That, in the opinion of the House, the government should ban all pay-to-pay practices by banks operating in Canada, through the enactment of a mandatory financial code of conduct to protect consumers.
Mr. Speaker, I will be sharing my time with my colleague, the member for .
It is an honour to stand here in this place today on behalf of the good people of Davenport in the great city of Toronto, and in fact on behalf of all Canadians who are upset to the point of anger over unfair pay-to-pay fees. A pay-to-pay fee is a fee a customer is charged just for the right to pay their bill. This is patently unfair, and it plays out in a variety of different ways. Today, we are discussing, specifically, the banks.
Colleagues in the House will recall that the NDP led a very strong campaign to ban pay-to-pay fees, and due to that pressure the government introduced, in its last budget, the one before this one, measures to ban pay-to-pay fees on telephone companies, ISPs, telecommunications companies and cable companies. However, it did not include banks in that ban. Of course, when that did not happen, banks were free to do what they wanted with pay-to-pay fees, and we have seen them increase and expand.
Right now, pay-to-pay fees, just on transactions, just on statements that are mailed to people's houses, are worth about $180 million a year. That is $180 million that Canadian consumers have to pay the banks, the big five, just to get their statements in the mail. This is outrageous. It is ridiculous. It is unfair.
Today we have an opportunity to finally close the door on this unfair practice that Canadians from coast to coast to coast agree is unfair. I am sure my colleagues across the way on the government side have heard from their constituents about these fees. It is time for all of us to do the right thing, do what we were sent here to do, and that is fight for, protect and speak up for Canadians who sent us here, who we represent.
Banks are some of the most powerful corporations in the country. There are very few institutions that can stand up to a bank. An individual small business, an individual person, a hard-working Canadian, has a tough time doing that. However, that is what we are here to do. That is what we can do today.
I invite my colleagues from all the parties to support this motion to ban pay-to-pay fees. I want to read a bit of a letter that I received on this issue from a woman named Cynthia in my riding, a small business person, who said:
I have multiple accounts with TD Canada Trust and have been a customer with them for 30 years(!).
Now, this is what we call customer appreciation.
They charge $2 for EACH account statement.
I 've opted for online billing, but I need to print out copies for my records, so I end up paying for ink and paper to print my own bills. Either way, I lose.
Many in my riding have their own businesses. I represent a riding with many small, micro-entrepreneurs who are trying to make a living, oftentimes out of their own homes. She goes on to say:
I have my own business. I can only laugh at the idea that my customers would be agreeable to me charging them for printed invoices.
When was the last time any of us went to a restaurant, for example, and when we got the bill had to pay for the bill, too? That is what is happening. It is a big business; $180 million.
The Public Interest Advocacy Centre found in a survey that it did that almost 40% of Canadians said they were not comfortable or could not use online billing, and 74% said they disapprove of companies charging extra for bills or statements.
Let us talk about who this would affect the most. It would affect those who do not have Internet access, seniors, persons with disabilities, many people for whom English or French is not their first language, and people who do not want to bank online for a variety of good reasons. In a sense, it affects communities that are already at some level of disadvantage in our society, and it is our job to ensure that they are treated equally and fairly.
These are unfair charges, and they are allowed to happen because the current government has opened the door for them. Whenever we talk about pay-to-pay fees here, the government rebuts the idea by touting the code of conduct under which the banks are governed. I am sure the government will do that today. However, what the Conservatives will not say, but what we will remind them of today, is that the code of conduct that they trumpet is a voluntary code of conduct. Let us imagine if the commute of Canadians watching this today was governed by a voluntary code of conduct. I can only imagine what Highway 401 would look like if it was governed by a voluntary code of conduct, but that is basically what we have going on here with the banks.
Why would the government not ensure that banks were following a code of conduct that is mandatory, not one that the banks can pursue by choice? When it is by choice, we see consumers having their pockets picked time and again while the Conservative government stands by and watches it happen and essentially allows it.
We have an opportunity today to do something very important for consumers right across the country.
A couple of weeks ago, one of the five big banks—which, by the way, just posted over $2 billion in profits in its recent quarter alone—announced that it would charge extra pay-to-pay fees just for the right to make a mortgage payment, a student loan payment, or a credit card payment. It wanted to charge an extra bit of money just to pay a bill, until a huge outcry both on the street and in the House of Commons forced RBC to back down.
However, that did not stop it and all of the other five big banks from increasing fees on everyday transactions. Someone told me recently that when they took out $40 at a bank machine, they were charged $4.50 to take out their own money. That is outrageous. We need to have a serious conversation about what is and is not fair.
It would be one thing if these businesses were in distress, but how is it that the government allows Canadian banks, who are all posting over $2 billion in profit every quarter, to nickel-and-dime hard-working Canadians? Shame on the government.
Today we have the opportunity to do the right thing by hard-working Canadians who have to play by the rules, make ends meet, and work hard. They do not deserve to have their pockets picked in this way. Today we have an opportunity to right this unfair practice.
I look forward to this debate today and to this House agreeing tonight that we will end pay-to-pay fees forever.
Mr. Speaker, I want to thank my colleague from for sharing his precious speaking time with me, because our time is very limited. This is an opposition day and we are dedicating our entire day to this topic. I am sure that he could have shared a number of thoughts from his constituents regarding the problems with these pay-to-pay fees. I want to start by reading the motion, because it is very short and clear:
That, in the opinion of the House, the government should ban all pay-to-pay practices by banks operating in Canada, through the enactment of a mandatory financial code of conduct to protect consumers.
I want to reflect on my 10 years of public life. It has already been 10 years, and I can hardly believe it myself. This fall will mark my fourth election campaign. I have met all kinds of people in these 10 years. Every single day in the past four years specifically, I have taken time to hear from the people of Beauport—Limoilou.
