44th Parl. 1st Sess.
March 20, 2024
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Mr. Speaker, I am pleased to have the opportunity today to participate in the debate on Bill C-365, an act respecting the implementation of a consumer-led banking system for Canadians. This is a private member's bill.
Bill C-365 would require the Minister of Finance to table in each House of Parliament, within 30 days of the bill's passage, a plan to implement an open banking system in Canada and a bill to implement an open banking system in Canada within six months. I could stop there, because that is a plan that would see the government move more slowly on open banking than it already is. The Minister of Finance has already announced that budget 2024 will include legislation for the implementation of consumer-driven banking.
Instead, I will take a moment to underline the importance of this file and why we should reject a private member's bill that would impose a lax deadline and no details on the implementation of a consumer-driven banking regime. Consumer-driven banking, also known as open banking or consumer-driven finance, refers to systems that allow people and businesses to securely transfer their financial data to different financial services providers, such as apps that use data to provide automated budgeting and savings advice. Individuals can access services that allow them to build their credit by proving they have paid rent on time, for example.
It is expected that consumer-driven banking would empower Canadians to securely access and share their financial data, ensure that Canadians are not subject to fees when accessing and sharing their data, protect Canadians and the financial system from risky practices like screen scraping, ensure that parties at fault are liable for any damages or data breaches, and allow Canadians to safely access innovative products and services that can help them improve their financial outcomes.
The issue now is that without consumer-driven banking, Canadians, by default, currently share their banking credentials with entities other than their bank in order to access data-driven financial services, while there are no rules around the practice. This can be worrisome for many Canadians. Personally, it makes me feel uneasy. Like many other Canadians, I am concerned that the non-secure, unregulated practice called screen scraping leaves us open to security, privacy and liability risks in the event of data breaches or losses. That is why giving Canadians control over their own financial data is so important.
That is exactly what our government wants to do. Indeed, we support the implementation of consumer-driven banking. We have already made a lot of progress in this direction. However, such a system needs to be defined by clear rules to protect consumers.
Last fall, the Minister of Finance indicated in the 2023 fall economic statement that the government intends to introduce framework legislation for implementing consumer-driven banking in the 2024 budget. This framework legislation will propose a phased-in approach to scope, oversight of the technical standard, and a timeline for phasing out screen scraping.
In line with international best practices, the aim of our legislation will be to codify key elements including scope, common rules for addressing liability, privacy, security, accreditation and management of technical standards; mandate a government-led governance entity responsible for monitoring and supervising the system, enforcing common rules, accrediting and updating mandated technical standards; and address liability among industry participants.
Our work will be framed by three major policy objectives. First, we are aiming to ensure the continued safety and soundness of the financial sector by addressing the security risks arising from existing data sharing practices such as screen scraping, and by establishing oversight of financial data sharing activities. Second, we want to ensure that Canadians can securely and confidently access and use their financial data to improve their financial outcomes. Third, we want to establish a cohesive framework with a clear, fair and transparent approach to accreditation, to support the continued security and stability of the Canadian financial sector, including existing financial institutions.
It is important for our government to ensure Canadians benefit from effective oversight of financial data sharing. That is why our framework will mandate a government-led entity to supervise and enforce the framework.
To facilitate oversight of provincial entities while respecting their jurisdiction, a model that permits provincial entities to opt in to governance, supervision and participation will be developed.
Naturally, governance design is key to ensuring the framework achieves the public policy objectives, which in this case are safety, stability, innovation and utility for all Canadians.
With a strong governance framework, we will be able to ensure participants abide by common rules by outlining clear roles and responsibilities for participants and government, and what actions will be taken when non-compliance occurs.
I am glad to see that, after significant consultation and review, there is now broad alignment among stakeholders with the government's proposed approach. The day after the fall economic statement, the Canadian Bankers Association was quoted as saying that it welcomes “the clarity provided in the Fall Economic Statement” and that it will “continue to work collaboratively with the government on implementing a consumer-driven banking regime in Canada.”
Furthermore, Canadian fintechs were also reported to be supportive of the government's plan, as outlined in the fall economic statement and policy statement. The framework proposed by our government aligns with those of our largest trading partners, including the United States.
As members can see, consumer-driven banking is something that we support and are acting on. This framework is necessary to establish a system that enables secure financial data sharing. The Minister of Finance has already announced that budget 2024 will include legislation for the implementation of consumer-driven banking.
