INDU Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, December 9, 1999

• 0905

[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): Pursuant to the order of the day, Bill C-276, an act to amend the Competition Act, 1998, negative option marketing, I would like to call this meeting to order.

We're very pleased to have the Consumers' Association of Canada here. We apologize that we were unable to reach you yesterday to let you know the difficulty we were having with the voting in the House, and we look forward to your opening statement.

Ms. Gail Lacombe (President and Chief Executive Officer, Consumers' Association of Canada): Good morning. Yes, we were reached yesterday. We were originally to have been here at 11 a.m. and we were asked to appear at 9 a.m., so for us it's not a problem to be here. We understand the circumstances and we are very pleased to be here to read this brief to you.

The Consumers' Association of Canada, founded in 1947, is a 52-year-old independent, not-for-profit, volunteer-based, charitable organization. Our mandate is to inform and educate consumers on marketplace issues, to advocate for consumers with government and industry, and to work with government and industry to solve marketplace problems in beneficial ways.

We have a national office in Ottawa and branches in the provinces and territories. CAC is a member of Consumers International, and all policies on specific issues are based on the internationally accepted Consumer Bill of Rights. One of these rights is the right to choice. CAC believes that support for Bill C-276 is a vote to restore to Canadian consumers the right to choose.

Before beginning our presentation we would like to particularly thank Mr. Roger Gallaway for his tenacity in taking this bill through its various lives. It's difficult to recall another piece of legislation that is so important to consumers that it's had such a tortuous journey back and forth through the two Houses.

CAC believes that negative option is no option, and we hope and trust that Bill C-276, with the suggested amendments, is the final version of this bill.

I would like to present Jenny Hillard, who is our vice-president of policy and issues, for the official presentation. Thank you.

Ms. Jennifer Hillard (Vice-President, Issues and Policy, Consumers' Association of Canada): I really do appreciate those of you who are listening to us, because we as volunteers know what it's like to work all night and then go to something else in the morning.

Gail is from Montreal and I'm from Winnipeg, so there was no way you could catch me before I came yesterday; I left home at 6 a.m. So we appreciate your sliding us forward so that it wasn't a wasted journey to Ottawa.

CAC has been an active opponent of the practice of negative option marketing since March 1993. At that time we raised the issue in cable broadcast hearings. This was prior to the great cable revolt of January 1995, when consumers protested against the outrageous practice of negative option billing by cable companies.

At the heart of this protest was a demand from Canadian consumers that legislators put a stop to negative option billing once and for all. It led to Mr. Gallaway's earliest efforts to introduce legislation to prevent this nefarious practice, which we believe undermines consumers' right to choice in the marketplace.

We're very encouraged to see that this bill extends the reaches of the legislation beyond the cable and broadcasting sector. As prophesied by Industry Canada in 1996, this practice has become an important tool, especially in the financial services sector.

More and more, business is relying on the concept of “applied consent”. More and more consumers are expected to opt out of some marketing schemes by a certain date or end up paying the bill. This practice has an especially heavy impact on more vulnerable consumers, such as the elderly, those with literacy problems, and people for whom English or French are second languages.

Negative option marketing relies on market inertia to sell new products or services to an existing client base. This creates a situation that is anti-competitive, as it tends to concentrate market share with the existing players.

Despite the public outcry in 1995, nothing has changed. Even after the calls and letters to members of Parliament, the cable monopolies have continued to use negative option billing to market specialty channels. The onus was still on the consumer to somehow cancel the new service before it showed up on their bill.

• 0910

Now the telephone companies and financial institutions have jumped on the bandwagon, and negative option is being used in cases where consumers were traditionally subject to tied selling. It seems that every time we manage to eliminate one anti-competitive, anti-consumer practice from the marketplace, someone thinks up another way to remove our right to make informed decisions and to give express consent before making a purchase.

In addressing Bill C-276 and the proposed amendments, we'd also like to respond to some of the detractors of this bill. While CAC was totally in support of Bill C-393, we can appreciate the reason for some of the amendments that have been proposed. We recognize the value that many of these proposed changes will have in satisfying the concerns of some of the critics of the bill.

This bill does not prevent companies from substituting one service for another, provided that the price does not increase. This makes it a little difficult for us to understand some of the arguments the Department of Finance has put forward against this bill.