What I find really striking, and I am sure my colleagues have seen this too, is that people are proud of their accomplishments, whether they have raised a family, found a job, bought their first house or owned a house for 20 or 30 years. However, one constant is becoming increasingly obvious: people are complaining more and more about the rising cost of living in general and especially the countless fees they have to pay.
They also talk to us about taxes, but their main issue is the fees they have to pay left, right and centre, fees on all kinds of simple transactions, fees that businesses charge to compensate for declining revenues in highly competitive markets. However, the most offensive fees are no doubt those that make up the enormous profits of huge Canadian companies, particularly our big banks.
I am a long-time observer of the Canadian economy. I have been interested in it for 30 years, and I have seen how admirably stable our chartered banks are. However, I have also witnessed them taking advantage of people over and over, and I believe that governments are complicit because they have not done anything about it for years. That is so disappointing.
My colleague from chose to target pay-to-pay fees for paper bills. That is certainly the most offensive example of abuse on the part of the big Canadian banks. It is an outright insult to the millions of Canadians who, unfortunately, depend on paper bills. I think it is unfortunate because changes made by big businesses such as chartered banks hold people hostage and force them to change their habits or try to adapt somehow.
I currently have the great pleasure of being a member of the Standing Committee on Finance. However, for all of 2014, I was a member of the Standing Committee on Industry, Science and Technology. I am very proud of having had a front-row seat to and an active role in passing legislation to prohibit these pay-to-pay fees for getting paper copies of telephone, cellphone, or cable television bills, among others.
It was a great victory and we are very proud. We led the charge for a very long time. My colleague from spoke of our late leader, Jack Layton. I very much remember our campaign all those years ago. Our beloved Jack got in front of an automated teller machine and denounced the ever-increasing fees and the fact that people had to pay to withdraw their own money.
Before I go on, I will provide some very interesting and very important statistics to inform this debate. According to a poll by the PIAC, 33% of respondents said they were not comfortable with the idea of receiving a bill electronically. That is one in three Canadians, which is a rather significant part of the population. According to Statistics Canada, one in five Canadian households do not have Internet, but more importantly, 46% of homes with a household income of less than $30,000 a year do not have Internet. That is almost half of all the lowest-income households. Some 40% of senior Canadians do not use the Internet.
When I went door-to-door, especially as part of our campaign against eliminating door-to-door mail delivery, many people told me they supported the NDP campaign not because they felt uncomfortable or deprived at the loss of home mail delivery, but because they were thinking about their neighbours, namely seniors, households with very young children, people with reduced mobility, or people who do not use the Internet and who will end up paying a heavy price when mail is no longer delivered to their door.
It is the same in this case. Someone like me, a young 48-year old who is comfortable using the Internet, can easily make the transition. That being said, my mother does not even have a cell phone and has never used the Internet in her life. Why should she be charged for a paper invoice? That is outright robbery. My mother is far from being alone; on the contrary, many of her friends of the same or similar age are also entirely dependent on paper. With that in mind, how can a responsible government that respects all Canadians allow people to be cheated in this way, forced to pay $2 for every invoice? It might not seem like a lot, but it is huge. My mother worked for part of her life, but her retirement income is pretty modest. For her, every cent counts. How can we tolerate a government that allows this kind of outright theft? It is stealing.
I am not even talking about other charges that also seem to go up every year, or even twice a year, in the case of transaction fees. Even people who have very little income have to make a few withdrawals or a few transactions from their account. For someone like my mother, having to pay $1 or $1.50 for each transaction and $2 for a paper copy of her statement to see what is happening with her account is, quite frankly, scandalous. Any responsible government should really look at the situation and protect people from this kind of abuse.
That being said, I am very pleased to be able to speak to this issue on behalf of all Canadians, and especially my constituents in Beauport—Limoilou. This is yet another subject that we will be debating in the weeks to come and over the summer.
Mr. Speaker, I am pleased to use my time today to endorse the spirit of this motion and to review certain measures by our government that have already taken place to put Canadian consumers first. In my remarks I will also illustrate how this government has often been able to ensure positive commitments from financial institutions without resorting to mandatory measures.
It is quite remarkable to see the NDP members actually put forward any sort of public support for Canadian consumers, especially since they have voted against every pro-consumer measure that our government has introduced. Nonetheless, we will be supporting the motion today because our Conservative government has a strong record on consumer issues, and I am glad the members of the NDP are happy with that announcement. We will continue to put Canadian consumers first. We certainly hope they will too.
In doing so, however, I would like to remind the hon. member that consumer protection measures like the updated code of conduct this government released in April benefits two different groups: the businesses that rely on financial institutions to operate, and the consumers that make those businesses and ultimately our entire economy a success.
It was the Canadian Federation of Independent Business, after all, that noted that the code of conduct for the credit and debit card industry in Canada “has served merchants extremely well....[It] has done an excellent job in ensuring some fair ground rules and maintaining Canada’s low-cost debit system”.
Accordingly, a valid and constructive examination of the motion before us simply must ensure both small business and consumers are priorities. With the NDP refusing to support our measures helping small businesses, on top of all the measures to protect consumers, I question the sincerity of the NDP's motion today.
In the motion, the hon. member has trained his sights on the business-to-consumer space, the B2C space. B2C, on the other hand, describes the relationship between a company and the end user of a service. Without question, these relationships are important. Canadian families work hard to make ends meet and every dollar counts. When Canadians make decisions about how to spend their money, they must be assured of a voice, a choice and fair treatment.
