44th Parl. 1st Sess.
February 1, 2024 10:00AM
- Feb/1/24 6:41:10 p.m.
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Madam Speaker, this is so simple, and I think I speak on behalf of all Canadians. I have five words: We do not believe them. They have had six years since they promised to implement this legislation. They said it would be done by 2023; it is 2024. All these companies have been promised one thing, but they did not get the answers.
A report for this exact open-banking legislation is sitting on the desk of the finance minister. It was after the fact that this private member's bill hit the floor that the government even mentioned in the fall economic statement. It is time to get this implemented. Let us get it done.
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Madam Speaker, I will start by thanking the member for Bay of Quinte for introducing the bill. It is a very interesting bill.
As surprising as it may be, this is the first time we have the opportunity to debate open finance in the House. Even the Standing Committee on Finance has never addressed this issue. So far, the discussion has been largely left to the experts and industry representatives. The Department of Finance, the Office of Superintendent of Financial Institutions, the Financial Transactions and Reports Analysis Centre of Canada, all those fine people, are currently examining the issue. As I said earlier, the same goes for the Autorité des marchés financiers, or the AMF, and Quebec's department of finance. In fact, back home in Quebec, we have Desjardins and other co-operatives.
It is also important to remember that the technology companies that would interface with customers in an open financial system are not banks. Essentially, they do not fall under federal jurisdiction, just as not all financial institutions fall under federal jurisdiction.
I have been closely following the work of the Advisory Committee on Open Banking, which is referenced extensively in the preamble of the bill. This work is very enlightening. The committee heard from a wide range of stakeholders, including banks, credit unions, insurance companies, trusts, brokers, technology companies, and the list goes on. My colleague talked about that. However, no consumer advocacy groups, privacy advocates or provincial regulators, such as Quebec's AMF, were consulted. It was therefore time to broaden the conversation. For that reason alone, the bill makes a huge contribution to the debate, and I thank my colleague once again for introducing it.
Implementing an open financial system constitutes a huge change with many implications. In the long term, we can envisage a system in which financial institutions would essentially be able to manufacture financial products. Customer relations would be handled by technology companies that would not offer the financial products themselves but would act as intermediaries and data aggregators. That is quite a change. The bill's preamble lists the benefits of such an open financial system. I will not repeat them here, as I think they have been clearly outlined. I would even say that it is inevitable that we will move toward an open system. It is going to happen.
Since this is the first time we are discussing this subject, I will use my time today to broaden the debate a bit, because there are also challenges and risks. It is our job as legislators to talk about all that, since we are working toward the common good.
Our financial system's greatest asset is its stability and the confidence that comes with that stability. It is stable because it is subject to very strict legal obligations. Ultimately, if something goes wrong, for example if there is fraud, data theft, failure to report a suspicious transaction that would enable the tracking of money laundering, and so on, then the financial institution is the one that is legally and financially responsible. These financial institutions are subject to strict prudential obligations so as to ensure they have the means of dealing with the risks in question.
Since the financial institutions are ultimately responsible, they currently guard their members' and customers' personal, financial or banking information very jealously. Again, the financial system's greatest asset is its stability. However, this is also where it becomes a weakness, because it can lead to compartmentalization and a lack of flexibility. The world has changed with all the new financial products online. The development of information technologies has given rise to the data economy, which requires the data to circulate more freely in order to grow. It is unclear whether our financial architecture is currently adapted to this new environment. That is the purpose of the bill.
A financial institution cannot be asked to be responsible for the use of data it no longer has custody of. Regulations and prudential standards will have to be adapted. It is far from certain that a technology company, on the other hand, has the wherewithal to take on the financial risks I mentioned earlier. For example, a financial start-up can be born and die in no time at all. That has been the case with several cryptocurrency companies. Caution is needed. That does not mean we should stand idle and fail to move towards a more open banking system.
People want the flexibility this kind of system offers. People want aggregators that put all their information in one place, facilitate transactions and give individuals an accurate picture of their financial situation. When money is tight at the end of the month, these applications and services are valuable, and there is demand for them.
People do not understand why they are not being allowed to do this with the technology available today. After all, our personal information belongs to us.
That is why fintech companies have already started coming on line despite the legal limbo. They are responding to an obvious demand. At this point, because they are not officially part of a financial system that makes sense, they exist in a grey area and find alternative ways to evolve.
