're proposing and some other issues we raise.
I just wanted to underline to you that Bill 140 is important to us because everything the government does affects our ability to compete. This is a marketplace and an industry and a sector which is undergoing massive, rapid change. I don't have to tell you that the banks are getting bigger, the trust industry, with one notable exception, has virtually disappeared and the insurance industry is consolidating. We used to boast that we were the real alternative to the banks. It's now becoming a truism that we're the only alternative to the banks, given what's happening in the industry. Our strength is that we're not the banks. That's part of our unique market niche and certainly our competitive advantage, but of course in the marketplace we're dealing in, with the need for economies of scale and massive investments, it's also somewhat of a disadvantage not to be of that size.
Our bread-and-butter activity, taking deposits and making loans, is disappearing as a lucrative source of revenue for us and all our players. The switch now is into a much broader range of services and products where you make income on fees. For us to be able to compete, we have to keep up with the competition and meet the modern consumer's demands for new services and new products. We think the public interest is served by a domestic alternative to the banks, but we have to be competitive. We look to you, as our regulators and the people who are the fathers of our legislation, to make sure that we continue to be a viable alternative.
We're here in a constructive spirit today. We propose that the committee consider the amendments you have before you. We think those amendments both honour the principles and the objectives of the bill that you unanimously adopted on second reading. We're here in this spirit, to try to improve the bill and work with the bill.
At that, I turn it over to Lorrie to take you through the actual details of the amendments.
Ms Lorrie McKee: As David stated, in principle we're not here to object to the creation of a Financial Services Commission. In fact, many of the goals and objectives of this bill are similar to goals and objectives that our members have. Merging backroom operations, streamlining regulations and reducing government costs are also goals that are shared by the credit union system.
Credit unions are having to seek out similar solutions in order to compete today at all levels: regionally, provincially and nationally. We're having to look for solutions, different ways to operate that result in greater efficiencies and cost savings for consumers. At the same time, the Financial Services Commission provides an opportunity for greater self-regulation of our sector. This is also welcome to us.
The new tribunal is considered to be an improvement over the current situation. Right now perhaps there's not the appropriate separation between regulation and adjudicative functions that is needed.
The new commission does create new fees for our credit unions. Obviously, the introduction of new fees is a concern for our members. There are additional uncertainties around these fees because at this point we don't know what they're going to be. That's going to be set out in regulation.
Our greatest concern, and why we're here today, is to talk about the accountability the commission will have to industry. As a result, the amendments we've put forward are intended to increase the level of accountability the commission has to industry. They don't change the fundamental objectives of the bill, nor do they alter the government's desired outcome, which is to create this new commission.
We've recommended three amendments, and they're appended to our brief. The first amendment is intended to give both financial and operational measures that will give industry an ability to assess the commission's performance. Since industry is going to be financially responsible for 100% of the costs, each regulated sector is going to want to know that it's paying for only its share of the costs. Further, in order for industry to judge whether it's getting good value for its money, industry is going to want a breakdown of how the commission, the tribunal and the ministry are spending its money.
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It's our belief that to truly be accountable, an industry finance commission must be required to report regularly to the industries that are paying its bills. Therefore, we've recommended that the following reports be produced by the commission: regular financial reporting, cost-benefit analysis of regulation, annual value-for-money audits and an annual business plan. As currently drafted, the bill only requires an annual report to the minister, which is tabled in the Legislature, and an annual audit by the Provincial Auditor.
Our BC credit unions have been working under a Financial Services Commission since 1990. In their case they've had continual frustration with the commission that they don't get the reporting they feel they need to adequately judge that they are paying their share of the bills and only their share of the bills.
The purpose of our first amendment, therefore, is to build in some stronger accountability and some mechanisms that will help improve accountability than currently exists in the bill.
The second amendment we've recommended is that an industry-wide advisory committee be established. This committee would be made up of representatives from each of the industries regulated in the commission. It would act as a resource and sounding board for the commission. For example, it would review the financial reports, the fee levels, the assessment formulas and business plans. It's our view that both industry and the commission could benefit from this type of committee by the ongoing dialogue it would create.
The commission is structured to operate on a cost recovery basis. This principle is stated in the explanatory notes to the bill. However, since the bill doesn't see a situation where there would be a surplus or a deficit, it's silent on how a surplus or deficit would be dealt with if one should occur.
Again I look at the British Columbia example. That commission in the last two years has operated with a surplus of almost $2 million. That surplus did not result in lower fees for industry. Rather, it was put into government general revenues. Ontario credit unions want to ensure that the fees to industry will be adjusted so that over a two-year period the commission operates on a revenue-neutral basis. Therefore, we're suggesting the addition of a clause in the bill that will clearly outline how a surplus or deficit would be treated. That's what our third amendment seeks to do.
Also listed in our brief are some other issues. These issues are equally important to us, but we believe these can be dealt with through regulation: the fee structure, the assessment formulas and the timing and implementation, for example. We look forward to those discussions with government as soon as possible.
Much of the discussion we've had around Bill 140 has dealt with the cost savings that government will have as a result of the bill. Yet we see the Financial Services Commission as an opportunity for the ministry, our deposit insurer and ourselves to sit down and talk about their respective roles and responsibilities, to seriously take a look at ways that we can reduce duplication, streamline regulation and reduce red tape. It's our hope that this new commission will provide the starting point to achieve some of these other objectives.
That concludes my comments. David is just going to add a few more points.
Mr Agnew: Our survival, basically, depends on a public policy environment responsive to what we would fairly describe as our unique needs and our unique place in the financial services industry. If you walk in our shoes, in the last, say, three years what we've seen from government is that we've had an imposition of the provincial sales tax on our deposit insurance premiums, we have had more recently the introduction of a new capital tax on a good number of our members, and now we will have the user-pay scheme through the Financial Services Commission. We've had an issue on the table for some time, which is the level of our deposit insurance premiums, and there hasn't been any movement on that.
Again, if you put yourselves in our shoes, this bill, which as Lorrie says we do not object to at all in principle, for us at the moment anyway simply means increased costs. We want to look at the glass half full as opposed to half empty and look at it as an opportunity to put into context some of those broader issues that affect our industry, such as the premiums and some other issues, including the duplicative regulatory regime we're now working under. It offers an opportunity for the Legislature and the government to reaffirm their commitment to the credit union and the caisses populaires system.
Perhaps the next time we're here we'll be dealing with those kinds of issues and we can be somewhat more enthusiastically supportive. But I just want to repeat that we're here in the spirit of constructive comment on the bill and we ask for your consideration of our amendments. Thank you.
The Chair: Of your allotted time there is approximately 20 minutes left. If you'd like to accept questions from committee members, we'll start with the official opposition. It will be approximately seven minutes of your time.
Mr Gerry Phillips (Scarborough-Agincourt): I appreciate the presentation. The amendments on the surface seem quite sensible and fairly benign. I wonder if the government has had a chance to look at them and whether there's any feeling they would be acceptable to the government.
Mr Bill Grimmett (Muskoka-Georgian Bay): The people presenting here today have met with me earlier in the week and they were kind enough to provide me with the suggested amendments. At this point we feel that the legislation addresses the concerns they have in their suggested amendments, but perhaps when the time comes around to us I'll provide a little longer explanation of our position on each of the amendments.
The second amendment suggests a working group be set up. I understand that in all the discussions between the credit union groups and the ministry this has been agreed to. We feel that the group can be set up in a less formal way than having it in the legislation. Given that the industry is changing from time to time, it probably would be better to have that be flexible.
The other two issues that I think need to be dealt with at length -- if you wish, I can deal with them now.
Mr Phillips: If you're not planning to have something on the accountability, I would ask Mr Agnew to give us an indication of this: If we didn't adopt your recommendation on accountability in terms of reports, what sort of reports would you expect to get if the bill isn't modified? Where are the weaknesses, if you will, in the bill that we should be aware of?
Mr Agnew: We take the perspective that this is a new regime and this is a new form of arranging the public service of Ontario and we applaud those kinds of renovations to the system. But I think there's a quid pro quo, which is that if we are to start paying 100% of the freight over time, then we probably are reasonable in expecting something more than what you would get with a normal ministry report, which is an annual report that is tabled nine months after the end of the fiscal year and tends to be relatively shy on details.
We pay taxes already. We are paying for these things through our regular income tax and lots of other things, including PST, but when we start paying directly for these things in addition to the taxes we're paying, then I think we're entitled to a little more detail and a little more say in exactly how the commission is arranging its affairs.
The value-for-money is very important to us, because all a sudden we're going to be paying for things we didn't pay for before, and things that perhaps we didn't think were all that necessary and perhaps a little irksome we suddenly have to pay the bill for now. That's a different kettle of fish.
Mr Phillips: Have you any indication of what the total cost might be to the credit unions for the commission?
Mr Agnew: No, we don't. It's even difficult to guess. I want to be very clear. We have had several meetings with the officials and they've been very receptive to our ideas. We think it's prudent to codify them because, as one learns in life, governments change and people change and what was somebody's commitment may not be the next person's commitment. That is why we're trying to codify them. For us it's the world of the unknown, and that is partly why, to get back to the accountability measures, we want that kind of detail.
I know from some experience that it's very difficult sometimes to segment the cost of government into particular areas. We could be looking at bills that we're not sure are right on the money. I think we have to have some ability to get in there and really look at the details.