The changes that have been put forward in paragraph (3)(c) appear to cover the marketing of certain cable channels. CAC is satisfied that this will enable cable companies to deal with CRTC rulings, and it leaves the CRTC, not the cable monopolies, to determine which channels will be marketed as a negative option. At the same time, it deals with the issue that some members raised with regard to the continued addition of culturally important cable channels such as those providing French language programming, native programming, and other specifically Canadian broadcast needs.

CAC believes that the proposed amendments to the section on notification simplify the process of achieving express consent and should prevent this section from causing problems for a business that wishes to establish an open, trusting relationship with its consumers. It will be difficult for those that wish to continue with negative option schemes, but surely that's the purpose of this bill. We would question why the proposed amendment does not reference other communication mediums, especially electronic, given the rapid changes occurring in the marketplace.

While regretting that the penalties are not set at a level where they could be more than a cost of doing business, CAC is not opposed to having this bill changed so that it could be dealt with through administrative penalties rather than through the criminal courts. Our experience is that this is faster, more efficient, and less of a deterrent to government to actually deal with some of the marketplace problems that require action.

CAC is concerned that this bill will no longer apply to enterprises governed by the Trust and Loan Companies Act, the Cooperative Credit Associations Act, and the Insurance Companies Act. We believe that by exempting these enterprises you give credence to the argument that the playing field is not level to the financial services sector. We're also concerned that since many of these institutions are now owned by the major banks, they will be the new hotbed of negative marketing schemes.

Finally, we'd like to address the constitutional arguments that have been raised concerning this bill.

CAC is unable to understand why the federal regulation to prevent misleading advertising is acceptable, but a federal regulation to prevent negative option marketing is not. As an organization with provincial and territorial branches, we struggle with the difficulty of the misleading advertising rule, which applies only to advertisements that affect the national marketplace. However, we continue to lobby provincial-territorial governments for matching legislation to deal with the town pizza parlour.

As Canadians live with situations where some things are regulated federally and some provincially, CAC continually struggles to harmonize federal-provincial consumer legislation. We would prefer to have something to deal with some of our marketplace problems than to have nothing. We recognize that Quebec and B.C. already have legislation to deal with negative marketing within their own provinces. Whether or not this legislation could be applicable to federally regulated enterprises is a matter for the courts to decide. In the meantime, we would urge members from these provinces not to deny this type of tool to consumers living in other provinces just because your consumers already have that protection.

CAC is very concerned that at many times in the debate on this bill and its predecessors, the facts have been lost or deliberately obscured. The result has been to raise the fears of many—fears that are unfounded. If consumers really want new services, they will take them on a positive option basis.

In passing Bill C-276, you can protect consumers by referencing two simple words, namely, “prior consent”. If this bill passes, then companies would actually be required to obtain prior consent from the consumer before charging for a new service.

CAC hopes that the bill will receive your approval so that Canadian consumers in every province are able to choose the transactions into which they enter, at least with federally regulated industries. The success of this bill will, I'm sure, encourage our provincial-territorial associations to increase the pressure for this to become a piece of harmonized federal-provincial consumer legislation.

• 0915

We would like to close with a quote for the record. This comes from the Minister of Canadian Heritage, on September 25, 1996, in the House of Commons:

This Government opposed negative option billing last year. It opposed negative option billing this year. It will oppose negative option billing next year. As long as we are the government of Canada there will be no negative option billing.

Thank you.

The Chair: Thank you very much, Ms. Hillard.

I'm going to begin with Monsieur Brien.

[Translation]

Mr. Pierre Brien (Témiscamingue, BQ): Thank you for coming this morning. Does your association also represent consumer groups in Quebec?

Ms. Gail Lacombe: Yes, the Association des consommateurs du Québec is a member of the national organization.

Mr. Pierre Brien: As you know, the Consumer Protection Act contains provisions respecting the practice of negative option marketing. You mentioned that Quebec and British Columbia have legislation to deal with this practice.

Ms. Gail Lacombe: That's correct.

Mr. Pierre Brien: Can you tell me if federally regulated companies must comply with the Consumer Protection Act?

Ms. Gail Lacombe: All I can tell you is that in Quebec, provisions are in place to guard against the practice of negative option marketing. Does this legislation apply to federally regulated banks and companies? I don't know and therefore, I can't answer your question. We're talking about provincial, not national, legislation.