These words once again recall the 2013 Speech from the Throne and the very first strokes of what was to become our consumer first agenda. It is here that hon. members may have first heard the term pay-to-pay, for it was on this occasion that we committed to end pay-to-pay policies in specific industries in Canada, starting with the telecommunications sector. Contrary to the wording of the motion, the pay-to-pay concept goes beyond banks.
For those who are not aware, pay-to-pay billing refers to a new charge on monthly phone bills that previously did not exist. This fee may cost up to $6 each month and is charged to Canadians who choose to receive their monthly phone bill by mail, that is the paper version. Here again, promises made, promises kept.
Last December, legislation prohibiting telecommunications companies from charging Canadians for receiving paper bills received royal assent. This was a very good first step, but it was by no means our last.
One of the most important relationships Canadians have is with their financial institution, and Canada's banks are world-class. The World Economic Forum has recognized Canada's banking sector as the soundest in the world for the seventh straight year. That is something of which we can all be very proud.
Our nation's financial institutions continue to meet global regulator reform thresholds on time and often ahead of schedule. Three of our six major banks count among Bloomberg's list of the world's strongest. More important, Canadians have high regard for their financial institutions: 87% have a favourable impression of banks in Canada, significantly higher than any other service providers; 75% give banks a good rating for being stable and secure; and 79% of Canadians get good value for their service fees.
This is positive news because it shows Canadians recognize that a profitable banking sector benefits communities across the country and the Canadian economy as a whole. Those countries that do not have a sound banking sector, including the ones most impacted by the global financial crisis a few years ago, have come to envy those that do.
In the banking sector, as in the telecommunications sector, our government has been proactive about ensuring that Canadians do not face unfair or undisclosed charges for services rendered. Our efforts in this regard are long standing and cut across many different areas of the banking and financial industry. They are even in collaboration with other levels of government. However, while we have a strong banking sector, we also understand the concerns of Canadians who feel nickel-and-dimed by the big banks. It is why we have introduced tough measures to protect Canadians from predatory banking practices and have continued to look for ways to protect Canadian consumers when dealing with their financial institutions.
Some of our measures leverage public education. For example, in budget 2014, we committed to raising public awareness about the associated costs of payday lending and other lending products with high interest rates. We are also giving provincial governments the space they need to fully regulate payday loans, including a 2007 change to the usury provisions of the Criminal Code.
Many more of our efforts draw on the benefits of clear disclosure to help consumers make good choices. Disclosure rules ensure that service providers, credit card companies, or federal financial institutions that offer mortgages, highlight relevant consumer information about charges and consequences in a manner that is visible and accessible. For example, the prepaid payment products regulations, which came into force last May, require disclosure of fees in a prominent information box on exterior packaging; disclosure of pertinent information on the product's use, including on how to access the full terms and conditions and a toll-free number to make a balance inquiry; prohibit the expiry of funds; and prohibit dormancy fees during the first 12 months following card activation.
To put consumers first, our government has prohibited unfair practices where necessary. That includes, for example, the use of unsolicited credit card cheques, which encourage funds to be withdrawn directly from a credit card. These cheques are considered to be cash advances, which can accrue higher interest rates and fees and do not provide an interest-free grace period.
Another example of our government's consumer commitment is the access to funds regulations, which reduce the maximum cheque-hold period to four days from the previous seven days for cheques of less than $1,500. The regulations also provide consumers with more timely access to the first $100 of a cheque.
These are some of the actions that the government has taken, which in turn have prompted changes within the banking industry.
However, our financial industry has always been a driver of positive change. Financial companies also recognize the value of treating their clients fairly, whether they be consumers or businesses. It is the Canadian way, and our government has repeatedly helped to make that happen.
For example, budget 2014 called on banks to enhance disclosure to consumers of the costs and consequences of collateral charge mortgages relative to conventional mortgages. In response, on September 3, 2014, eight major banks, and the Canadian Bankers Association on behalf of its smaller member banks, committed to providing consumers with general comparative information on residential mortgages. Banks also committed to providing specific information about these same topics to consumers on their individual mortgages at the time of or before entering into a mortgage loan agreement.
The NDP voted against all of these consumer protection measures.
Just over a year ago, Canada's eight largest banks voluntarily committed to enhancing low-cost bank accounts, and to offering no-cost accounts with the same features as low-cost accounts to a wider range of eligible consumers, especially students and seniors.
Industry-initiated change has not been limited to our federally regulated financial institutions either. Last fall, we welcomed voluntary commitments by Visa Canada and MasterCard Canada to cut credit card fees by close to 10%. Visa and MasterCard started to implement the reductions in April 2015. This is a very important commitment for retail business owners in particular.
Canadians have proven to be enthusiastic adopters of new and evolving payments technology. From the early days of automated teller machines, now known as ATMs, to newer tap and go technologies at point of sale, the days of exchanging hard cash for goods and services, for many, seem long ago and far away. I am proud to say that Canada leads in this respect.
Businesses that accept payments must now consider a much larger number of payment options, ranging from cash to debit to credit, and emerging digital technologies as well. That is why, alongside the recent release of our updated code of conduct for the credit and debit card industry in Canada, we have also undertaken a consultation, seeking the views of Canadians on how to ensure that payments innovations are safe and provide adequate consumer protection.
Payment systems are vital to the movement of money in an economy. Given their importance, the government provides oversight of these systems based on the broad policy objectives of safety and soundness, efficiency, and consideration of user interests. It is our strong hope that one of the major conversations that this consultation will spark is related to efficiency and how to ensure that our payments industry remains competitive so that consumers do not face higher costs when using new payment technology. At the same time, businesses can make the right choices about the kinds of payments they will accept.