Mr Phillips: You mention under "Additional Issues" the cross-subsidization of costs. I am familiar with this. I think in the trust industry at one time, maybe 10 years ago, there were significant costs incurred because of litigation going on, considerable legal fees and accounting fees. Is that what you're suggesting under "Additional Issues," that the commission should prohibit the cross-subsidization of costs where the credit union organization picks up perhaps substantial costs because of some challenges in the pension industry?
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Mr Agnew: Yes, and I'm sure from the other industry's point of view vice versa, although we don't anticipate this to happen in any industry. But absolutely, that's a very important principle to us. We don't necessarily see in all areas a great synergy between some of these areas. We've never had a whole bunch to do with the pension industry, for instance. I think there will be segmentable costs. Those ought to be clearly segmented so we're not cutting each other's grass.
Mr Gilles Pouliot (Lake Nipigon): Mr Agnew and Ms McKee, it's a pleasure. I certainly wish to thank you for extending the courtesy in terms of a briefing prior to appearing in front of the committee. I understand that the same courtesy was extended to all concerned.
You are perhaps aware that the government has decreed that they should save in the neighbourhood of $25 million with Bill 140. The costs associated with these measures are now transferred to the users. We have no access to regulations. We're asked to acquiesce; we're asked to pass the bill. In principle, we're very much in favour of the bill. We were never opposed to streamlining, to cutting through red tape. It's a situation that sits well with us. However, it would be significant and it would help a great deal if we were cognizant of the associated fee structure.
It's like I like the car, but in the final analysis I will have to find out how much the car will cost. It's very important since your margin is not that of the larger corporations, financial institutions, for instance, not that you're from hand to mouth, but the fee structure is very important to you. Question: Under this revision, under Bill 140, how will your life change in the context of the sector? What will change for you when this is passed in the Leg?
Mr Agnew: In and of itself we don't anticipate operational-type changes because the bill as it's written essentially seems the status quo in terms of the regulatory environment. We have an excellent working relationship with the ministry and the officials within it. We don't anticipate that to change. What will change is our bottom line because we will start to pay, we gather, both annual assessments plus fees for services. That's an additional cost to business.
Mr Pouliot: When you mention "fees for services" -- and I listened intently to your presentation -- if I read the tone correctly, and I may need your help, you've indicated that pension players will keep the commission busy. The pension element is one of the three components in this bill that are being merged. It's a quickly moving world. Do you anticipate in terms of fees that you, as a credit union, will be paying a fee like everyone else, a prorated fee and a user fee, for instance, if you seek recourse at the tribunal vis-à-vis pensions? It's not likely to happen to you, but it will happen to others. Who's going to pick up that bill? Do you expect to pick up the bill?
Mr Agnew: I know it's the government's intention to segment the cost between the industries. I think the scheme is, and these are subject to conversations -- we have been assured up and down and we certainly have no problem in accepting the assurance that we will be consulted on the actual setting of those fees and the transition period. But we would anticipate two kinds of things that we would be paying: an annual assessment, and then presumably if you never have to call the commission you would pay no other fees, except that the ministry continues to do examinations, on a regular schedule, of all credit unions. That's an example of the kind of thing we hope this bill gives us the opportunity to examine: whether in the current environment an examination by the ministry is necessary when we're already examined by our deposit insurer on a regular basis, in fact on a more regular basis than we are by the ministry.
That's the kind of thing where we would hope for an ability on an ongoing basis to talk to government, and through the advisory committee that we're suggesting continue to go back to the operations of the government and suggest things that could change. Some of these things require legislation, but some of them don't. I think there are real opportunities for efficiencies.
Mr Pouliot: On these matters, again, we're supporting Bill l40. I don't find the government of the day, those people there, difficult to deal with. I find them, in these contexts, somewhat accommodating. Yet I must ask you this, Mr Agnew. You're not a big player in the overall scheme. Perhaps it's unintended -- I don't believe they would go that far; it would serve no purpose here -- but could it be that once you read the regulations, one would come away with the impression that the government has conducted a subtle attack on credit unions?
Mr Agnew: I don't think that --
Mr Pouliot: I see this in disproportionate fees, if you wish.
Mr Agnew: I don't think for a moment that's the intention. We also support the bill in principle and we have no problem with the idea of user-pay -- that's certainly the way the world is going -- as long as there's a quid pro quo, which is that we are allowed to do more self-regulation, that we have a very hard look at areas of duplication and overlap and red tape and things with which it is not necessary to go to the commission and have them do a service for a fee. I would hope that those are the kinds of opportunities that are afforded to us.
Mr Pouliot: When all is said and done -- a dollar is a dollar -- for your industry this is a new tax, is it not?
Mr Agnew: It's a new assessment and a new fee schedule. It's a new cost --
Mr Pouliot: Let's not play with words. I need your help here. This is a new tax.
Mr Jim Brown (Scarborough West): He's trying to help.
Mr Agnew: Yes, he certainly is. He's always been helpful, in my recollection. He's been very helpful.
The Chair: Unfortunately, your time is up. We'll have to go to the government's side.
Mr Grimmett: If I could just take a couple minutes to address -- I know some of my colleagues have questions -- the suggested amendments. I agree with Mr Phillips that the suggestions are very practical. In our discussions yesterday or the day before I indicated that I think they are very helpful suggestions on how your industry wishes to deal with the ministry. I know from the discussions that the ministry has had with the credit unions over the past year and a half that these issues have been consistently brought up by you.
I'd like to deal with them in reverse order. The third suggested amendment we feel is addressed by section 25 of the bill. It allows assessments to recover expenditures actually incurred. From talking with the ministry people I can assure you that, assuming that the bill is passed and assuming that we are able to achieve some efficiencies and structure the new organization in a way that we can do that, we will then be in a better position to sit down with each industry. At that time we will be in a better position to provide each industry with our estimate of the actual costs of regulating those industries.
I know from the experience that credit unions have had in British Columbia that there's a certain healthy scepticism about knowing how much the cost of regulation is. But I want to assure you that it's our government's intention to let each industry know what the costs are, because we don't feel there should be cross-subsidization. We feel that the bill addresses that issue. We want to make sure that the industries are enthusiastic in the new operation. We feel that section 25 deals with that issue, but you have my assurance that the issues you raised and the concern the credit union industry has to make sure they're not cross-subsidizing another sector we're taking very seriously.
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The issue of setting up a working committee: We feel it's in the best interests of both the government and the industry to have a flexible situation. I think the ministry has committed to setting up such a group. Probably it would be better if that group were in place sooner rather than later, but we don't feel it needs to be in the legislation, where it would lack flexibility.
The first suggestion you have about accountability, and I know that your industry wants us to set up as efficient an operation as possible -- is it not possible that the requirement of quarterly reporting would in itself add a great deal of cost to the operation of the commission? Remember, those costs are going to be recovered from the sector that incurs them.
Mr Agnew: I appreciate that nothing is ever free in this world, but certainly in our business, and I think in virtually every business, it would be unusual for an entity, an institution, not to report quarterly. That's certainly what we do. We are required to do it by DICO. We as Central do it to our members quarterly and it's fairly brief and fairly top-line. It's the annual that is the really detailed one. So I would hope that there are sufficient management information systems that would allow that to be fairly automated, actually.
Mr Grimmett: Just quickly, the scope of the bill is to require annual reporting, and that addresses the issue of surplus as well, because if there is surplus in the fees or assessments to the industry, they would be adjusted on an annual basis so that surplus wouldn't continue. We think your suggestions are very good and the ministry is going to look at the quarterly reporting issue, but at this point we feel that the annual reporting will give you the kind of information to help you plan for the following year. You can certainly, in your discussions with the ministry as the regime develops, make those suggestions. I think Mr Brown has a question.
Mr Jim Brown: In your preamble, I was so encouraged when you said that you were an alternate source for funding to the banks. You know the banks are making unconscionable profits, nickel and diming individuals with surcharges and bank charges. I think they have probably put more small businesses out of business in the last six or eight years than anyone. So when you said that you're competition for the banks I was really encouraged, although I think in the last 15 years there's only been one new credit union and I, personally, would be concerned about that.
How would this bill limit your ability to grow, to help small and medium-sized enterprises? Would it impair in any way the ability to create new credit unions to increase the source of supply of capital for the small businesses that create all the jobs?
Mr Agnew: Mr Brown, it is, as I said before, a new hit to our net income because this will be another cost of business. To that extent it does impair to that degree, and I'm not going to pretend it's huge. It's another thing, and as I say, it's one more in a series of things that have hit our balance sheet.
One of the things that has to be worked out in the discussions about the assessments and fees, of course, is that there will be a fee for setting up a credit union. There is a fee for amalgamating credit unions, which is sometimes how they remain healthy. Everything we do to try to remain viable and try to remain competitive will now have a fee attached to it.
Mr Jim Brown: There's a fee for setting it up but there has only been one set up in the last 15 years, so that can't be a big problem.
Mr Agnew: But there's certainly a lot of amalgamation activity going on. Name change, all sorts of things will now suddenly have a fee attached to them. Again these are just another thing you have to take into consideration when you're putting together a business plan.
The Chair: Mr Agnew and Ms McKee, your time is up. Thank you very much for coming and for answering questions as well.