Mr. Pierre Brien: At present, federally regulated companies comply with the legislation. For example, plans are in the works to introduce four new cable channels. The companies involved have received the go-ahead from the CRTC, but they haven't yet been given the nod from the Consumer Protection Bureau. If the bureau's approval is not forthcoming, these channels will never make it to the air.

Ms. Gail Lacombe: If I understand you correctly, you're saying that in Quebec, companies comply with the Consumer Protection Act. Is that right?

Mr. Pierre Brien: That's right, even federally regulated enterprises.

Ms. Gail Lacombe: I'm very happy to hear that, because it's a different story elsewhere in Canada.

Mr. Pierre Brien: Once this particular piece of legislation is enacted, federally regulated enterprises will have their own legislation, whereas the activities of provincially regulated companies will be subject to provincial legislation. This means that at times, certain activities would be subject to federal legislation and at other times, to provincial legislation.

Isn't it possible that this regime could lead to some confusion, given that the legislative provisions will not necessarily be the same? For example, services are not defined in this legislation. No definition is provided of a new service. Take, for example, a channel which used to be part of the basic cable package and which now is becoming a specialty channel. Would this be considered a new service?

Ms. Gail Lacombe: I'll ask Ms. Hillard to answer that question.

[English]

Ms. Jennifer Hillard: As Canadians, we deal with these issues all the time. There's a lot of consumer legislation that is federal only, and we all struggle with how it gets dealt with in the provinces. In fact, the broadcast sector has an advantage because the CRTC will rule. With the amendments that have been put into this bill now, in that subsection (3), they can add an extra service. They can use negative billing if it's a culturally important station. We would never argue against the need for Canadian culture.

To deny the rest of the country, which doesn't have the good fortune to have the sort of provincial legislation Quebec has, the option to at least keep this practice out of the financial institutions and the telephone companies would be a real shame.

If we could all have Quebec's consumer legislation, believe me, we'd love it.

[Translation]

Mr. Pierre Brien: I want you to understand that it is difficult for us to support a bill like this, despite its very legitimate aims. In Quebec, where a number of companies are provincially regulated, there's going to be some problems because the day federal legislation is enacted in this area, the Consumer Protection Act will no longer apply to financial institutions. The latter will now argue that they are governed by the federal statute and that the Consumer Protection Act no longer applies everywhere in Quebec, but rather only to enterprises that are not federally regulated. In order to resolve one problem, the government is creating a problem in Quebec where one did not exist before and that's not easy for us to accept.

I want you to understand our position on this matter, which isn't exactly cut and dry. If we oppose this legislation, it's not because we have anything against consumers, but rather because we have a problem with the provisions. As Ms. Lacombe was saying, there are clear safeguards in place in Quebec. With the passage of this proposed legislation, we will end up having two different laws which may not necessarily contain the same definitions and which may not necessarily have the same scope.

• 0920

[English]

Ms. Jennifer Hillard: How do you deal with things such as the insurance that banks are required to have, which is federal? How do you deal with misleading advertising, which is federal? I'm from Manitoba, and when we have misleading advertising and it doesn't apply to something that advertises all across the country, there's nothing we can do about it, unless we can get our province to respond. But if it's national, then it's covered under the Competition Act and the misleading advertising sections.

A lot of what the banks do is already regulated federally. I'm sure that if you try to impose some provincial legislation on them, at some point some court is going to have to take this decision.

Mr. Pierre Brien: No, they respect the provincial law. In practice they respect the provincial law. There is no challenge of that. If you can give me an example, I will be glad to see it. I would like to see an example of a concrete problem with that in Quebec. I challenge you to give me one.

Ms. Jennifer Hillard: If you have the same legislation provincially and federally, I don't see where—

Mr. Pierre Brien: No, it won't be the same legislation.

Can you define for me what is a new service in this bill? Is a channel that is actually on cable but will be a specialized channel in the future a new service?

Ms. Jennifer Hillard: Surely the CRTC will take those decisions. The CRTC will take those decisions. As I read the bill, the changes that are being made to subsection 53.1(3) to allow for that also allow for the CRTC still to determine what happens with cable television.

With the banks, which are probably at this point more of a concern to us than the cable sector, if you have negative option law that is provincial and you have negative option law that's federal, I don't see where the problem will arise, because you have the same legislation.

