| May 2009
Urgent: Write now to support better banking
laws,
and a strong public interest review process for proposed bank mergers
and
takeovers
BACKGROUND
The bank mergers proposed in 1998 were stopped, but TD Bank was allowed
to take over Canada Trust in February 2000, banks and other financial
institutions continue to provide poor service to many Canadians, and
bank mergers will likely be proposd in the future.
The federal government released a policy paper on financial
services at the end of June 1999, and introduced draft legislation in
the form of
Bill C-38 on June 13, 2000, but Bill C-38 was derailed by the fall 2000
federal
election.
Bill C-38 was re-introduced as Bill C-8 in February 2001, and
was
passed by Parliament in June 2001.
Bill C-8 contained some good measures, but left some key gaps
in
bank regulation (For details, see Comparison Between
Bill
C-8 and CCRC Recommendations).
In late 2006, the federal government introduced Bill C-37
(which
passed in April 2007) but it contained a couple of ineffective measures
that
only slightly increase bank accountability in Canada (For details, see
the CCRC's Analysis of Bill C-37).
The federal government has an ongoing review of the Bank
Act
-- so please let the government know you want Canada's banking law
strengthened to prevent and penalize abuse of customers, businesses and
communities by
Canada's big banks.
In addition, the federal government has an ongoing public
consultation process on the review process for bank mergers, and plans
to finalize review guidelines in 2008.
Below are suggestions for pushing the government to close
these gaps
in your letter to Prime Minister Stephen Harper, Finance Minister Jim
Flaherty,
opposition party leaders, and your MP. Also, it is very helpful if you
include
examples in your letter of poor service you have received from banks or
other
financial institutions.
****************************************
SAMPLE LETTER
Dear Prime Minister Harper / Finance Minister Flaherty /
Opposition Party leader / Your MP:
The federal government strengthened bank accountability by
including some good measures Bill C-8 (passed in June 2001). However,
some key gaps were left that will continue to make it difficult to
ensure banks and other financial institutions serve all Canadians
fairly and well, and Bill C-37 (passed in 2007) did little to close
these gaps.
The banks have recently recorded $16 billion in losses and writedowns,
and
all the federal government has done is offer them a subsidy of up to
$250 billion, without requiring the banks to do anything return in
terms
of
better service or prices for customers.
I'm writing to urge you and the federal government to close
these
gaps and to ensure our big banks remain Canadian-owned and
controlled.
We need a banking system that meets our needs. The federal
government can help bring about badly-needed improvements by making the
following key
changes:
- Facilitate the creation of a Financial Consumer
Organization (FCO)
to help consumers, as the Task
Force
on the Future of the Canadian Financial Services Sector recommended
in its September
1998 Report (See Recommendation #56(b) on page 208 of the Report)
by requiring banks and other financial institutions to enclose an FCO
flyer in their
mailings to customers, inviting people to join the watchdog group, and
prohibit
bank takeovers and mergers until the FCO is set up using this method (To
see the CCRC's position paper describing the FCO proposal in
detail, click here, and for
more details, click
here);
- Require banks and trust companies to provide detailed
information
on loans, investments and services to customers, as required in the U.S
(we
need to track whether banks are meeting the needs of individuals and
businesses on a community-by-community level and, as in the U.S.,
require corrective action if banks are not meeting customer needs -- To
see details
about the U.S. Community Reinvestment Act (CRA), click
here -- To see
details about the $4.5 trillion in reinvestments that have resulted
from the
CRA since 1977 (in a PDF-format document), click
here); and prohibit bank takeovers and mergers (such as TD Bank's
takeover of Canada Trust -- To see the CCRC's review of the TD
Bank takeover of Canada Trust, click
here)
if the disclosed information shows that they do not serve all customers
well
-- To see the CCRC's position paper describing how this bank
accountability
system should work, click here;
- Empower the Competition Bureau and Financial Consumer
Agency of Canada (FCAC) to conduct an audit of profits from service
charges and credit card interest rates, and reduction in competition
community-by-community across Canada, and savings from closing
branches and firing tellers, over the past 15 years, and require banks
to cut charges and open branches if
past profits were excessive (To see details, click here);
- Prohibit any future service charge or credit card interest
rate increases if the bank can't prove the increase is justified (To
see details, click here);
- Require banks and trust companies to disclose the
profit/loss record
for any branch proposed to be closed, to allow for a full review of the
reasons for the closure (To see details, click here);
- Require banks and trust companies to prove that they have
a fair
and very good service, lending and investment record every year for the
past
10 years as a mandatory condition for any financial institution bidding
on federal government contracts (To see the CCRC's position
paper describing how this bank accountability system should work, click here);
- Require the Financial Consumer Agency of Canada
Commissioner to disclose the name of the financial institution and the
terms of settlement whenever the Commissioner finds that an institution
has violated the law (currently, the Commissioner can only disclose the
name of the institution if the Commissioner prosecutes the institution)
-- To see details, click here and
view
subsection II(c), and change the complaint process so that consumers
can complain
directly to the Ombudsman for Banking Services directly at any time
without
having to go first to their bank's ombudsman;
- Give customers access to the money they deposit by cheque
as soon
as the cheque clears (Bill C-37 (which passed in April 2007) only
reduces
the cheque hold period from the usual 10 days to 4-7 days, even though
98
percent of cheques clear in one day), and;
- Increase the maximum penalty for violating the Bank Act
to
$50 million (Bill C-37 (which passed in April 2007) increased the
maximum
penalty from $100,000 to only $200,000, a meaningless penalty for
Canada's
big banks which each make $15 billion in revenue each year).