CANADIAN CO-OPERATIVE ASSOCIATION / CONSEIL DE LA COOPÉRATION DE L'ONTARIO
The Chair: I ask the Canadian Cooperative Association to please come forward and have a seat at the desk. You might find it helpful to accept questions after initial presentation but it's entirely up to you. I wonder if just before you begin speaking, for the record, you would introduce the people at the table.
Mr Claude Gauthier: My name is Claude Gauthier. I have been a resident of the Mississauga area for the last two years. Before that I was a farmer in Timiskaming in northern Ontario. I've been involved with the agricultural cooperative world for a number of years. I will be presenting a submission today on behalf of CCA and the Conseil de la Coopération de l'Ontario. With me are Judy Goldie, who is the manager of the Ontario region of CCA; and Brian Iler, from the legal firm of Iler Campbell Klippenstein, a Toronto firm that specializes in helping cooperatives from a legal standpoint.
Mr Chairman and members of the committee, I am pleased to have the opportunity to address your committee on behalf of the Canadian Co-operative Association, Ontario region, which we refer to as CCA, and the Conseil de la Coopération de l'Ontario, which we refer to as CCO, to raise our concerns about the Financial Services Commission of Ontario Act, Bill 140.
As a background, the Canadian Co-operative Association is an umbrella organization that supports the growth of cooperative enterprise in Canada. The Ontario region represents the shared interests of over two million members of our cooperatives and credit unions in the province. Membership in our association is quite diverse, from established cooperatives like The Co-operators Group, Growmark and Gay Lea Foods to much smaller federations representing not-for-profit child care and housing.
Le mandat du Conseil de la Coopération de l'Ontario est de favoriser la création de coopératives de façon à encourager le développement socioéconomique dans nos milieux franco-ontariens. Le CCO regroupe depuis 32 ans environ 186 coopératives en Ontario. Ces entreprises représentent plus de 300 000 membres. En 1996, un peu plus de 3500 individus étaient engagés dans le développement de ces entreprises et géraient un actif d'environ 3 $ milliards.
A list of our respective members is appended to this submission. I am, however, speaking today about issues that affect non-financial co-ops, so when I refer to co-ops in this brief I am excluding credit unions, caisses populaires and co-ops that deliver insurance products. In Ontario there are approximately 1,400 co-ops, which represent in excess of $4.1 billion in assets, and I'm talking about the non-financial co-ops.
As you probably know, cooperatives are community-based business ventures that are owned and controlled in the community by the people they serve. They are democratically controlled, with each member having a single vote regardless of his or her investment in the cooperative. Investors in the co-op are its member-owners and users of the cooperatives services, not investors primarily looking for financial returns. Non-members who purchase securities are motivated by a wish to support the goals and objectives of a local business venture, not a desire to achieve speculative gains. While co-ops are organized in a distinctive way, we compete directly with other types of businesses in the same economic sector. Many of these other businesses are not subject to regulation to the degree that we have been operating under or looking at under the financial commission.
The Co-operative Corporations Act establishes the basic framework within which all Ontario co-ops must operate. Up until the creation of the Ministry of Financial Institutions in the late 1980s, co-ops came together with credit unions and caisses populaires under the Ministry of Consumer and Commercial Relations. Regulatory responsibilities for both credit unions and cooperatives were then shifted to what is now the Ministry of Finance. Since both share common values, principles and democratic structure, the government of the day felt that knowledge and an understanding of cooperatives by government staff were required for effective service.
However, co-ops are obviously quite different as businesses in comparison to the other sectors currently regulated by the Ministry of Finance, those same sectors that will now fall under the jurisdiction of the proposed Financial Services Commission. Maintaining our identity and, more importantly, a regulatory regime that is appropriate for a business as opposed to a highly regulated financial institution is not a new issue for us but one that has been brought again to the forefront by the introduction of the Financial Services Commission of Ontario Act. For example, the need to have more flexibility in the way we do business was the key reason we sought changes to the Co-operative Corporations Act in 1994.
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I'd like to address a few key issues. I'll start with the assessments of costs and fee structure.
This aspect of the bill will have a significant impact on the cost of doing business for co-ops, and is the most serious issue for our system. The commission will have the power to levy an assessment on the sectors. CCA and CCO do not believe that an assessment is appropriate to levy against co-ops.
Unlike the financial services sectors that are heavily regulated, co-ops have little and in some cases no ongoing relationship with the ministry. Most not-for-profit and small co-ops only deal with the ministry on incorporations and bylaw changes. Given the nature of our business relationship with the ministry, a sector-wide assessment is not justified. Other forms of businesses and not-for-profit organizations do not have that type of levy and it would be a competitive disadvantage to incorporate as a co-op.
I just might make a point to talk about the group I work with in my day-to-day life through the Growmark organization, which is the Ontario agricultural supply cooperatives. Most of our cooperatives are competing against enterprises that are totally not subject to regulations. You've probably heard in business about the 20-80 rule, where 20% of your business generates 80% of your income. If we look at our membership -- and I'm talking about the member cooperatives under our organization -- 20% of our co-ops probably generate 80% of the income produced by those cooperatives in their communities.
What I'm saying is a lot of the co-ops, the remaining 80%, are basically operating on a break-even, constant approach. The assessment that is being projected or contemplated by this act would probably jeopardize some of those organizations. At least it would reduce their ability to operate in their communities and fulfil the mandate to their local communities.
We could also talk about the fact that within the group that we're talking about here today, the child care cooperative section, which is a not-for-profit group, is operated basically by volunteers. It's the best example of self-help groups that we have out there. Levies in this case would not be in the public interest.
My point is that the majority of the co-ops in the non-financial sector, a very large majority, would be very heartily affected by this possibility of assessment of fees down the road, and this will have a very real chilling effect on the degree to which people in communities would contemplate, appreciate and organize under the cooperative structure.
Therefore, the CCA and CCO recommend that subsection 25(1) of Bill 140, that permits the charging of an assessment, be amended to exempt co-ops incorporated under the Co-operative Corporations Act from assessments.
To date, fees for services to co-ops have been modest and often set in relation to those fees charged to other forms of business. The co-op system is concerned that the resulting fees do not represent a significant barrier to co-op startups and raising capital, and that they must not exceed those fees charged to other forms of business for similar activities.
I talked to the vast majority of our non-financial sector being organized basically on a break-even basis. We also need to recognize that they represent a very small piece of the economic group being regulated under this commission and an assessment would be creating hardship.
The commission has been set up to provide regulatory services to the financial sectors. Much of the structure to be put in place will not serve co-ops. Our system, for example, is excluded from the Financial Services Tribunal. The setting of overheads in any cost recovery process must be transparent enough to ensure that the amount fairly represents the usage of ministry services. We would be pleased to participate in an all-sector committee to look at fair distribution of costs.
I'd like to speak for a moment about co-op regulation and the regulatory framework. The co-op system has been working with the Ministry of Finance to streamline the regulatory process. This work was initiated because of bottlenecks emerging in the system and the opportunity offered by the ministry to participate in the red tape review process. This work has been productive. However, given the mandate of the red tape review, these changes have been incremental. We will require a significant change in this regime if we are to approach an affordable fee structure that also achieves full cost recovery.
At a recent meeting with Deputy Minister of Finance Dina Palozzi and Ross Peebles, the assistant deputy minister for deposit institutions, there was agreement to establish an advisory committee to look comprehensively at the regulatory process, with the objective of recommending ways to achieve a more effective and efficient process. We appreciate the ministry's willingness to commit to this work and ask for the government's support for this initiative, including a flexible time frame for requiring cost recovery should the recommendations require changes to the Co-operative Corporations Act.
The length of time to process offering statements continues to be a concern for our members. As the sector finances more of these services, we want to ensure there are cost-benefit analyses of these regulations and agreed-to performance standards for services.
I'd like to speak to the issue of maintaining effective co-op services. Clearly, as you understand by now, co-ops in our group do not offer financial services like all the other industries that fall within the commission's jurisdiction.
We continue to represent a very small part of the ministry's work. While this was also true within the current structure, during a period of dramatic change the interests of our system and the unique services we require from the government could get overlooked. The co-op system continues to need civil servants with specific expertise and a consistent approach to our work. Establishing an ongoing advisory committee would ensure good communication between the commission and the co-op system.
In conclusion, CCA and CCO recommend the following:
(1) That subsection 25(1) of the financial services act be amended to explicitly exempt from assessments co-ops incorporated under the Co-operative Corporations Act;
(2) That fees applied to services for co-ops set by regulation shall not exceed those charged to other forms of businesses for similar types of activities;
(3) That an all-sector committee be established to review the costs of the commission to ensure transparency in allocating costs;
(4) That an ongoing co-op advisory committee be established to ensure a smooth transition and implementation process; and
(5) That this advisory committee work with the Ministry of Finance to examine the regulatory framework for co-ops, with a view to making recommendations that will ensure an effective and efficient regulatory system. This work shall be completed and implemented before considering full cost recovery through fees for service for co-ops.
Mr Chairman, that's the extent of our written submission.
The Chair: Would you be prepared to accept oral questions now?
Mr Gauthier: Sure, and we will share, if you don't mind.
The Chair: Absolutely. Approximately 15 minutes, which would leave about five minutes per caucus. We'll ask the official opposition to begin.