More important to this debate today, which I am surprised the NDP has already forgotten, is that the banks have already committed to ending pay-to-pay charges. It makes this debate somewhat unnecessary, as the NDP is completely ignoring that the banks have made a commitment to the federal government that they will not charge customers for bills when money is owing.
Our government completely agrees that we should support eliminating the practice of making customers pay fees to see their bills or invoices, which is why, in the spring or summer of 2014, the banks made their commitment to ending this practice for Canadian consumers. Our government fully intends to accept the banks' voluntary commitment.
I am sure the hon. member knows that our government does not regulate the day-to-day operations of banks, but this issue is something we take seriously, which is why we are proud that we are able to work with the industry to help all consumers.
Then, there is the financial code of conduct that the member has raised. Again, I am faced with some confusion. Economic action plan 2015, the extraordinary budget that the introduced this year, proposes a new financial consumer protection framework for banks. This is the same budget that the opposition has already committed to voting against, which comes as no surprise when members opposite vote against most of our government's measures without even reading them.
Economic action plan 2015 proposes to amend the Bank Act. It will strengthen and modernize Canada's financial consumer protection framework to respond to the diverse needs of Canadians. Not only will it make the consumer protection provisions of the act more transparent and consistent with regard to the banks' dealings with consumers, it will benefit all Canadians, including the most vulnerable consumers. Since it would be enshrined in the Bank Act, the framework would be mandatory.
Again, New Democrats need to read the budget before they propose their motions. Our government's use of voluntary codes of conduct has increased transparency at banks and is considered a model framework around the world. Every Canadian bank has accepted and implemented our voluntary code of conduct. We are taking it one step further to make sure the framework will prohibit certain business practices, improve access to basic banking services, and broaden requirements for clear and simple disclosure of information for banking products and services.
I am sure that the point is clear already, but let me quote from the budget text itself:
The Government of Canada intends that the Bank Act provide the exclusive set of rules governing consumer protection for banks. One comprehensive set of rules will allow banks to officially deliver national products and services and provide consumers with the benefit of knowing they have the same uniform protection when they deal with their bank anywhere across the country.
I am not sure what more the member wants. This is a clear example of our government taking true leadership on this issue and helping all Canadians, by putting these principles in law.
Let me be crystal clear for the NDP. Banning pay-to-pay bank fees is the kind of thing we intend to look at, including in our mandatory financial consumer protection framework that we promised in economic action plan 2015. Our government understands that when Canadians make decisions about how to spend their money, they must be assured that their interests come first and they are given fair treatment.
I could spend a whole day listing the measures we have introduced to help consumers and that the opposition has voted against, but I see that my time is almost up.
Let me comment on one more measure that I believe is extremely important, and that is financial literacy.
Our government has been working to support the financial literacy of Canadians since we came to power. We have created the financial literacy leader position and invested funds to ensure that Canadians have the skills and knowledge to make informed financial decisions. As we have said many times, this will not only result in economic benefits for Canadians, it will also benefit the entire economy.
Protecting consumers and supporting small businesses remain a central focus of our government. We continue to work through our many channels to effect positive change for both groups. From regulations to voluntary industry-driven codes, consumers today enjoy far greater protections than ever before, even as the products and services they enjoy also evolve in step with technology and our increasingly digital world. Canadian consumers and businesses stand to benefit first from these exhaustive efforts, which is only right and fair.
Again, while we support the motion here today, I urge the NDP to stop playing political games and finally support the countless measures that our government has introduced to protect Canadian consumers. It could perhaps start by supporting economic action plan 2015.
Mr. Speaker, I rise today to speak to the motion from the member for seeking a ban on pay-to-pay fees charged by Canadian banks.
I want to start by examining the issue of pay to pay and how it relates to existing consumer protection measures in the financial sector. Then I would like to use the rest of my time to discuss a more meaningful way to bring fairness to the middle class and those Canadians working hard to join the middle class.
I believe that the underlying issue of today's motion is one of fairness. The motion before us calls for “a mandatory financial code of conduct to protect consumers”. While the text of the motion does not explicitly lay out an objective, I believe that its main objective really is fairness, which is something any reasonable person in this House can support.
It is an issue that speaks to our founding principles, peace, order and good government, and is a recognition that we need strong consumer protection measures so that Canadians are treated fairly when they make a purchase or enter into an agreement.
There is an inherent imbalance between large institutions and large businesses and individual consumers with respect to information and power. Most individuals need the protection of strong laws and consumer protection measures to help even the scales.
Canadians are justifiably proud of our banks. We have some of the largest and most successful banks in the world. Our resilient banking system did not just happen by accident. It was shaped, largely, by reforms in the 1990s, directed, in fact, by the strong governments of Paul Martin and Jean Chrétien, when globally, the banking systems were being deregulated in Europe, the U.K., and the U.S. Canada did not follow suit at that time and did not follow the global trend of deregulation. Canadians and our banking system are better off for it.
However, every system needs balance. A strong banking system must be complemented by strong consumer protection measures that ensure fairness for Canadians.
In today's economy, access to basic banking services is essential for consumers. We are moving towards a cashless society. It is becoming nearly impossible to carry on today without a bank account. Even the federal government is pushing Canadians towards an increasingly cashless society and electronic transactions. The government is in the midst of phasing out, for instance, its use of printed cheques. As of next April, Canadians will be required to accept all payments from the federal government by direct deposit. This will include tax refunds and federal child benefits as well as CPP, OAS, and EI payments.
The government has said that it will only issue cheques under exceptional circumstances. For example, it will continue to issue cheques to people who live in remote communities where they do not have access to a financial institution. For everyone else, it is clear that the government sees bank accounts as a prerequisite to receiving financial support.