Canadians have made it clear in every poll conducted over the past 15
years that they need, and want, better banks. Please close these
gaps by
passing a law to ensure that all financial institutions in Canada serve
all
Canadians fairly and well, and can be held accountable for poor
lending,
investment or service records.
And please do not let Canada's banks take over any other
financial
institution, or merge together, before you have set up the Financial
Consumer
Organization, and the strict bank lending, investment and service
disclosure
and evaluation system outlined above. (To see the CCRC's
position paper
concerning reviewing bank mergers and takeovers and competition issues,
click here).
Please let me know what steps you are taking to introduce
bills to
close these bank accountability loopholes, to pledging in your party's
election
platform to close these loopholes.
My vote in the next election will very much depend on your
response.
I look forward to hearing from you.
Sincerely,
(put your name, postal address and email address (if you have
one)
here)
************************
THE ADDRESSES
Please send your letter for free (no postage necessary), to Prime
Minister Stephen Harper, Finance Minister Jim Flaherty, and also
Liberal Party Leader Michael Ignatieff, NDP Leader Jack Layton, and
Bloc Québecois
Leader Gilles Duceppe, and your own MP
all at the following address (NO POSTAGE NEEDED):
House of Commons
Ottawa, Canada
K1A 0A6
(To find your MP using your postal code, click
here)
OR send your letter by email to all the federal
party leaders and the Finance Minister at:
pm@pm.gc.ca, harper.s@parl.gc.ca, Ignatieff.M@parl.gc.ca,
jack@fed.ndp.ca,
ducepg@parl.gc.ca, leader@greenparty.ca, Flaherty.J@parl.gc.ca
You can also fax your letter to Stephen Harper at fax: (613)
941-6900 or Jim Flaherty at fax: (613) 995-5176.
NOTE: Email letters are not read as thoroughly, and are not as
influential over policy-makers, as hand-written letters sent by mail or
faxed. So please, if you have the time, write a letter and send it by
mail or fax to these
two ministers.
OR send your letter by fax or email individually to:
Prime Minister and Conservative Party Leader Stephen Harper
Fax: 613-941-6900
Email: <pm@pm.gc.ca>
Email: <harper.s@parl.gc.ca>
Liberal Leader Michael Ignatieff
Fax: 613-947-0310
Email: <Ignatieff.M@parl.gc.ca>
NDP Leader Jack Layton
Fax: 613-230-9950
Email: <jack@fed.ndp.ca>
Bloc Québecois Leader Gilles Duceppe
Fax: 613-954-2121 or 514-522-9899
Email: <ducepg@parl.gc.ca>
If you have time, also write to the House of Commons Finance
Committee at: 180 Wellington St. Roon 603, Ottawa, Ontario K1A 0A6; the
fax number
is (613) 996-1626 and the email address is fina@parl.gc.ca
Also if you have time, write to the Senate Banking Committee
at:
The Senate, Ottawa, Ontario K1A 0A6, Fax: all MPs and Ministers is
House of
Commons, Ottawa, Ontario K1A 0A4; the fax number is (613) 947-2104 and
the
email address is banking_banques@sen.pa
rl.gc.ca
(Please also send a copy of your letter to the CCRC at the
address set out below.
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