Mr Phillips: I don't mind doing that. I'm sort of accustomed to alternating.
The Chair: I'm sorry. Yes, by all means; the NDP will start.
Mr Pouliot: Mr Chair, we understand that since we're also with the opposition, official or not, we tend to agree on the same subject matter, which is mainly to support the government, whenever possible, on legislation. For a second I thought Mr Kormos, who is one of my distinguished colleagues, was to join me, but he's a little shy and bashful. He went out with his class, but had a good chance to say hello to David.
What part of northern Ontario are you from, Mr Gauthier?
Mr Gauthier: Timiskaming, New Liskeard, Earlton.
Mr Pouliot: I know the area quite well. I live in Manitouwadge -- not Manitoulin; Manitouwadge. I've been there for 32 years. It's my pleasure indeed.
You seem to be concerned -- you're the second presenter, after the Credit Union Central -- about the fee. In fact, in your conclusion you focus on subsection 25(1), that you'd be "explicitly exempt from assessments." You're not talking about the whole group; you're talking about some part of the group. What is your rationale that some would be exempt from assessment?
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Mr Gauthier: The rationale, and I tried to explain that in our brief, is that the vast majority of this non-financial services co-op group -- and there are exceptions -- are basically operating on a non-profit approach. A lot of them are run by a group of volunteers who choose to use the cooperative incorporation features to organize their work and offer their services. They are operated by community-involved people. These organizations are set up and organized to serve the members of their community.
Indirectly, we are asking these volunteers to put more dollars on the table so they have the ability to offer their community services that are basically required, for two reasons: One is to challenge an unfair supply proposal in the community, and the other would be to ensure that a minimum standard of living exists for those citizens.
Mr Pouliot: Mr Gauthier, every tabled piece of legislation has a compendium. You go to the intent and spirit, you read the written word, the legislation itself, and then there are the regulations, which regulate the oxygen of the legislation. I don't believe, Mr Chair and Mr Parliamentary Assistant, that the intent was to oblige, to mandate people who are under an umbrella of non-profit to pay a fee. This would penalize people.
Sometimes, and I am pleased that you have mentioned it, people fall through the cracks in the system and they end up paying. This would run contrary to the good deeds they're providing. If they're non-profit, I would assume the balance sheet would show that they have no money except that for running current-day affairs. This is not profit-motivated. For them to seek services under the auspices, the umbrella of the commission is highly unlikely. You don't occupy much time.
As a good Samaritan, the province has the duty to look favourably at this reasonable request, to say, "If you're non-profit, it will not change the spirit, it will not jeopardize the legislation, it will not change its intent." You can still go forward and pass it, but in this case all it would require is a two-line amendment. I would certainly favour and support that kind of amendment, should the government wish to proceed with it. That point is very well taken.
That's all I have, Mr Chair.
The Chair: We'll move to the government party.
Mr Grimmett: I'll allow some time for my colleagues to ask questions, but I did want to address the suggestions that you made. I do want to acknowledge that Judy Goldie was good enough to speak to me before the presentation, earlier in the week, and we had a chance to talk about the issues. I think they're very clearly presented in your brief.
The issue of section 25(1), if I can just give a brief overview of the approach the government sees for your sector under the act -- you indicated that the ministry has committed to meeting with you to try and work towards efficiencies in the regulation of your industry. You make the point, "We continue to represent a very small part of the ministry's work," and I think that's correct. The scheme of the act is to try and find efficiencies, because it is a cost recovery approach, while at the same time -- Mr Kwinter has made the point several times -- maintaining the necessary consumer protection that all of the industry must operate under.
What we see happening with your sector is that your working group will sit down with the ministry, if we're able to get the legislation passed, and once we have it in place, we can find out the exact cost that your industry would have and you would have the opportunity to provide the ministry with advice on how your portion would be paid. If you wish to do it entirely with fees, that might be possible, but it may also be possible that assessments would be necessary.
We feel it's necessary to include all the regulated industries under section 25, but as you can see from section 25, we're quite prepared to have unique methods of recovering the costs that work best with each industry.
Mr E.J. Douglas Rollins (Quinte): Thanks for your presentation. When you looked at section 25, if you had looked under subsection(3), there are some variations in there. Like the parliamentary assistant is saying, there are some variations in there that you can meet and there is a possibility you will fall away from some of those, in the manner in which you will form part of that sector. I think there's room in there for you people to still exist without having too heavy a fee structure.
Mr Brian Iler: Could I respond? With respect, we disagree. We believe co-ops should be exempt entirely from the prospect or the possibility of assessments. That is because co-ops are not like the other sectors which you do regulate and include in this bill. Our competitors are not other trust companies or other insurance companies or other pension funds. Our competitors are business corporations and our competitors are not-for-profit corporations.
Co-ops span the spectrum, from business corporations over here to non-profit corporations over here. If, as a lawyer, a new client comes to me and says, "I'd like to incorporate as a business but I'm looking at the co-op model and I'm looking at the business model," with the prospect of an assessment you can be very sure that the recommendation is to choose the business model and not the co-op model.
Similarly with the non-profit, if I want to set up an organization which is going to run on non-profit principles and I'm looking at the co-op model and I'm looking at the non-profit model, you can be very sure, given the prospect of an assessment only on co-ops -- not on business corporations and not on not-for-profit corporations -- that the recommendation will be that the not-for-profit corporation be utilized. Similarly, for existing cooperatives, the choice for existing co-ops facing the prospect of any assessment will be a conversion to either a business corporation or to a not-for-profit corporation.
What it leaves co-ops with is unfair treatment, an unequal playing field and the prospect of the sector disintegrating in the sense that the very clear definition we have in the Co-operative Corporations Act will become muddy, not used, and we'll see a disappearance of the concept of the cooperative in the province.
Mr Grimmett: Can I ask you one further question, Mr Iler?
Mr Iler: Yes.
Mr Grimmett: Do you see that the industry could provide the ministry with cost recovery exclusive of assessments?
Mr Iler: We haven't seen figures from the ministry as to what the costs are, so it's very difficult to answer that question. We believe there are considerable efficiencies to be achieved through discussions with the ministry and changes to the act, and we've had discussions in the past about these. We're not convinced that's possible. It's certainly something we're attracted to. I think everyone likes to pay their way, but there are aspects of co-op regulation which are in the public interest which are not necessarily something the sector itself should bear.
If we're concerned about the integrity of the model of a cooperative, which is what regulation in some ways is about, the public guardian and trustee regulates charities. We don't look to charities to fund that kind of public interest of maintaining charitable organizations as integral models. You want to look at co-ops in that same way.
Mr Grimmett: I just wanted to make the point, when you're talking about your competitors, would they not be subject to regulation by the Ontario Securities Commission if they're business corporations?
Mr Iler: Yes, if they're offering securities to the public.
The Chair: We'll move to the Liberal Party now, please.
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Mr Phillips: The big point I think you're making -- I want to make sure I've got it -- is that this bill is designed to deal with the regulated sectors, consisting of insurance, pension and deposit institution sectors in Ontario, and this bill is vacuuming you into that, you being Gay Lea Foods, the Co-operative Housing Federation of Canada, the Ontario Natural Food Co-op, the Ontario Worker Co-op Federation -- there are a whole bunch of businesses and organizations that have absolutely zero to do with insurance, pension or deposit, but you will now be under their umbrella; they will have responsibility for you almost by accident, because the Corporations Act includes Co-operators Group, the insurance company, and the credit union -- it does not?
Mr Iler: No, it does not.
Mr Phillips: Is there any logic -- and I mean this sincerely; I'm afraid we're making a huge mistake here, where by accident you're going as an appendage to the selling off of the chattels and you will end up an orphan in this place. Have I interpreted it properly?
Mr Iler: In large part you have. We don't fit with the rest of the regulated industries. We're not a regulated industry in that sense. Historically, because credit unions and cooperatives are both founded on the same principles of democratic control by members, we have been administered or regulated by the same civil servants.
When the Ministry of Financial Institutions was created, it was felt appropriate that we continue to be regulated by civil servants who have had the expertise on credit unions, in terms of the democratic values, as well as co-ops. So we were moved over to financial institutions. We don't belong there. Given the thrust of this bill, it may make sense to move us back to the Ministry of Consumer and Commercial Relations, where we are with non-profit corporations and business corporations, with whom we have more identity, aside from the particular values the co-ops have.
Mr Phillips: I honestly think that is what should happen. I think you're here by mistake, personally. I guess I can't ask the government to comment on that right now, but maybe we can this afternoon.
Mr Bruce Crozier (Essex South): I have a question, but I think you have a comment.
Ms Judy Goldie: Yes. Certainly, we have had this type of discussion among ourselves as to where we belong. We're a very unique form of business enterprise in that we have both social and financial purpose. In preparing and reviewing the legislation, that certainly was one option. We talked about whether we should just be coming and saying, "Let us out."
We do require, as businesses, the services of the ministry in terms of incorporations and also review of offering statements, which is the tool we use as we raise money. So there is a certain regulatory regime that we do require. I guess the choice is to look at the securities commission or where we are now, and we find yet again other anomalies, because the securities commission doesn't deal with business start-ups. So we're in a difficult position in terms of where we actually fit.