Liberals believe that the government ought to show more compassion, understanding, and flexibility in allowing more Canadians to continue receiving cheques. For instance, we can look at situations with many of the elderly, who may be less disposed to using electronic banking, or low-income Canadians, who may not have ongoing and reliable access to high-speed Internet or who cannot afford those connections on an ongoing basis.
We recognize how essential it has become for Canadians to have access to basic banking services, particularly, as I mentioned, for low-income Canadians, who cannot afford to see their meagre earnings eaten up by large fees. That is why, in 2001, the Liberal government brought in legislation to guarantee access to basic banking services for all Canadians, including low-income Canadians. It is why the Liberal government banned the banks from placing a hold on government cheques valued at $1,500 or less. It is why a Liberal government brought in rules requiring each of the largest banks to offer a standard low-fee bank account. These accounts include between eight and 12 transactions per month as well as a free debit card, free deposits, and free monthly statements.
At the same time, a Liberal government established the Financial Consumer Agency of Canada to monitor the financial services industry, educate consumers, and enforce new, stronger consumer protection measures. These reforms were introduced by a Liberal government. They were an important step forward, but a lot has happened over the last decade. Technology has changed everywhere. Smart phones are now everywhere. More Canadians are doing their shopping and banking online, and a growing number of companies in telecommunications, broadcasting, and the banking sector are pressuring Canadians to pay their bills online as a way to cut costs.
In the past few years, we have seen a proliferation of pay-to-pay fees. Let us be clear about what that term actually means. “Pay to pay” is widely understood to mean the practice of charging customers an additional fee for mailing them a paper invoice or statement, in a lot of cases. It does not mean an end to all transaction fees for payments.
Last year, the Public Interest Advocacy Centre estimated that Canadian consumers were paying between $495 million and $735 million per year to receive paper bills for telco and banking services combined. Of that total, $180 million was for the banking sector. PIAC also conducted a survey that found that a third of Canadians were uncomfortable receiving bills or statements online, for a variety of reasons. I mentioned seniors, particularly, who may be averse to that.
Many Canadians are worried about falling victim to online scams and identity theft. Earlier this year, thousands of employees at the Canada Revenue Agency were unable to identify a fake email phishing scam that was sent to them as part of a test. It is understandable that cautious Canadians would take extra steps to avoid the possibility of being scammed.
Another reason some Canadians insist on paper billing is because they simply do not have a choice. They do not have high-speed Internet at home. This is a significant barrier to low-income Canadians. According to Stats Canada's latest Canadian Internet use survey, only 58% of households in the lowest-income quartile have Internet at home. That compares to an access rate of 98% and 94% in the first and second income quartiles. Not surprisingly, the PIAC survey found that low-income Canadians are more likely to pay their bills in person or by mail rather than online, and they are not alone.
Canadians living in rural and remote communities are less likely to have reliable high-speed Internet at home. Seniors are less likely to use the Internet regularly, making them more likely to end up paying extra fees for paper billing.
It seems unfair to punish Canadians with extra fees because they are poor, they are low-income, or they live in an area where they cannot get high-speed Internet. It seems to me that we are disadvantaging those who are already disadvantaged.
PIAC estimated that Canadians without Internet access spend between $77 million and $102 million per year on paper billing. Pay-to-pay fees were virtually unheard of before 2010, but between 2010 and 2014, a system came into place that forced some of these most vulnerable Canadians to pay extra fees just to find out how much they owed for banking and telco services, which are considered essential in the modern world.
In the last few months, new consumer protection measures have come into place. Bill introduced measures to end pay-to-pay fees in the broadcasting and telco sectors. It prohibited service providers from charging customers who receive paper bills for wireless, Internet, telephone, and television services. Liberals voted in favour of these measures during clause-by-clause consideration of the bill.
There have also been new measures to limit bank fees. The government has built on the reforms Liberals introduced in 2001 and expanded low-fee and no-fee bank accounts. Students, low-income seniors, and Canadians with disabilities are entitled to basic banking services with no fees. With low-fee and no-fee accounts, many Canadians can avoid pay-to-pay fees at their banks.
However, according to the banks around 15% of Canadians pay fees for mailed bank statements. Apparently, the banks are willing to waive these fees for customers who face economic hardship or who do not have Internet access, but there is more that can be done to avoid pay-to-pay fees across the federally regulated financial sector.
Of course, the devil is in the detail. Closing the door on pay-to-pay fees would not mean a thing if it leads to similar fees popping up elsewhere. The government must be clear in how it defines the term pay-to-pay. Does it refer to invoices for accounts where the customer owes money, such as credit cards and mortgages? Does the government have a broader interpretation that would include statements for all financial accounts at the bank, including investment accounts, or is the government's interpretation even broader still? It seems that a small number of people are trying to morph the term into something far more comprehensive, covering almost any financial transaction fee on any payment. Therefore, we need some level of clarity around that. No one likes bank fees, but banning transaction fees in a modern world of e-commerce has to be done discerningly.
It is really important to recognize that there are many meaningful ways we can bring fairness back to Canadian families who are struggling. Today's motion reflects one way. The Liberal plan for fairness is another way to help struggling middle-class Canadian families and those Canadians working hard to join the middle class.
The Liberals have put forward a plan to stand up for Canadian middle-class families. We recognize that too many Canadian families are struggling just to make ends meet. They are struggling under the crushing weight of record levels of personal debt, $1.66 for every $1.00 of disposable income. Canadians have been taking on more debt as the job quality in Canada has deteriorated. In fact, according to CIBC Economics we have the worst job quality in Canada that we have had in 25 years. We have seen full-time jobs with benefits being replaced by part-time work.