In order to do that, we continue to work closely with industry, federal regulators, provincial and territorial governments and other stakeholders.
It is clear that, with all the progress we are making on creating a consumer-driven banking system, Bill C-365 is not necessary. It will be obsolete before it is even voted on.
That is why I will vote against Bill C-365, and I invite my hon. colleagues to do the same.
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Madam Speaker, I would like to thank the member for Bay of Quinte for introducing Bill C-365. As surprising as it may be, this is the first time we have had 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. All the fine people at the Department of Finance, the Office of the Superintendent of Financial Institutions and the Financial Transactions and Reports Analysis Centre of Canada are currently examining the issue. The Autorité des marchés financiers, or AMF, and Quebec's ministry of finance are also looking into it. It is important to remember that the technology companies that would interface with customers in an open financial system are not banks. They do not necessarily 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 and technology companies. However, no consumer advocacy groups, privacy advocates or provincial regulators were consulted. It is past time to broaden the conversation. For that reason alone, the member is making a huge contribution and I sincerely thank him for it.
Implementing an open financial system would be a huge change with many implications. In the long term, we can envisage a system in which financial institutions would essentially 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 the sponsor did a fine job outlining them. I support them. They are real. I would even say that moving toward an open system is probably inevitable.
Since this is the first time we are discussing this subject, I will use my time today to broaden the debate a bit. It is our job as legislators to talk about the benefits, but also the challenges and risks, 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 strict legal obligations. Ultimately, if something goes wrong, for example if there is fraud, data theft, failure to report a suspicious transaction that would assist in tracking money laundering or terrorist financing, then the financial institution is the one that is legally and financially responsible. 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 guard their members' and customers' personal and financial information very jealously. However, this is where the system's greatest asset, its stability, also becomes a weakness, because it can lead to compartmentalization and a lack of flexibility.
The world has changed. The development of information technologies has given rise to the data economy, which can only grow if data circulates freely. It is unclear whether our financial architecture is adapted to this new environment. A financial institution cannot be expected to take responsibility for the use of data it no longer has custody of. Prudential standards and regulations will have to be adapted. It is far from certain that a technology company has the wherewithal to take on those financial risks. A financial start-up can be born and die in no time at all. If that happens, there will be no one left to shoulder the consequences of fraud, data leakage, incorrect information or poor financial choices. We need to be cautious.
Does that mean we should do nothing? Far from it. People want the flexibility of an open financial system. They want aggregators that put all their information in one place, facilitate transactions and give individuals an accurate picture of their financial situation. That is invaluable when money is tight at the end of the month. People also have a hard time understanding why they are not being allowed to do this. 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, however, because they are not officially part of a cohesive financial system, they exist in a grey area and find alternative ways to evolve. Users currently provide their personal information themselves, and when the app gets into an account, it extracts data from the screen and stores it.
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. As I was saying, the status quo is not sustainable. It would be pointless for legislators to bury their heads in the sand. There is no going back to 1990.
In some cases, the risks are minimal. An aggregator that scans public data to show us mortgage rates at all financial institutions in one click is convenient and low-risk. When it collects our personal data to give us a detailed picture of our financial situation, that is also convenient, but carries more risk. Financial information is very sensitive, so it is vital to protect it. 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. What we need is a clear framework with clear obligations and responsibilities, as well as oversight mechanisms and institutions to enforce compliance.
The Advisory Committee on Open Banking 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. Companies continue to operate in a grey area, which is not serving anyone well. That is why the advisory committee recommended giving clear direction but introduce minimal regulations so that things can move faster. Then, industry stakeholders can determine for themselves how to operationalize that and resolve technical issues. In short, the committee is recommending a sort of self-regulation.
The committee recognized that the financial soundness of technology companies is an issue, but it did not propose any institutional mechanism for dealing with it. There would not be any equivalent for deposit insurance, at least not in the beginning. At best, the committee mentions getting 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, they can join if they want to, but as second‑class institutions.
I am a Quebecker whose main financial institution is a co‑operative, not a bank. Understandably, a two‑tier financial system leaves much to be desired. Barring a constitutional amendment, the federal government cannot regulate them. Also, in order for the financial system to be truly open, governments will have to coordinate. I really like the first clause of Bill C‑365. It requires the government to present directions and an action plan in a timely manner so that the public can take ownership of it and we can debate it. That is good. 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 rash to me.