It was our conclusion at that point in time that with some adjustments we could continue effectively within the Ministry of Finance. It may be, as we continue to explore the matter with the ministry, we may revisit that question, but at this point we decided not to take the position of saying, "Just exclude us from the commission."
The Chair: There are a couple of minutes left, Mr Crozier, if you want to use them.
Mr Crozier: Just very quickly I want to emphasize what my colleague has said. If you look at the title of the bill, it's to establish the Financial Services Commission; it's in place of the pension commission, the Ontario Insurance Commission and the deposit institutions division in the Ministry of Finance. So clearly I think too it would appear as though you've just been, as Gerry said, vacuumed into this, perhaps by mistake. The time to correct that would be before we get beyond passing the bill itself.
I want to ask, when you had your discussions with the ministry under the co-op regulations and the red tape review, did the discussion come up at any time then, relative to this Bill 140, or were those discussions separate from that?
Ms Goldie: They were prior to the introduction of the bill.
Mr Crozier: So there was no discussion; you weren't aware at all that you were going to be brought into this.
Ms Goldie: That's right.
Mr Crozier: In your business -- we need a brief answer -- do you deal mostly with your co-op members, or is a significant percentage of your business people who aren't members of the co-op?
Mr Iler: The majority of the volume of the transactions is done with members, by a large margin.
The Chair: Thank you very much. Your time has expired. We appreciate you taking the time to come to the committee and answer our questions.
Mr Iler: Thank you for the opportunity for input.
ASSOCIATION OF CREDIT UNIONS OF ONTARIO
The Chair: I'd like to ask the Association of Credit Unions of Ontario to please come forward and have a seat at the table. Mr Thomas Robins, welcome. You have half an hour. You can use the time as you wish. Many delegations leave some time for questions from committee members, which is helpful, but it's entirely up to you.
Mr Thomas Robins: My name, as you mentioned, is Tom Robins and I'm executive director of the Association of Credit Unions of Ontario. On behalf of my members, I would like to thank you for the opportunity to meet with you this morning to discuss various aspects of Bill 140.
The Association of Credit Unions comprises 18 credit unions, combined assets of $2.6 billion and capital and surplus equal to 7.04% of assets. Our membership includes two of the three largest Ontario credit unions.
The association works with Credit Union Central, our colleagues who you just heard a few moments back, the Fédération des caisses populaires de l'Ontario in Ottawa and l'Alliance des caisses populaires de l'Ontario, based in North Bay and about to merge with the federation in Ottawa. Together, through a coalition, we put forward common positions on matters of concern to the credit unions. As a coalition, we met with the Ministry of Finance to discuss regulatory options in the past and subsequently, just a few weeks ago, our concerns on Bill 140.
As a matter of general policy, the association supports the general direction of Bill 140. Indeed, the bill codifies proposals discussed in the 1970s, the first step of which was taken some years later. That was the creation of the Ministry of Financial Institutions in the mid-1980s under the direction of your colleague, the Honourable Monte Kwinter.
With respect to Bill 140, I've attached for your information a copy of the coalition submission to the Ministry of Finance on Bill 140. To summarize the issues -- I know these are in front of you, but I'll read them into the record -- we believe that:
To provide effective policy and regulation for Ontario's credit union and caisse populaire system, the government -- I'm not talking about the commission here -- needs to ensure it has adequate staff resources who understand the sector's unique culture, philosophy and regulatory requirements. That's because at some point, even though the commission is going to be in place, there is going to be a policy branch looking at financial or policy issues coming up.
To ensure commission decisions are based on sound cost-benefit analyses, stronger accountability mechanisms are required. My colleagues from Credit Union Central elaborated on that.
To provide sectoral input on the operations of the commission, an industry advisory committee should be established.
To ensure the continued financial stability of the credit union and caisse populaire system, the industry should be consulted on the fee structure and financial reporting requirements of the commission and tribunal.
To avoid the cross-subsidization of industries regulated by the commission, which could weaken the financial solvency of credit unions and caisses populaires, internal cross-subsidization of industries must be prohibited by regulation. There are provisions within the statute, I believe, to do that.
To maintain financial stability, statutory capital, reserve levels and growth potential, a transition period is required in order for Ontario credit unions and caisses populaires to absorb this new cost of operating. Again, my colleagues from Credit Union Central have elaborated on some of those issues.
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To minimize the potential for the commission to be used as a source of non-tax revenue -- and one of the members of the committee did make reference to British Columbia -- any surplus should be used to reduce fees and/or overhead assessment costs in future years and not be used for general government revenues. This principle needs to be clearly articulated in the bill. Again, my colleagues have submitted suggestions to the committee.
The creation of a Financial Services Commission should be viewed as an opportunity for the ministry, the Deposit Insurance Corp of Ontario and the industry to review collectively their respective roles and responsibilities to truly reduce duplication and streamline how Ontario credit unions and caisses populaires are regulated. To ensure that each of the regulated industries is appropriately represented on the commission, the appointment process needs to be clarified.
Finally, and again my colleagues from Central have raised this, the cumulative burden of new taxes, higher deposit insurance premiums than our competitors and the creation of the new commission and its associated costs has the potential to hinder our industry's ability to be the true domestic alternative to the banks and trust companies, at least those that remain, and maintain statutory capital and reserve levels and sustain jobs in the Ontario economy. For the record, one staff person has to be released for every $40,000 in additional non-productive costs within the system.
I would like to comment specifically on two issues from the above list: firstly, the extent to which the regulatory regime can be streamlined and regulatory duplication reduced, and with respect to insurance and pension administration, the impact of federal and provincial overlapping jurisdictions minimized.
Credit unions and caisses populaires are now unique in Ontario in that they are regulated by the Ontario government and the Ontario Deposit Insurance Corp. The association is on record with the Ministry of Finance that it would like to see the government, and now the proposed commission, have a minimal hands-on, day-to-day regulatory regime. Our preference is for the deposit insurer to undertake the regulatory role, delegating these functions as appropriate to the leagues, of which there are two in the association, under the deposit insurer's supervision, with the commission using external auditors to undertake testing on a sample basis to ensure compliance with commission standards. That would save several million dollars because the cost of overhead within a government organization can be significantly higher than just hiring people on an ad hoc basis.
Secondly, the minimization of the costs of regulation through the commission becomes imperative as the ability to maintain profit margins are being eroded not just by meeting the competition from banks and trust companies but by the imposition of additional charges by government and ongoing charges by the deposit insurer.
With respect to credit unions and caisses populaires, regulatory costs per dollar of assets already exceeds those of loan and trust corporations, as our deposit insurance is currently $2.10 per $1,000 of assets, while the insurance levy by the Canada Deposit Insurance Corp is currently $1.67 per $1,000 of assets and is expected to drop to 15 cents per $1,000 within the next three to five years. There will be a phenomenal variation in costs over the next years between credit unions, caisses populaires and our competition, which includes the banks, of course.
On top of those charges, credit unions and caisses populaires are now being taxed on the capital built up under statutory direction. For the record, a number of association members will be paying more in capital tax than current profits. That's if one extrapolates current capital and profits to the year 2002 when the full rate comes in. That will require them to use capital to pay the tax, effectively double taxation. This was raised with the Ministry of Finance but they didn't consider it to be double taxation. This in turn, over time, could cause them to be in non-compliance with both statutory and deposit insurance requirements.
We know what our costs are now, but we really do need to see what the additional costs are going to be, because currently they are covered in our business taxes through the transfers to the current credit unions and corporate services branch. But it is imperative that the costs of the commission allocated to credit unions not put them in a worse financial position than they are today. As my colleagues have noted, regular reporting on costs to those regulated, with an opportunity to provide input, is an essential matter that needs to be incorporated into the legislation.
I know this doesn't come into my brief, but I was listening to the comments by the cooperative sector and I just wanted to make a comment. Until the mid-1970s there was a cooperative services branch which was completely separate from the credit unions branch. They were subsequently merged towards the middle of the 1970s into the current branch, mainly because the business corporations branch didn't want to have cooperatives as part of their normal day-to-day activities. I would also note that they're the ones that are regulated by the cooperative services branch and not financial service corporations.
I understand, at least I know from past talking with Brian Iler, that one of the key issues they have is their offering statements. If they were in the business corporations branch, they would be subject, in all probability, to the requirements of the Ontario Securities Commission, which obviously is a key issue because their requirements are significantly greater than they are for the cooperative services branch under the cooperative services legislation.
Thank you, Mr Chairman and gentlemen, for the opportunity of meeting with you. I would be pleased to answer any questions you may have.
The Chair: Thank you very much, Mr Robins. There are approximately 21 minutes left for questions, which we'll divide evenly between the three parties. We'll start with the government party.
Mr Grimmett: The point you raised about the regulatory scheme and the participation by the credit unions in helping to design it, I understand there have been ongoing discussions between ministry people and your association, as well as the other association we heard earlier representing credit unions. Can you clarify this? I believe in 1994 legislation was introduced that allowed the provincial government to impose assessments on credit unions. Is that correct?
Mr Robins: I couldn't answer that; I wasn't in this position then. I was actually with the Ontario Pension Board.
Mr Grimmett: I believe it's been in legislation since 1994 and the government has not yet moved to deal with that cost-recovery aspect of regulation.