Too many middle-class Canadians have not had a real pay raise in a long time and too many young Canadians have yet to really start their careers. They face a labour market that still has 160,000 fewer jobs for young Canadians today than back in 2008. Young Canadians face a growing pressure to take unpaid work, just for the work experience. We have all heard of recent graduates who are stuck in a cycle going from unpaid internship to unpaid internship, while their parents are struggling to help pay the bills. That is another reason why more and more Canadians are going deeper into debt, the direct financial subsidization of young Canadians who have good educations but cannot find good work to support themselves.
Many middle-class parents are delaying their retirement in order to help adult children who simply have not been able to achieve financial self-sufficiency. It is no longer unusual to hear of young Canadians still living with their parents into their late 20s or beyond. Meanwhile, income inequality has grown, and growing income inequality does not just go against our sense of fairness, it is also bad for economic growth. We have learned that from the IMF, among others.
A Liberal government would make the tax system fairer and cut the middle-class tax rate by 7%. That is a $3-billion tax cut for those who need it the most. We could afford to do this by asking the wealthiest Canadians to pay a little more so the middle class can pay less. We would introduce a new tax bracket for the top 1% on incomes over $200,000.
We would also cancel the Conservatives' $2-billion income splitting scheme that the C.D. Howe Institute has actually told us will only benefit 15% of Canada's richest families. Income splitting provides $2,000 more to those who do not need the help. It does nothing to help single parents or low-income families. In fact, according to the C.D. Howe Institute, 85% of Canadian households, those who need the help the most, will not get a dime from income splitting.
According to the Parliamentary Budget Officer, higher income families are not only more likely to qualify for benefits under income splitting, the average benefit actually rises with family income. The Conservatives are providing the most help to precisely those who need it the least. We do not think it is fair to ask struggling Canadians to pay for a $2,000 tax break for the Prime Minister's family or, in fact, for the family of the leader of the Liberal Party of Canada.
Income splitting is not just unfair, it also needlessly complicates our tax system and is bad for growth. It is complicated that we need to follow an 85-step process just to apply. Even the tax experts within the Department of Finance who wrote the rules got it wrong the first three times it came to Parliament. It is also bad for growth. The PBO has shown that income splitting will actually weaken our economy rather than strengthen it. He estimates that it would cost the equivalent of 7,000 full-time jobs.
The Liberal plan would do more to grow the economy and help families with the high cost of raising kids. A Liberal government would provide one bigger tax-free monthly cheque to Canadian families with children. Under our plan, every family earning less than $150,000 per year would receive more monthly benefits.
With the Liberal plan's new Canada child benefit, a typical two-parent family with two children earning $90,000 per year would get $490 tax-free every month. Under the Conservatives, the same family today only receives $275 after tax.
When we compare the two plans, the Liberal plan would provide an extra $2,500 per year tax free over what Canadians are now getting under the Conservative government. Therefore, that family making $90,000 a year with two children would be $2,500 better off every single year.
With the Liberal plan, a typical single-parent family earning $30,000 a year with one child would get an extra $533 tax free every month. That is significantly more generous than the $440 that family gets under the Conservatives currently.
A Canadian family making $45,000 per year with two children would receive an extra $4,000 per year after taxes under the Liberal plan for fairness than they are receiving right now under the Conservatives.
It boils down to choices, and Canadians have two fundamentally different choices now. The Conservatives are offering tax breaks for the wealthy, and the Liberals are offering a plan to help the Canadian middle class with a middle-class tax cut and a new, fairer, more generous and simpler Liberal Canada child benefit.
Liberals believe in a country that works for everyone. We will put more money in the pockets of Canada's middle-class families and those Canadians who are working hard to join the middle class.
In conclusion, today's motion focuses on small fees that are an irritant to Canadians. It is a step that we expect all parties can support. However, a Liberal government would go further by tackling the bigger issues facing Canadians.
We would provide real, meaningful help to Canadian families who are struggling and a middle-class tax cut that would put more money back in the pockets of the Canadian families who need the help the most. A Liberal Canada child benefit would help vulnerable Canadian families, low- and middle-income families with children who need the help the most.
We can afford to do that and still balance budgets, because we are prepared to make a choice by asking wealthier Canadian families to pay more. It is fair and it is also good for jobs and growth, because when we cut taxes on the middle-income and lower-income Canadians, it is more stimulative to the Canadian economy.
We will be presenting more plans for jobs and growth in the future and fairness for Canadian middle-class families. We are looking forward as a government moving forward to really helping those families after the next election.
Mr. Speaker, I am very pleased to rise today to speak on the opposition motion. I will be sharing my time with the member for .
I think the motion before the House is very important for most ordinary Canadians. It calls on the government to ban all pay-to-pay practices by banks through the enactment of a mandatory financial code of conduct to protect consumers.
Let us take a minute to think about who we are talking about. We have seven nationally chartered banks but only five really big banks. Just so we understand their financial position, let me quickly review that for hon. members.
The Royal Bank of Canada has assets of $655 billion; Toronto-Dominion has $557 billion; Scotiabank has $496 billion; the Bank of Montreal has $236 billion; and CIBC has $336 billion.
In the first two quarters of this year alone, the banks turned a profit of $15 billion. That is only halfway through the year, so these companies are not struggling to make ends meet.
These are companies with enormous assets, built on the deposits of Canadians. If we run through the big banks, we see that the Royal Bank holds nearly $400 billion of our money, the Toronto-Dominion Bank $391 billion, Scotiabank $350 billion, the Bank of Montreal $236 billion, and CIBC $336 billion, so scrambling to extract every last fee out of Canadians is not something they have to do to stay afloat.
They are remarkably stable banks, and I give them credit for the good job they have done in achieving that stability through rough economic times.