As we consider the implementation of open banking, let us heed the Emperor Augustus and make haste slowly. That is essentially the message I am getting from the Speaker, who wants me to wrap up. Let us get to work right away because the status quo is no longer tenable, but let us take the time to do things right, because the stakes are high.
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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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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, first of all, I thank my colleague for Bill C‑365, which is very interesting. I look forward to talking about it in my speech.
Many of these fintech companies are provincially regulated tech start-ups. In fact, the largest financial institution in Quebec, Desjardins, is a co‑operative operating under the provincial jurisdiction of the Government of Quebec and is not subject to federal legislation.
I would like to know whether my colleague has considered the need to align with Quebec's wish to consult and legislate in this area, and whether he is open to the idea of amending Bill C‑365 to prevent a situation where some banks are regulated under an open banking system and Desjardins, in Quebec, remains unregulated or not yet regulated. I wonder whether my colleague has thought about that aspect.
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moved that Bill C-365, an act respecting the implementation of a consumer-led banking system for Canadians, be read the second time and referred to a committee.
He said: Madam Speaker, when I was a young boy, growing up, like many Canadians, I fondly remember playing the game Monopoly. I loved owning all the utilities, collecting Park Place and Boardwalk, then putting hotels on them and bankrupting all my brothers, sisters and family members. It was really great.
The game, of course, was developed in the early 1900s by Lizzie Magie. She wanted it to be an educational tool. It was meant to show the negative aspect of property held in the hands of a very few. One hundred years later, Canadians see that Canada has a monopoly problem. Canadians pay the highest cellphone bills on the whole planet. When it comes to groceries, we only have three Canadian grocery chains and two American chains that are driving prices up. When it comes to a lot of industries, like the Internet, we have a monopoly in the sky overhead. We have satellite, which is the only accessible Internet a lot of our six million rural Canadians can get from Elon Musk's Starlink.
Then we look at the main one, which is banking. We only have five Canadian banks that control 87% of all the mortgages. Excuse me, but it was five. Two weeks ago, the finance minister approved the merger of HSBC and RBC. The number one bank bought the number seven bank, which means that five banks now control 90% of all the mortgages in Canada.
Talking about how bad it is with monopolies, we can go back to 1776. Adam Smith talked about monopolies in The Wealth of Nations. He talked about the invisible hand and the many buyers and sellers who negotiate and dictate prices. If we remove that invisible hand, and if we take away sellers and keep it to a very few, then prices go up and wages go down. We are seeing that across Canada. Canada is the country that has the most monopolies per industry sector.
Oligopoly was a word created in 1930, and it means “few sellers”. It actually comes from the word “oligarch”. When we talk about an oligopoly, that is what we are talking about in the banking sector. When we have few sellers, prices go up, services go down, wages go down, start-ups go down and innovation goes down.
We only have a month to look back at what happened, with RBC announcing it was going to buy HSBC, and to see exactly what happened from that. Before the announcement, HSBC had interest rates of 6.4% versus RBC at 7.15%. After the announcement, those rates went up 6.55%. That meant if someone had a mortgage of $500,000 in Vancouver, they just paid $750 more a year. Monopolies benefit only the very few. The shareholders and the owners are the only ones who benefit, while Canadians lose. We certainly have that problem.
When it comes to the banking sector, we do have major problems because of this oligopoly. One-third of Canadians are upset with their financial institutions. Canadians pay some of the highest banking fees in the world. Because of economic conditions, J.D. Power stated that 50% of banking customers are “financially vulnerable or stressed”. That is an increase of 6% from only a year ago.
The banks will not share people's financial information. If people want the freedom to deal with another bank or institution, the banks feel that they own that information and will not share it with whom people want it shared. Canadians are nickel-and-dimed by the big banks for basic financial services, which Brits, Australians and Americans get for free.
The answer to our monopoly and oligopoly problem is right in front of us. A robust, open banking framework or consumer-led banking would allow the industry to overhaul its outdated systems and to modernize payment infrastructure, and would allow a platform for fintechs to fill the gaps left by Canada's oligopoly with one simple method. The banks would have to share one's financial data with one's consent.