I certainly appreciate your comments and the comments earlier from Credit Union Central of Ontario with respect to possible duplication. I think you're probably aware that our government has certainly taken some pride in trying to seek out where the duplication exists in government operation, so we're certainly interested in hearing your comments on the possible duplication of regulation. But we have to be careful as a government, because all of this legislation still has as its underlying purpose consumer protection. While the Deposit Insurance Corp does have a regulatory role, there are some aspects of the regulatory role that are somewhat different from the Deposit Insurance Corp's operations that would be covered by the Bill 140 type of regulation.
Mr Wayne Wettlaufer (Kitchener): Mr Robins, on page 2 of your submission you raised the point of avoiding cross-subsidization of industries. I wonder if you could elaborate on that.
Mr Robins: One of the concerns we have is that when we have the pensions, insurance and credit unions, and obviously the pension and insurance industries are huge compared with the $13 billion and change that the credit unions have on deposit, the costs of running those two regulatory regimes, particularly the overhead costs, which can't be necessarily allocated on a direct costing basis, if they get out of hand we could end up with the credit union and caisse populaire system picking up a disproportionate share of those overheads.
The CDIC in Ottawa at one stage was spending money like water on the various regulatory functions, travelling around the country in first class, having expensive dinners and so on and so forth, which all came out. We really want to ensure that these costs just don't get out of hand so that we can maintain viable entities.
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Mr Wettlaufer: I have another question too. You were talking about the uncompetitiveness, if you will, of the deposit insurance rate that you're paying of $2.10 per $1,000 of assets versus the other financial institutions, which are paying $1.67 per $1,000. Until the credit unions appeared this morning, I forgot that somewhere in my past I served as a director of a credit union. It has reared its ugly head this morning, and I say that figuratively speaking because I remember so well that there were credit unions failing at the time that I was a director -- ours didn't fail -- and we were expected to pony up considerably for those that were failing. I think what I'm trying to point out here is that the reason the rates for deposit insurance for the credit unions is so high is because there have been failures, bad loans and what have you by the credit unions to a greater extent than other financial institutions.
The Deposit Insurance Corporation of Ontario has been running a deficit, significant losses, and they plan to eliminate their deficit in the next five years. Obviously they have to keep their rates high and the financial institutions causing the significant losses to the Deposit Insurance Corporation are the ones that have to pay more. Any comment on that?
Mr Robins: We as an industry fully recognize this particular issue. In fact, I think it's $1.10 or $1 and change, or each $1 of premium, that goes each year to the paydown of the accumulated debt and that's why they're so high. We accept that. We have to accept it because it's a result of the problems that arose with the inverse yield codes way back in the late 1970s and early 1980s. By 1982, you're quite correct, the industry had about $400 billion in assets and $400 million in impairments. So 10% of the assets were impaired and there were effectively several hundred credit unions in serious financial difficulty. I agree, that's the reason for that particular level of premium.
Hopefully it will come down, but the reason I was raising it was we do have that as a cost. It's a recognized cost and what we're trying to avoid obviously, as are all other businesses, whether for profit or not for profit, is to ensure that we know and can control our costs. Because if we don't control those, the yield on the difference between the income and outflow from deposits is insufficient to meet our ongoing operations.
The Chair: We'll move to the Liberal caucus now, please.
Mr Crozier: Good morning, Mr Robins. The parliamentary assistant has mentioned a couple of times that the bottom line for this legislation is consumer protection. I take him at his word. Some who might be more sceptical than I would say that it's really to reduce the government's cost by $25 million. If we can do that, that's fine, but in doing so, if we put an unusual burden on someone else, then I think we have to address that problem.
I want to go back to this cross-subsidization again. Earlier this morning you no doubt heard when Credit Union Central presented. They had an amendment, a recommendation, on how to treat any surplus or deficit. You seemed, through your presentation, to agree to a great extent with them.
One more thing: We heard then that the government said: "We understand what you're saying, but trust us. It'll be taken care of okay and you'll be happy." But wouldn't you feel better as well if the treatment of surplus or deficit were in the legislation and therefore there would be some reasonable assurance that there was no cross-subsidization?
Mr Robins: Yes, that would be our preference, because I think the clearer the direction that is given to any organization set up by, whether it be government -- particularly government in this case -- there is a need for the ground rules to be established right up front. Otherwise -- we saw that with the Power Commission of Ontario -- you can go off on tangents and create tens of billions of dollars of debt before there is an ability to get it under control.
The commission is unlikely to run up tens of billions of dollars of debt, but the principle is basically the same. It's always necessary to ensure that the controls are in place before rather than afterwards. Key order principle: Have the controls in place now and not after the dollars have run out the door.
Mr Phillips: Just on accountability -- and if you answered this earlier, my apologies -- Credit Union Central earlier this morning recommended several reports that they thought would be useful for the commission to prepare. In your remarks you talk about the industry advisory committee. Do you have any comments or suggestions on the reports that they think would be useful?
Mr Robins: I'm sorry?
Mr Phillips: Do you have any comments on the reports that Credit Union Central thought would be useful for accountability: quarterly reports on revenues, expenses, expenditures; an annual report on something on a broader basis? Is that something you're supportive of?
Mr Robins: Yes. As I mentioned right at the beginning, Credit Union Central and the association basically have agreed on all these issues and we fully support the proposals that Central has presented to the committee and to the parliamentary assistant.
Mr Phillips: Fine, okay. I appreciate that. Thank you.
The Chair: We'll move to the NDP caucus, please.
Mr Pouliot: Good morning, Mr Robins. If I were to look at your last quarter or your last fiscal year, credit unions, what kind of a year did you have?
Mr Robins: For the association there was a marginal decline in the asset base. It was just fair. For instance, our largest credit union, which has got just under $1 billion in assets, only made roughly $300,000 in income, primarily because they've been losing an awful lot of their members through the downsizing, and that's been happening through the industry.
They also had to release a lot of staff, and that's been fairly consistent. I can't speak for Central, but I know it's been consistent through the association. It wasn't a good year; it wasn't a banner year.
Mr Pouliot: You're not mandated to offer a competing range of service, which is lucrative; for instance, insurance brokerage premiums, fees of all sorts charged to industrial consumers, to large pension funds, if you wish, and to individuals.
Mr Robins: Each credit union obviously has a different way of handling it, but there are groups of credit unions that have banded together and are now providing services such as mutual funds. You can't offer insurance directly through a branch, which is very unfortunate. But there are various fee-raising services that are now being provided and, like the banks, it's becoming a greater part of the bottom line, the profit centre, because you can't live on the margin.
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Mr Pouliot: The financial services indexes pretty well around the world have had a year beyond compare. They've done very, very well, thank you. In fact they weigh so heavily on some indexes that anyone who is forced by mandate to play indexes ends up by way of institutional buying with a huge amount of shares from those institutions.
Yet when I look at your presentation I see that "the cumulative burden of new taxes, higher deposit insurance premiums than our competitors and the creation of FSCO and its associated costs has the potential to hinder our industry's ability to be the true domestic alternative to the banks and trust companies" -- during a good time, a very good time indeed. Low interest rates attract borrowers.
You don't make all that much money and yet you're telling me that on the $60,000 deposit insurance premium, although no one has ever defaulted, no one has ever lost money, not one deposit --
Mr Robins: That's true.
Mr Pouliot: -- has ever lost any money, there is the perception and the reality, that yes, financial institutions do get into difficulty. Hundreds of banks have gone bankrupt in the USA but their structure -- they don't have the charter system, heaven forbid. I have a lot of sympathy. You're downsizing. It's pretty bad when you ask the teller that you pay between $19,000 and $21,000 a year to stand on her feet all day long and you have to let her go. It's not a good scene, is it? So I do sympathize with you that you're downsizing. You don't have a lot of money and yet you're asked to pay one more tax.
Simply put here, the government has decided that there is a quick, relatively easy way to save $25 million. You know the way it goes. It goes to the central agency, which is the Ministry of Finance. It goes into vortex. They need $25 million bucks, so why should you pay the $25 million? The banks are not going to complain; heavens, the insurance companies are not going to complain. They're too busy keeping the banks at bay. But you are now a member of the club. The trick here is that the club is made out of different players, big ones and small ones. You are a small one.
So you are appearing right before, on the eve of the passage of this bill to say, "Be careful about my ability to pay," and you're right on. We don't know now how much you will pay. What we know is that $25 million will change hands. You will all pay, whereas yesterday you did not pay, and the range of services offered to you will not change. But in order to change the 25 million bucks you have to say, "We're cutting through red tape and we're streamlining," because you just can't say, "Look, it's a new tax, $25 million, because we've got to satisfy the tax cut." But that's for another day.
I sympathize with everything and I hear that the government side is listening. When it comes to regulation, we don't have that power with the opposition, Mr Robins, but they do; that when they meet a certain evening at regulations, they will say: "Give a break when it comes to the fee. Be consistent and reasonable but look at their ability to pay." Because if the day comes that you can't function, you're not serving the purpose of anybody.
Are you confident that some of the recommendations, especially with a focus on the fee structure, that the government will listen to you? I think they will listen to you.