I also want to acknowledge that these banks have more than 250,000 employees who provide, by and large, excellent service to consumers and also contribute a lot to their local communities in terms of charitable activities and fundraising for those charities.
In particular I want to acknowledge the employees of the Toronto-Dominion Bank. As the LGBTQ spokesperson of the NDP, I know the Toronto-Dominion Bank has been very generous in supporting Pride activities across the country and encouraging the end of homophobia in the workplace, both as it affects their employees and as it affects their customers, so I am not saying that banks never do anything good. They quite often do. However, what I am saying is what we are saying in this motion: there is no need for the banks to extract $180 million a year in pay-to-pay fees.
We are standing in the House now with the government saying it is in favour of the motion. That is very interesting. If the Conservatives had just put this measure in the budget, Canadians would already be saving $180 million. Did they simply forget, or did they just discover they are in favour?
I say “forget” quite seriously, because in their throne speech in 2013, they promised to end pay-to-pay fees in federal jurisdiction, and they actually did so. However, when they did, they ended the fees only for telecommunications companies, not the banks. The banks were exempted. Either there was some lobbying going on or the Conservatives forgot their promise to end pay-to-pay fees in the public sector.
The Liberals are also saying they are in favour, but I have to remind the Liberals that they are the ones who brought in all the voluntary financial codes of conduct for banks. They were not mandatory codes of conduct, but voluntary ones, and we have seen again and again that voluntary codes of conduct for financial institutions do not work.
I want to cast back to another example, one that is very important to some of my constituents, and that is what happens when we have a dispute with a bank. In 1996, to their credit, the Liberals set up what was called the Ombudsman for Banking Services and Investment. That was way back in 1996. If an individual had a dispute with the bank, that person could go to an independent, non-profit organization and get mediation of that dispute and some help in taking on the big banks.
Over time, the banks began to not like the decisions of the non-profit, neutral, and independent mediator, so in 2008 the Royal Bank of Canada pulled out. Why? It was because the Liberal legislation was not mandatory. It was voluntary. When the Royal Bank pulled out and got away with it, the Toronto-Dominion Bank watched very closely, and in 2011 the Toronto-Dominion Bank pulled out.
There was some question then raised again in the House by the NDP about whether they could actually get out of having this independent mediation service. This issue was clarified by the Conservatives in 2012, but they clarified it this way: they said banks are required to have a third party dispute resolution mechanism, but they did not specify it had to be the independent, non-profit Ombudsman for Banking Services and Investment.
What did the Royal Bank do and what did TD do? They hired companies to provide the independent third party mediation services.
If a client of one of the banks has a dispute, how would that person feel about taking the dispute to someone the bank has hired for an answer? I think most Canadians would see it as lacking the basic independence that would create confidence in decisions of that third party.
In summary, the government had a chance to bring the banks back under the Ombudsman for Banking Services and Investment but did not do so, and the Liberals have been remarkably silent on this issue of dispute resolution with the banks.
Is it just pay-to-pay fees? I heard some people asking why the NDP was picking on such a minor thing. That question does not take into account that it is not a minor thing for most people, and when the totals add up to $180 million taken from Canadians for paying to pay, it is actually a large thing for most consumers.
However, it is not the only area in which the NDP has been active in trying to point out that the voluntary codes of conduct on fees simply do not work. In 2012, we did a campaign to point out the enormous amount of money being collected by the banks on transaction fees. These are fees charged for putting people's money into their own accounts or taking money out of their accounts. It is their money in and their money out, but the banks charge fees to do that. The banks say there is a cost to these transactions, so they have to charge people for them.
Our consumer affairs critic worked very hard to discover the actual cost to banks. We know what they charge: they charge between $1.50 and $3 for every transaction for people to put their money into their own account or to take it out, unless they are under a special plan. Then the banks give a few transactions for free, because otherwise there would be a total consumer revolt.
What is the real cost? It is 36¢ per transaction.
However, when the NDP put forward a motion in the House to cap those bank transaction fees at 50¢, still allowing a nice profit to the banks, neither the Liberals nor the Conservatives supported it. They said that under these voluntary codes of conduct, it is up to the banks to decide if their fees are appropriate or not.
Once again, consumers are left with very little recourse, because when we check and compare bank fees, we find that these fees are almost all the same, so if consumers are unhappy with one the big five and go to one of the others, they find the same conditions.
I want to raise another thing that we have not addressed today in this motion. That is the question of mortgage discharge fees. What we have seen increasingly in Canada is that when people pay off their mortgage and are finally free of the bank and own their own house free and clear, the bank charges them for paying off that mortgage.
Initially what we had in Canada what was called a mortgage discharge fee. I checked today, and in the big five banks, mortgage discharge fees range between $200 and $400. I grant that there are some paperwork costs, but the banks have been making a profit off the mortgage for 25 or 30 years. They are not loaning the money for free. They are charging interest, but when it comes time to pay off that mortgage, people have to pay to pay.
What we have seen in the last five years, however, is a proliferation of fees. Now there is not just the mortgage discharge fee; sometimes we are also charged an e-registration fee. In Ontario, that runs to $70. We pay the bank to pay off the mortgage, and then we pay to register land titles stating that we paid off the mortgage, so we are paying to pay and then we are paying to tell people we paid.
Some people are also charged what is called a reinvestment fee. The banks have decided that if people pay off their mortgage and go somewhere else and the bank has to find a new borrower, we should pay the cost of that. A reinvestment fee of $300 is charged by most of the banks to reinvest the money we just paid them back. Essentially, we have to find them a new client. As well, there is a reassignment fee of $260 if we change banks, and of course all of the banks charge very large fees for prepaying a mortgage.