Users currently provide their personal information themselves. When the app gets into an account, it extracts data from the screen and stores personal and confidential information. Financial institutions' secure networks get regular visits from actors outside the financial sector, and that makes them vulnerable. The more advanced these strategies get, the greater the risk to our banking system.
I was saying that the status quo is not sustainable. It would be pointless for legislators to bury their heads in the sand as though it were 1990.
In some cases, it must be said, the risks are minimal. An aggregator that scans public data to show us mortgage rates in one click is convenient and low risk. However, an aggregator that collects our personal data to give us a detailed picture of our financial situation is also convenient but riskier. Financial information is very sensitive, so it is vital to protect it. Furthermore, if the app can be used to perform transactions, which implies that it places orders, that opens up a whole new level of risk, the risk of fraud.
What about the principle of needing to know the customer? That principle is the foundation of our anti-money laundering and anti-terrorist financing laws. How can a financial institution apply this principle when it is communicating via an app?
Lastly, an important part of risk is the financial capacity to take on risk. Without that, the consumer could lose everything. Fintechs currently operate in a grey area, which is a problem. A clear framework is needed, with clear obligations and responsibilities, as well as oversight mechanisms and institutions to enforce compliance.
The advisory committee recognized all of these difficulties, but it felt that it was important to move quickly so that Canada would not be lagging behind and so as not to hamper the sector's development, a bit like what my Conservative colleague mentioned earlier. He also said that the companies continue to operate in a grey area, which is what is happening right now and is not serving anyone well. That is why the advisory committee recommended giving clear direction.
However, the committee also recommended minimal regulations so that things can move faster. Then, industry stakeholders can determine for themselves how to operationalize and resolve technical issues. In short, the committee is recommending a sort of self-regulation.
It recognized that the financial strength of technology companies is an issue, but it did not propose any institutional mechanism for dealing with it. There will not be any equivalent for deposit insurance, at least not in the beginning, when the new legislation comes into force, as the committee suggests. At best, the committee mentions that people should get their own insurance.
The committee also recognized the constitutional issue, but it proposed circumventing it. It proposes integrating the federal financial institutions. As for the others, for example, the large credit unions, they can join if they want to, but as second-class institutions, which is something we do not want to happen. As Quebeckers, whose main financial institution is a co-operative and not a bank, we understand that a two-tier financial system leaves much to be desired. Barring a constitutional amendment, the federal government cannot regulate these other institutions. Also, in order for the financial system to truly be open, the governments will have to coordinate.
I like Bill C‑365. It requires the government to introduce legislation in a timely manner. However, I am not so sure about the second clause. Setting a deadline for introducing legislation without ensuring that we are ready and that any potential problems have been resolved seems a bit hasty and rash to me.
In implementing such an open system, I would like us to follow the example of Emperor Augustus who said to make haste slowly. Let us get to work right away, because the status quo is no longer tenable, but let us take the time to get it right, because the risks are high. Specifically, let us do it right by properly consulting the Quebec government when it comes to regulating co-operatives.
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Madam Speaker, I am, as always, proud to rise on behalf of the amazing people in North Island—Powell River.
Today, we are here talking about a private member's bill from the member for Bay of Quinte, Bill C-365. This is a very interesting bill. It is about consumer-led banking systems and Canadians. Happily, I have had some constituents come and visit me about this very issue, from the Coastal Community credit union in my riding. They talked about some of the really significant issues, especially for people living in rural and remote communities.
People may not have access to a bank at all in their community, or it may be a long distance to go to a bank. They may also be in a situation in which they have only one banking institution in their community and they want to go to a different one but cannot, because sharing that information can be incredibly complex. This is really key in this issue. It is making sure that people's personal banking information is accessible, so that if they find another bank that is going to meet the needs they have, they will be able to get that information sent in a way that is more transparent for themselves and for the banking system.
This PMB asks the Minister of Finance to table a plan for the implementation of open banking within 30 days of this act's coming into force. I think it is really important for us to all understand that in 2018, which is a while ago, the finance minister did create an advisory committee to look into this. In 2021 it delivered a report that included a plan for implementing consumer-led banking in Canada as early as 2023. Here we are in 2024, and it is still not happening. Again, it really is about making this more accessible.