Consumer-led banking makes the banks have to use an API, application program interface, so that companies could bank with people, and Canadians would get financial freedom. It is just common sense. It is freedom to decide who to bank with, which apps people want to use, how long their data is going to be used for and for what purposes.
It would mean that hundreds of financial institution applications and even new banks would be able to ply for Canadians' business, and Canadians would have the freedom of choice to decide who gets their banking business.
However, consumer-led banking, open banking, has already been delayed by this Liberal government for six years. My bill, Bill C-365, would end this six-year delay, and there is not a moment to lose. Other countries get it. South Korea implemented this in 2019, India in 2011, Australia in 2020, Japan in 2017, New Zealand in 2018 and the U.K. in 2018. Through consumer-led banking, we have seen countries other than Canada empower their consumers by allowing them, through security access, to share their own financial data. Other countries have reaped the rewards that Canada has lost out on.
In the U.K., with consumer-led banking implemented, with only 14% market share, consumers pay zero dollars for monthly transactional fees or for overdraft fees. Consumers in the U.K. pay zero dollars to their bank in general. The savings per year for the people in the U.K. is 12 billion pounds, and for small businesses, it is eight billion pounds. There have been over 250 companies created and over 4,000 jobs.
The reality, much like the industrial policy that Canada has lost out on, is that the most competitive and forward-looking leaders are based in other countries. Canada has some really great financial tech companies ready to lead the world, but if this is not implemented, they are going to leave Canada. This government has stalled, and the industry is losing patience, but let us walk through what has happened with this.
The government announced in 2018 that consumer-led and open banking would be in place by 2023. It is way past 2023.
The government hired an expert panel. Does that sound familiar? It hired an expert panel to weigh in back in the summer of 2021, which had a comprehensive recommendation of how to set up the system, including an 18-month implementation schedule.
The government hired a new expert to then come up with the framework in 2021. The expert reported back to the government in early 2023, but the report was never made public. In fact, it sits on the finance minister's desk. The minister sat on this report for six months and stalled this legislation, and now promises that it will be implemented. Strangely enough, after my private member's bill, Bill C-365, to get the government to implement consumer-led banking, it was tabled. However, this patient fintech industry is losing its patience, and we risk losing these companies, potentially worth hundreds of billions of dollars to this economy, at time when we need it the most.
For Canadians out there who are asking what “fintech” is, it stands for financial technology companies, and more Canadians have used a fintech app than they might even know. If a person cannot qualify for a loan because they do not have a Canadian credit history, they can share their monthly rent payments information with Borrowell's Rent Advantage to build their credit store. QuickBooks uses a person's transaction data to automate their bookkeeping, and there are one million small businesses using this app. Wealthica tracks a person's investment accounts at different banks while Wealthsimple is a Canadian online investment management service. Shakepay allows people to pay friends, buy Bitcoin and send money. KOHO is a no-fee spending and savings account with the perks of a credit card. Wise allows people to send cross-border currency quickly and efficiently.
The fintech industry in Canada is worth $9.4 billion with 169 investments in 2021 worth $1.75 billion, but it is despite this government, not because of it. Companies exist, but is almost in a black market.
Nine million Canadians have been simply giving away their online banking usernames and passwords, or what we call “screen scraping”, because the banks will not pass that information on. Screen scraping is illegal in most countries. Can members imagine having to share their safe word with another company because the banks just will not share their information? It is incredibly dangerous. As part of the U.K.'s open-banking reforms, the U.K. scrapped it, banned it and made it so that it could not happen. However, for nine million Canadians, it is happening each and every day.
Consumers need laws that force the banks to allow them to, on request, transfer their data from a bank to a financial tech organization, or to move it from bank to bank in order to give them financial freedom. It defines how the consent should be obtained, as well as the cybersecurity requirements that banks and apps must meet. Perhaps most importantly, open banking also helps customers hold their banks or fintechs liable if and when they are unreliable with their data.
Canada's reluctance to embrace open banking has recklessly allowed Canadians' private data to be at risk or compromised. Competition would help fix fraud. It makes companies sharper and makes them invest in better technologies. Currently, with fraud increasing, there has been a decrease in satisfaction with how banks handle fraud-related problem resolution. With competition, we would solve that.