I have a lot more to say about the practices of banks, but in conclusion I want to say that I am not attacking the employees of banks. For the most part, employees are like the rest of ordinary Canadians. The problem they have is that they face the wrath of consumers at the wicket or in the office when it comes to paying these fees, and I do have some sympathy for them.
What we heard today is that all parties are in favour of ending these pay-to-pay fees. I look forward to this bill perhaps passing unanimously in the House, and when it does, I would also like to see some action. I hope we are not in the situation we saw with removing the tampon tax or with other things the Conservatives have voted in favour of, when they simply did not take the action they could have taken to save consumers money right away.
Mr. Speaker, it is my pleasure today to speak to the motion brought to us by the member for , a hard-working MP who has been very passionate about making life more affordable and addressing all the silly charges, which are not so silly because they impact the lives of people. I should call them hidden charges that customers are facing, and many times they do not even know it unless they examine their bills.
The government should ban all pay-to-pay practices by banks operating within Canada through the enactment of a mandatory financial code of conduct to protect consumers. I think all parties agree on this. Just as it acted quickly on the tampon tax, I hope that after the debate today, the Conservative government will move very quickly to implement this motion as well.
Just to make it clear, we are not talking about the gargantuan and outrageous fees charged by credit card companies when they lend money, through the credit cards as well the credit card fees. Nor are we talking about the huge burden on businesses, especially small and medium-sized business, of transactions fees.
We are here to talk about pay-to-pay billings that Canadians have started to receive. Some people may think this means paycheque to paycheque. It does not. This term was coined by a young volunteer in Toronto. He actually asked if we had to pay to pay. It is really about having to pay a fine or a fee in order to pay a bill or to do some banking. The motion is about that.
As members know, to receive a paper billing, banks are charging some pretty hefty fees. The Internet is not available to all Canadians. According to Statistics Canada, one in five homes in Canada has no Internet, and 46% of households with income below $30,000 have no Internet.
Forty percent of Canadian seniors do not use the Internet. I am hearing from a lot of constituents, both young at heart and others, about the impact of these fees on their day-to-day lives. We have seniors who live on a fixed income, a very limited income that is not keeping pace with the cost of living, and are finding these new fees cropping up all over the place.
We are talking about some of our largest banks. The five major banks, just in the first two quarters, made a profit of $16 billion. RBC alone raked in $5 billion. These are the banks that are saying that they are now going to charge a fee to pay, whether it is a fee to pay a bill, or a fee to pay off a mortgage or many other things.
Let me remind members that RBC was in the media quite a bit when it laid off hard-working, qualified Canadian workers and brought in temporary foreign workers to cut costs. It was only when it got caught and it was all over the media that it came out and became champions of jobs in Canada for Canadians. It is the bank that makes billions in profits, yet it is charging these fees to hard-working Canadians, putting pressure on our hard-working middle class and all those who aspire to be middle class. These are incredible new pressures.
It is very hard to imagine that banks are charging these fees. I always thought automation would lead a reduction or elimination of fees, but it seems that this is not the case. Through automation, not only have we seen many jobs disappear but now the banks want to rake in even more money, or to steal more money from consumers.
Canadians should not have to hand over their hard earned money just to receive a bank statement or pay a bill. Surely, a bank where people deposit their money gains from that money when they are paying almost nothing in interest on those deposits. Banks are still charging more than enough in the way of interest when people take money out, and that can vary quite a lot, as we know, with credit card interest fees going up to 18% or 21%. Even borrowing from the bank can be very expensive. However, when people put their money in the bank, they hardly get any return on that at all.
The Conservative government talks the talk, and it is very famous for that. It promises things over and over again, and each time it makes it seem as if it is making a new commitment. We see that right now with the budget that it is promoting to the public, yet the action plan has not gone through all of the rinse cycles in the House or the Senate.
The government announced in the 2013 speech from the throne that the Conservatives would finally take action to “End “pay to pay” policies, so customers won’t pay extra to receive paper bills”.
It re-pledged the same action in the 2014 budget to “eliminate the practice of pay-to-pay billing”. Guess what the Conservatives did with the resulting legislation that it brought forward to deal with telecommunications companies? They excluded banks, which make billions of dollars in profit. I am sure Canadians are thinking “what was the payola in return?”, or “what kind of lobbying took place?”
It is not that Canadians pay a small amount in these fees. They pay $180 million a year just to receive bank statements. Nobody should be punished for receiving bank statements or paying their bills, yet that is exactly what is happening to hard-working Canadians.
I have quotes from hard-working Canadians and from our seniors.
The Canadian Association of Retired Persons said, “It hardly seems fair that customers - through no fault of their own - are being charged two dollars extra for the privilege of paying their bill”. It is higher in some banks.
The Public Interest Advocacy Centre recommends “the Government of Canada follows through on its commitment to eliminate the application of additional fees charged to Canadian consumers to receive a paper bill or statement”.
This issue is not funny. However, comedy is often used to show people who fail to understand just how ridiculous some policies are. Fees for paper bills and statements were named a top contender for Canada's dumbest charge in a special series by CBC's Marketplace in October, 2013, beating out Ticketmaster fees, airline seat selection fees, and even ATM fees.
People have been raising their voices. Canadians should no longer have to wait for another promise to be made and not kept. I would urge my colleagues across the way to do what they did with the tampon tax and get on with implementing this.
As we look at the struggles that Canadians face to make ends meet, this would go a long way. This fee targets, specifically and unfairly, our seniors, those without Internet access, and families that already struggle to pay their bills. The other thing that we have to take into consideration is that a growing number of us, and I am one of them, are concerned about online fraud and identity theft. Now we are being charged more and are essentially being penalized for banking offline.
Finally, I would urge my colleagues to, just as we did for the tampon tax, pass this today and implement it by the end of the week.