Mr Robins: The share of the credit unions, you're looking at probably roughly $5 million, which is relatively small. I believe that's roughly the branch budget for the credit unions branch, which relative to the total base for credit unions is small, but its the mention that ensuring that those costs just don't start escalating. The comment about the $25 million, I don't think the compensating reduction in the corporations tax to offset the increase in the transfer from government to the commission which will levy it -- so they will be $25 million better off, but the corporations tax is not going to drop.
Mr Pouliot: Not likely, not in your field.
The Chair: You have a few minutes left if you want to use them for any further comments, Mr Robins.
Mr Robins: Not unless you have some more questions.
The Chair: No, we don't. I just wanted to let you know if you had any further comments, you were free to make them.
Mr Robins: I'll just make one comment on the banks. One of the reasons that margins are lower than they are with the banks of course is. We have been acting for the community, we've been keeping our costs to the users lower than the banks, because most credit unions and caisses populaires don't have the same level of service fees. They don't charge the $13, $14, $15 for whatever. Somebody mentioned the nickel and diming that goes on. Of course that's one reason why the profit level is somewhat lower. As we mentioned, one of the key moves that many credit unions are now making is moving into ancillary services where these margins can be increased through, effectively, payments by third parties.
Mr Pouliot: I wish we had time to philosophize and I would certainly like to hear your opinion one day soon perhaps, Mr Robins, about the Province of Ontario Savings Office, that great institution which has been by mandate a monopoly, the cartel of all governments, everyone has a chance at it. But there's only one hand with those people it seems, the hand that takes money in. Their services fees are competitive indeed. Why not? There's no risk whatsoever.
Mr Robins: POSO has the best of all worlds. It doesn't have any --
Mr Pouliot: Do they come in under this? I don't see them, no.
Mr Robins: No. They have all these liabilities but no assets. It's great for the government. You couldn't really buy it and get the same rate of return, because they tend to pay a higher rate on deposits than the banks and the credit unions. We can't compete.
The Chair: Thank you very much, Mr Robins, for coming today and answering questions.
I'd like to alert committee members to the fact the committee agreed to have all amendments tabled by 1 pm today, if anyone needs to be reminded of that. I also want to mention that the business paper for today in the House shows Bill 149 might come up. If it does, we will not sit for clause-by-clause because of the protocol that two financial bills don't appear at the same time in committee and the House.
ASSOCIATION OF CANADIAN PENSION MANAGEMENT
The Chair: I'd like to ask for the Association of Canadian Pension Management. Please come to the table. I would like to tell you, just while you're settling in, there's a small possibility of a recorded vote in the House, in which case we would take a five-minute recess, go up and vote and then come back down and complete your time. It doesn't happen very often, but it's possible.
You have half an hour to use, totally as you wish. You may wish to present for the entire time or take part of the time and then I will divvy up any remaining time for questions from the different caucuses. It's entirely up to you. Would you please identify yourselves for the record.
Mr Ross Gascho: My name is Ross Gascho.
Ms Mary Ross Hendriks: I'm Mary Ross Hendriks.
Mr Gascho: As you know, we're here today on behalf of the Association of Canadian Pension Management, and we'd like to thank the Chair and the members of the committee for inviting ACPM to present its submission today. Our comments today are as members of ACPM's advocacy and government relations committee.
At the outset, we commend the government for commencing the reform of financial services. We hope that the government goes further down that road as the various types of financial services come to look increasingly alike.
ACPM is a national association of pension plan sponsors. Its members represent more than 500 plans, with assets in excess of $250 billion. Its members also include members of the legal and actuarial professions, as well as other professional advisers to pension plan sponsors.
We believe that the views we're putting forward today are representative of a large number of our members. We note that ACPM has been, to our knowledge, the only major private sector group encouraging the government to undertake pension reform. In this regard we would point out that we provided detailed submissions to the red tape review commission and that that commission incorporated many of our recommendations into its report. We appreciate the opportunity to build upon our earlier work with the government.
With respect to Bill 140, the first of our points concerns the national regulation of pension plans. To date, a number of jurisdictions have passed legislation that would permit the jurisdiction to enter the multilateral agreement among the members of the Canadian Association of Pension Supervisory Authorities. The effect of that agreement would be to simplify the administration of pension plans with members in more than one jurisdiction.
The Red Tape Review Commission recommended that the Minister of Finance should explore ways to make administration of pension plans more efficient and reduce regulatory overlap. Obviously, one of the ways to do this would be to adopt the CAPSA agreement. However, Bill 140 does not include provision for Ontario to enter that agreement. In our view, it should do so, and we would strongly encourage the government to revise the legislation to include the appropriate enabling language.
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Our second major point concerns the commission that is established by the legislation. The government has articulated its interest in reducing the regulatory burden on businesses and other economic interests in Ontario. However, the legislation merges only the regulation of some aspects of financial services and notably excludes the regulation of securities regulation. We note that in other jurisdictions, in particular the federal jurisdiction, there is only one regulatory agency applicable to all financial services, and we wonder whether the same model may be suitable for financial services in Ontario.
The final point I would like to address concerns the principles outlined in section 3 of the legislation. As we understand it, the initiative to create the commission emerged from the previous government's plans to consolidate the various regulatory bodies. We are concerned that many of the structural changes may not improve the quality of resources necessary for effective pension regulation and policy-making. In our view, in order to ensure the most efficient and effective regulation of pension plans, the purposes of the commission should be expanded. In particular, the statute should include in its principles securing, preserving and protecting money contributed to pension plans and, second, encouraging the government to adopt the least burdensome regulatory approach that remains consistent with its overall regulatory objectives.
In this regard, we note that yesterday legislation was tabled in the federal House of Commons to amend the Office of the Superintendent of Financial Institutions Act. Part of that legislation would stipulate that the objects of OSFI in respect of pension plans are to supervise pension plans and ensure they meet minimum funding requirements and all other aspects of the Pension Benefits Standards Act.
Similarly, the Ontario Securities Act provides a framework for the regulation of financial services that may be suitable in part in the pension context. Pensions and insurance are at least as important as securities to the lives of Ontario residents, and we believe the legislation affecting them should reflect that importance. We would point out that the Ontario Securities Act refers in its purposes to balancing the importance to be given to each of the purposes of the legislation: effective and responsive regulation through timely, open and efficient administration and enforcement of the act; harmonization and coordination of regulatory regimes; and ensuring that regulatory costs are proportionate to the significance of the regulatory objectives sought to be achieved. In our view, these principles are critical to ensuring that the regulation of pension plans in Ontario is both efficient and effective, and therefore Bill 140 should reflect these.
Ms Hendriks: I'd just like to thank the committee for allowing us to present our views here today. My remarks today are made only as a concerned member of the government advocacy committee of ACPM and in my own personal capacity. Unfortunately, due to time constraints I have been unable to discuss this issue with my colleagues at my own association, and so I do not represent their views here today.
The first issue I'd like to raise with you is the issue of the tribunal. We believe the decision to maintain a tribunal within Bill 140 is very regrettable for several reasons. First, we believe it represents a significant duplication of costs and effort and adds to delay on major pension cases, which are almost inevitably appealed to Ontario Divisional Court without having to obtain leave in any event. Since the pension plans typically bear the costs of such litigation, we believe the government must recognize the effect of this problem on plan beneficiaries both in terms of money and delay.
Second, there is the very real issue of the overlapping jurisdiction between the authority of the superintendent and the tribunal granted by statute and the inherent authority of the judiciary. In our view, the commercial list of the Ontario Court (General Division) is the most appropriate place for these matters to be heard, since the judges on the commercial list have expertise in commercial litigation matters and they are completely independent.
Third, if you are concerned with the rights of the ordinary person to find redress on pension matters, for whom litigation might be unduly expensive, we suggest you might want to consider establishing some sort of alternative dispute resolution mechanism within the administration of FICOM in much the same way that the Ontario Insurance Commission currently resolves minor disputes through mediation and processes all of these smaller matters within a two-week period. We believe this would be a much more efficient use of government resources and would still protect the rights of the individual to due process. Of course, if there appears to be a deliberate breach of law, FICOM could still pursue a prosecution in conjunction with the Ministry of the Attorney General through the courts in any event.
On that point, we suggest that the amendment to section 111 of the PBA by section 221 of the bill is too circular. It would make more sense for the superintendent to order the matter to be taken to court directly rather than putting the onus back on the administrator to do so. We actually wonder if that might be a drafting error.
We would also like to point out to you that OSFI is able to oversee federally regulated pension plans without a tribunal. We believe Ontario can do so as well.
My second point is policymaking. It's our belief that since the early 1980s the government has relied much too heavily on the pension commission to provide it with policymaking advice when the commission has been relatively short-staffed and has been too focused on administrative matters to be able to give enough attention to serious overlapping concerns between provincial pension regulation and federal income tax issues or to the CAPSA agreement on the regulation and multilateral pension plans or the development of a national pension regulatory regime.
The distinctions between various sectors within the financial services industry in Canada are eroding as these sectors all mature. It is vitally important that the government, as an elected body, work with the pension industry to take the lead in establishing reforms to these sectors. It should not rely on overburdened tribunals or administrative offices to find the time and resources necessary to plan for the future of Canada's regulatory landscape.
We urge you to clarify the minister's role in policymaking, in particular under section 12 of the bill, and to incorporate a guideline-making power similar to the Ontario Securities Commission's power to do so, as well as some sort of consultation process with the pension industry as a whole. We've addressed that point in more detail in our submission.