The financial institutions that rank the highest in J.D. Power are those that effectively communicate about fees, fraud and savings; provide tools and information about budgeting and debt reduction; and address security and fraud problems in a timely manner. members can imagine that competition would also fix fraud. It is the lack of competition that is making Canadians have to put their data at risk, and this is compromising Canadians and Canadian businesses.
Let us be clear. Canadians want this. It is not just the cost savings, but the service. When we look at what Canadians want out of their banks, they want to be able to have the tools they want, when they want them. They want a bank that looks after their needs, and one that gets back to them. A lot of these fintechs are open during the weekends. We have seen other industries explode when they have competition. We see the service go up. We see wages go up. We make sure that we create good jobs that stay in Canada at a time when we need them.
Here are some comments we received when I put this bill forward. We have had a lot of good, positive feedback from fintechs that are desperately trying to get this legislation through. They have been asking for it for six years.
We have Sherri-Lee Mathers, an automation-obsessed accounting technologist, which are her words, in craft brewing technology. She writes, “Open Banking will bring improved Data-driven insights, and cashflow planning so desperately needed by Canadian Small Businesses. Especially, as they weather the challenges in the financial climate especially those industries that are still trying to recover from the pandemic!!...I SAY YES to OPEN BANKING!
Tanya Hilts is a CPB whose business name is Rev Up Your Business with Tanya: The Cloud-Savvy Bookkeeper & Efficiency Evangelist! These are great names. They are obviously entrepreneurs. Tanya writes, “Thank you...for your support....This is a game-changer for Canadian businesses, offering unparalleled transparency and control over financial data.”
Almost everyone I have met with supports this initiative and wants to make sure we get this right, get it through and get it going.
The other part right now is that start-ups in Canada are at a 20-year low. We have 100,000 fewer start-ups from entrepreneurs in Canada than we did 20 years ago, and this is at a time when we are seeing massive layoffs in the Canadian economy. We had announcements even in the last couple of weeks of thousands of jobs that are coming to an end and workers being laid off. We need this industry to grow. We need it to prosper. We certainly need it to excel with the right framework from the government, but we need that to happen right now.
The solution to Canada's monopoly problem is a Canadian consumer-led banking initiative and legislation that we want before the House within six months of this bill passing. In the United Kingdom, consumer-led banking has saved individuals 12 billion pounds per year and businesses over 6 billion pounds per year, with improved access to financial services, lower fees and greater control of their financial data.
Canadians know what a monopoly is, but they hardly know what a free market is. I talked about the board game Monopoly, and there is another board game called Anti-Monopoly, which is supposed to talk about the free-market system. It was supposed to teach our kids and families about a free market and what it is.
After 100 years of monopolies in Canada, it is time we open the free market. Today, Bill C-365 is calling for the government to reaffirm a promise to enact consumer-led banking and introduce legislation within six months so Canadians can have a free market in the banking sector and, with it, financial freedom and better prices, because Canadians and the Canadian fintech industry deserve more.
As the Conservative Party, we want to bring home savings and freedom to consumers. Let us bring home open banking to Canadians and the Canadian public.
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It being 6:24 p.m., pursuant to Standing Order 30(7), the House will now proceed to the consideration of Bill C-365, an act respecting the implementation of a consumer-led banking system for Canadians, under Private Members' Business.
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Madam Speaker, it is always an honour to rise in this place and represent the amazing people of Medicine Hat—Cardston—Warner, as well as all Canadians.
It is said that imitation is the sincerest form of flattery, but it is breathtaking just how desperate the Liberals have become. In the House of Commons, we are witnessing a curious trend: imitation disguised as Liberal innovation.
The recent flurry of activity from our Liberal counterparts presents a spectacle. It is desperation masquerading as originality.
It is really fascinating. The Liberals have hastily adopted common-sense Conservative strategies to cloak their actions as a remedy for affordability, all the while seeking recognition for ideas that were not theirs to begin with.
Unfortunately, their replica has flaws, and the Liberals know that they need to ram this legislation through before Canadians realize that it is nothing more than a cheap knock-off.
If the government is looking for another idea to steal from Conservatives, maybe it could finally decide to repeal the carbon taxes, which are the real reason Canadians are facing the soaring cost of living.