I have heard from some of my constituents, and this is a particularly concerning area for me, who have apps that allow them to take multiple banks they are using and look at the information in a way that is comparable. The problem with these apps, of course, is that individuals are sharing all their banking information and all of their passwords and hoping that the app does not take that information or get hacked by somebody who might use it in a very negative way. This is very concerning, and it is something my constituents have been very concerned about.
This is the other part of this bill: If the minister cannot produce a bill within the associated timeline, within the first six months of the act's coming into force, the minister must table a report. That is so there is transparency and we understand what the holdup is and what the problem is.
We need to see these things done. When it comes down to it, I think what we have to assess very clearly is that competition is the key here. I have to thank my friend, the member for Windsor West, who has been doing a lot of work on competition. On our cellphones, some of the highest rates on the whole planet are here. Why is that? It is partially because we do not have appropriate competition. It is the same thing that we are seeing in our grocery stores. The gouging that is happening in our grocery stores correlates very clearly with the fact that big, wealthy CEOs are making huge profits and getting huge bonuses, and their shareholders are walking away with a lot of money.
At the same time as that is happening, everyday Canadians are struggling to feed their families. People who work in those grocery stores are often not being paid well enough to afford the food in the store they work in. I think Canadians know instinctively that it is just not a fair system anymore. What we are seeing in our system is more and more gouging. We are seeing it with the oil and gas industry, which is seeing record profits like it has not seen in years at the same time as people are trying to figure out how they are going to fill up their tanks.
I come from a rural riding. Some of our communities are extremely isolated, and it is not just putting gas into cars. It is putting fuel into boats to get to the places we need to get to for grocery shopping and for the basic necessities of life.
I really appreciate and see a lot more people in my riding buying electric cars. There are plug-ins, and I have seen them working in places like Wasa, which is a very small community but already has a plug-in station. People are using that, which is fantastic, but we still have a long way to go.
When people are suffering, we know that competition is at the very core of the issue. This is something that we actually start to take steps on, moving forward, to address the issue. When I think about competition, I have to think about basic human rights and the fact that some people are unable to afford the basic things. However, I have to say that, at this point, without a cellphone, a person might be able to get away with it if they are retired and in their 80s, but for most people today, it really leaves them unable to access things.
I work with a lot of seniors in my riding who are still figuring out how to use computers, and they are certainly not interested in any way in going to the public library to do their taxes. Therefore, we do things to help and support them. However, young people today know how to use everything. They know that, if they want to sign up for anything, make an appointment with a doctor or any of those basic things, they must have access. If it is too expensive, and if we have less and less competition, then the consumer pays, and that is a big problem in Canada.
Whether it be banking, grocery shopping or buying gas, it is all about the fact that we have let the ultrawealthy, with wealth that most Canadians can never even consider, walk away with lots of cash in their pockets as we are struggling. That is why the NDP continues to do the work that it does to make sure that there is more fairness.
Yesterday, I was left with a lot of fear and anger in my heart. I think that, when things happen to our country, as parliamentarians, we should always stand up in this place and talk about them. What is making me afraid and very angry is the fact that, in Alberta, the premier is now putting forward legislation to say that children who want to identify as who they are in school have to get permission from their parents. I think that is a horrifying reality of attacking the basic human rights of people.
If we look at our system in Canada, there are no things known legally as “parents' rights”. There are parents' responsibilities, and there certainly are children's rights. I hate to see any step in this country that will put children in a place where they are not safe. We know from statistics that children who come from the queer community are not always safe at home. They cannot always be honest with the people they love about who they are. If we do not give them a place where they can identify as they want to identify, we risk their very lives. I think all Canadians have to stand up against this.
In closing, last year, I read a beautiful Canadian book titled Falling Back in Love with Being Human, by Kai Cheng Thom. She is an amazing, powerful trans writer who does a beautiful job of articulating the power and fierceness of the trans community, as well as amazing beauty, strength and solidarity. I hope that, as we face this challenge, we remember that not only are these children and young people vulnerable, but they are also powerful and strong, and they are going to be pushing back really hard. As they push back, we must do our duty and make sure that they are not damaged. I hope all people in the House consider the safety of children.
I will conclude by reading Kai Cheng Thom, who wrote: “To build a better future, we need to learn how to transform in response to one another. We can't build a better world by getting rid of people; we can only build a better world by bringing them in.”
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