Thank you very much for providing us with the opportunity to voice our concerns with you here today.
The Chair: We have approximately 20 minutes left. We'll divide that time up evenly between the caucuses for questions, starting with the Liberal caucus.
Mr Phillips: The recommendation that the appointment of the superintendent be not by order in council but by the minister -- I wasn't aware of that. Maybe the parliamentary assistant could help me. Is the appointment of the superintendent by the minister or by order in council?
Ms Hendriks: Presently in the legislation as drafted, it would be by the minister. We're recommending that it be by order in council. That's just to maintain the independence of the superintendent.
Mr Phillips: So that is the way --
Mr Grimmett: Yes, that is correct.
Mr Phillips: Maybe we could ask later the reason for that.
Ms Hendriks: The reason really is just to maintain the independence of the superintendent from the ministry itself. The tribunal, if it goes ahead, would be appointed by order in council. We think the superintendent's role should be as well.
Mr Phillips: Right. I was more saying we'll ask later the ministry staff or the government the reason why it is not by order in council.
You're also proposing that this have the same arm's length as the Ontario Securities Commission. Maybe to help us along here, this is a body that will be overseeing some of the most sensitive areas of consumer protection in Ontario: insurance, pensions, deposits. My own question is, if it's completely arm's length, is there a danger that the government absolves itself of any responsibility for this? In the end, I think people expect that their elected body has set up a regime that offers them the maximum -- not total, but the maximum -- protection. Could you see that if this were arm's length like the Ontario Securities Commission, the people's government may be too far removed from them?
Mr Gascho: I would suggest that if there was a major meltdown, let's call it, in securities regulation, the government would certainly be abundantly aware of that through its various constituents, that by moving pension regulation to an arm's-length model, Ontario citizens would continue to be protected, and that moving to that arm's-length model would certainly not absolve the government of its political responsibilities.
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Ms Hendriks: If I may add, in the broader picture, if it were to move to being a schedule 3 agency and self-funding, it would give FICOM more control over its own resources. One of the things that needs to be addressed going forward is the development of a national pension regulatory body. Ultimately, we might end up in Canada with a national securities commission and a national pension commission.
Mr Phillips: I was going to ask you about that, because I tend to think that is a natural evolution. It's just a matter of when, I think, not a matter of whether. Can you help me to understand why what we're doing with this bill will make that more difficult? Maybe I didn't quite understand your concerns.
Ms Hendriks: I think the difficulty, and it's point 3 in our submission, is that we're concerned that the bill just doesn't anticipate further process in this regard. It does not appear to make provision for the adoption of the CAPSA agreement on the regulation of multilateral pension plans.
Mr Phillips: Frankly, I technically don't understand that. Because it does not make the provision, is it not possible that down the road, when we are possibly contemplating a national pension scheme, we could move naturally to that? Is there something in the bill that makes it more difficult to move to that?
Mr Gascho: I'm not sure if we can comment that there's something in the bill that makes it more difficult to move towards that unified regime. I would point out, however, that it has been over 10 years since pension regulation was reviewed in Ontario. If we're going to undertake a wholesale review of the regulation of financial services, perhaps the regulation of securities should be bought under that umbrella.
Mr Pouliot: Thank you for your precious time indeed. It's high time, I think almost everyone will readily acquiesce, that pension regulations be updated to reflect the consumer's demand and the sophistication of the plans, the diversity, the changes that have taken place within the confines over the years.
You mentioned the need to consult with the pension industry. I take it that you were talking in terms of legalese, in terms of amendment or what a new act would reflect. I take it from a consumer's point of view when we talk about the pension industry, to help the people who make up the pension industry, ie, contributors, for without them there's nothing left; nothing else matters; it's a no-show.
I have a great deal of difficulty with the pension systems as they stand. I've followed the annals of some unethical ones, although they are a minority, but the people who were hit are real, where you wern't vested before for 10 years at one time, so ABC company became ABY by design. People were, under some defined terms, actuarially lowballed, anything that became a surplus went into the general pool of money. We know that.
The people I deal with at Midland Walwyn, if I make money, they give it to me; if I lose money, I take the responsibility. I can diversify. We all can do this if we take the time to study a little bit, whereas it is impossible over a period of time to lose money.
Now you have, with the great support, or tacit support at least, of the pension industry, the locked-in retirement provision, and the mechanism that will generate the money is a LIF, a life income fund, one of the great tragedies of our time, where you must annuitize by the time you're 80 years of age, and you're capped at 7.5% if you're over 50. This leaves the consequence of a friend of mine who is over 55 years of age, lives in Manitouwadge, got a buyout, got $171,000. He's diagnosed with a rapidly growing cancer. It doesn't augur well for my friend. He and his wife want to go to England; that's where his roots are. He can only draw 7.5% out of $171,000. The irony of it is that last year his assets grew by 18%, so you have that kind of tragedy. Conversely, if he had an ordinary RRSP, which would turn into an RRIF, he would be subject to a minimum, but there is no maximum.
So I would go beyond the need to regulate. That goes to say, let's have some consistency under the pension plans. Stop the tragedy. In this case, at 80 years old he'll be forced to annuitize. It's his money, but he won't be around, you see? Oops. And it's capped, whereas with an RRSP it's not capped. This is a tragedy. I'd like to find out more, when you have time, about pensions.
Mr Grimmett will spend some good hours talking about the need to revamp, to simplify it and to have it under one umbrella so that everyone who is subjected to pension -- your presence is treated equally -- has a better understanding of the system. I could not ask for a better presentation. You were late being added to the list. I've benefited greatly. I'll keep this.
Ms Hendriks: I'd just like to address your point. If people are concerned about incidences such as your friend, maybe the best way to do that would be -- when we talked about incorporating a consultation process under section 12 of the bill, we were thinking of industry groups, but there's no reason why consumers' groups couldn't participate in that process as well. That might improve the policymaking going forward and ultimate changes to the legislation.
Mr Grimmett: Thank you for attending here today. You certainly have a wealth of expertise in the area. I don't think the time I have will allow me to address all of the points you made even if I was able to, but I did want to address a couple of issues that you raised.
First, I want to clarify that I know the Minister of Finance is quite interested in pursuing the issue of a unified pension regime in Canada. It's quite fair to say the government has no intention of in any way frustrating that process through the introduction of Bill 140. We see Bill 140 as something that's very logical, because we see the integration of financial services everywhere. Many jurisdictions have seen the wisdom in trying to integrate the regulation of financial services. That's what Bill 140 attempts to do, to try to bring about efficiencies and have an integrated regulator model. I don't think that should be confused in any way with our agreement in principle with the idea of having some kind of unified regulatory regime of pensions in Canada.
During the ministry's pre-budget consultations with the pension people, we heard overwhelmingly that the pension industry valued the expertise of the Pension Commission and they wanted that to remain within the Financial Services Tribunal. Can you comment on that?
Mr Gascho: One point that I would make on that issue is that the view you have mentioned has been espoused very strongly by the Canadian Bar Association, for example, as one group. There have been three recent court cases, both in Ontario and in other jurisdictions, indicating that the standard of review that is applied to a pension regulator is one of correctness.
As the Pension Benefits Act is currently written, there is an automatic right of appeal to the courts. The scheme that's currently proposed under Bill 140 is that, for the most part, the superintendent makes the decision, the parties can then appeal to the tribunal, and then there's an automatic right of appeal to the courts. I think what the ACPM is concerned about is that the tribunal may be an unnecessary middle player because of the recently enhanced role of the courts, saying, "We will overturn the pension regulator unless we consider the regulator to have been correct," rather than the previous position which the courts took that they would substantially defer to the position taken by the regulator.
The Chair: Thank you for appearing before the committee. We appreciate it very much. We actually have a couple of minutes if you have any additional comments, any issues. No? Okay. Thank you.
Contingent upon Bill 149 not being debated in the House this afternoon, this committee stands adjourned until --
Mr Phillips: Mr Chair, it's our intention to move four amendments. We've given the clerk one of the amendments, but the other three are not in the required legal form. They are the three that the Credit Union Central proposed today. We're going to try and get leg counsel to draft it, but it may be 2 o'clock before we have it, maybe 2:30. It's the wording that we've got from the credit union, but I don't know what I need from the committee to --
The Chair: Unanimous consent.
Mr Pouliot: I do have a question, dealing again with amendments. The government has four amendments. This is the final four, right?
Mr Grimmett: Yes, that's correct. There will be four.
Mr Pouliot: So we're not to expect any surprises. It's fairly straightforward. Okay. We have none.
The Chair: Committee, do we have unanimous consent that the Liberal Party will put their amendments in writing and have them to the clerk by 2 o'clock instead of the originally agreed 1 o'clock? Agreed.
Mr Grimmett: If it's 2:30, it's not going to be a problem.
Mr Phillips: It's the wording that the credit union --
Mr Grimmett: We all know what the wording is.
Mr Phillips: It's getting it translated into legalese.
Mr Wettlaufer: Gerry, we always try to cooperate.
Mr Phillips: I sure do appreciate that.
The Chair: Again, contingent upon Bill 149 being in the House this afternoon, the committee will adjourn for now and we will come to order again at 3:30 to consider clause-by-clause of Bill 140. The committee stands adjourned.
The committee adjourned at 1203.