First, let us dissect the fabric of the Liberals' imitation. The Liberals’ newfound fascination with affordable living appears more as a last-ditch effort to mirror our common-sense Conservative initiatives, although it lacks the authenticity and the understanding required to genuinely address the woes of everyday Canadians.
This sudden adoption reeks of desperation. Maybe they have seen the polls. Maybe they are hearing in their ridings that the Conservatives are the only party putting forward common-sense ideas.
Maybe the Conservative message of common sense sounds good to them too, but their leadership comes down heavy-handedly when they vote in favour of our legislation, like the Liberal member for Avalon, who tried to do the right thing for his constituents initially, although he eventually betrayed them and caved to his master like a typical Liberal always does.
The government's thievery of Conservative ideas seems relentless. Were members aware that the fall economic statement contained no less than four Conservative private members’ bills?
For example, there is Bill C-323, an act to amend the Excise Tax Act with respect to mental health services, from the good doctor from Cumberland—Colchester. There is Bill C-318, an act to amend the Employment Insurance Act and the Canada Labour Code for adoptive and intended parents, from my friend, the member for Battlefords—Lloydminster. There is Bill C-294, an act to amend the Copyright Act, on interoperability, from my riding neighbour to the east, the member for Cypress Hills—Grasslands. There is Bill C-365, an act respecting the implementation of a consumer-led banking system for Canadians by the amazing member for Bay of Quinte.
While the Liberals eagerly snatch concepts from our playbook, they turn a blind eye to the actual root cause of the economic pains faced by Canadians: their out-of-control debt and deficits, out-of-control spending, a carbon tax that does not do anything for the environment, a rapid housing initiative that cannot build homes and inflation that results from all of their financial mismanagement.
These are the real culprits behind the soaring cost of living, behind escalating interest rates and the burdensome grocery store bills and fuel prices that burden the citizens of this country every day. Our Conservative blueprint for affordable living, particularly our Conservative leader’s building homes not bureaucracy act, stands as a testament to our commitment to the welfare of Canadians.
Our messaging, like the “bring it home” initiative, encapsulates not just slogans but a genuine drive to resolve the housing crisis plaguing our nation.
In contrast, the Liberals’ response to this crisis they partly crafted lacks the depth and innovation required for a lasting solution. Their plan, often confined within the boundaries of existing programs and reannouncements, fails to project a path forward. It is a patchwork of recycled notions rather than a blueprint for real, sustainable change, and they have no problem announcing the same promises over and over again with the same pompous Liberal attitude that most Canadians have grown tired of.
The question remains: Are the Liberals truly addressing the housing crisis or merely engaging in performative arts to mitigate the damage that their policies have caused and the fact that the vast majority of Canadians desire to see them removed from office? Their sudden attempt to provide solutions and then force them on Canadians seems more reactive than proactive, a calculated response to evade accountability rather than an earnest effort to rectify the havoc they created. I can only hope it means they are getting ready for an election.
Liberals may tout their actions as responsive and comprehensive, but in reality, they bear the marks of limited vision and failure of leadership.
The building homes not bureaucracy act, as presented by our Conservative leader Pierre Poilievre, is not just a set of words—
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moved for leave to introduce Bill C-365, An Act respecting the implementation of a consumer-led banking system for Canadians.
He said: Madam Speaker, Conservatives want to get Canadians back in control of their financial freedom. Right now, Canada's oligopoly of six banks controls 93% of Canadians' business. Those banks also have a monopoly on Canadians' financial data. Canadians do not own or control their financial data; the banks do.
Our common-sense plan, called consumer-led banking, would force the banks to give consumers back control of their financial data and, on their consent, share that with competitors who would fight for Canadian financial business. This would create competition, drive prices down and bring financial freedom to Canadian families.
If we compare Canadian banks to those in the U.K., right now, Canadians have bank fees that average $14.50 to $15 a month, average transactional fees of $1.40 and average overdraft fees of $25. In the U.K., which has this legislation, these fees cost zero dollars. Mortgage rates in the U.K. today average 5.99% versus Canada, which is 6.99%. That is a difference of 100 basis points.
Consumer-led banking legislation forces the government to stop dragging their heels and bring forward the second report on open banking, which has been sitting on the finance minister's desk since May and, within six months, to table common-sense, consumer-led banking legislation. This has been promised now for four years. In this way, Canadians, not the banks, can control their own financial data and financial future once again.
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