The Chair: Just to clarify, we will be hearing from the banks at our next scheduled meeting on Monday. The banks have already made representation to me, and I'm sure to others on the committee, that this bill has some difficulties for them and that they do not comply right now with any type of law that prohibits negative option marketing in Quebec.

So we'll have to clarify that on Monday, Monsieur Brien, because the banks are saying this law is going to create some difficulties. We're looking at different options right now.

Mr. Pierre Brien: This is why I'm saying it's not the same thing as what we actually have. There are differences. It's not the same thing. But we have protection against negative option right now.

The Chair: But not in banking.

Mr. Pierre Brien: I have one last question for this segment.

The Chair: Sure.

Mr. Pierre Brien: Everybody is talking about this thing happening with cable a few years ago, but do you have other concrete examples—even in Canada, not in Quebec—of negative option? I would like to have something concrete to see. You're talking about principle here. Everybody can agree on principle, but in practice, what things will we prevent in the future?

[Translation]

The Chair: Gail.

Ms. Gail Lacombe: I'd like to recount an experience I had about two years ago. Unfortunately, I didn't keep any record of this incident. I received a telephone call from an employee of the National Bank who offered me travel insurance. I told him that I wasn't interested in any travel insurance, but he replied that the service was free and that he would send me some background material. I told him that I didn't want any such material. Nevertheless, he proceeded to send it to me anyway. I discovered on reading this material that if I didn't notify the bank within three months, it would assume that I wanted this type of insurance coverage. I simply ignored the letter.

After three months, I went to the bank and discovered that $9.95 had been withdrawn from my account. When I questioned the bank about this, I was told that I was the one at fault and that the mistake would cost me. I told them then I hadn't made a mistake. I asked them to pull my statements and we discovered that the problem was linked to the travel insurance offer. I raised quite a stink. I wanted to know what right they had to withdraw funds from my account without my permission, without having a cheque in hand or anything of the kind. At the time, this was promotional offer by the National Bank and MasterCard. This happened in Quebec. That day, I think the bank received at least 50 separate complaints.

• 0925

I understand what you're saying. Quebeckers are well protected when it comes to such matters, except when it comes to federally regulated enterprises. Has this happened before? Companies in Quebec follow certain guidelines. However, if a company were to decide one day to act otherwise and the matter ended up before the courts, who would win? I really don't know. I'm neither a lawyer, nor a judge. I'm concerned about what might happen in the rest of Canada.

The Chair: Thank you.

[English]

Ms. Jennifer Hillard: There are also various telephone examples from across the country. They'll offer you caller identification or call waiting or one of these things free for three months, and if you don't specifically cancel it, then it starts showing up on your phone bills. So there are lots of examples. We didn't actually bring a hard copy of them, but our provincial offices would have them.

The Chair: Thank you.

Madam Jennings.

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): I'm actually glad my colleague from the Bloc raised this issue, because you've made a very valid point. Notwithstanding the fact that there is provincial legislation in Quebec for the protection of consumers, federally regulated industry sectors or companies have the choice as to whether or not they want to follow it, given that there's no federal legislation.

There are many cases, such as the telephone companies. I recently got a new telephone installed, several months ago, and there was a whole series of options. For some of them they said, “We're giving it to you for free for three months to try it out.” At the end of the three-month term, if you don't expressly tell them to cut it off, then you're just automatically billed for it. So that practice already exists within some of the federally regulated institutions. And as the chair said, the banks will be coming here, because they're stating they have some problems with this legislation.

You touched briefly on the point I wanted to get your comments on, which is the amendments that have been suggested to subsection 53.1(3) that would continue to allow the CRTC to do carve-outs for broadcast services—new cable stations and that—because either it's important to Canadian culture or it's important to advancing the culture of a minority, a linguistic minority or an ethnocultural minority. You're pleased to see that, if I understand, and you understand the justification for that?

Ms. Jennifer Hillard: Yes, we're very supportive of that. It's critical that the CRTC is the place to deal with those things, not over in the Competition Bureau.

Ms. Marlene Jennings: Excellent. And you're also in favour of the fact that infractions would be civilly reviewable, rather than criminal prosecutions?

Ms. Jennifer Hillard: We find we get a lot more action on things that can be dealt with in a non-criminal way. The rules of evidence for a criminal case are such that it's very hard to get anything even moved forward, let alone through the courts. So it would, I think, lead us to better enforcement, more effective enforcement.

Ms. Marlene Jennings: In some areas of activity, you have civilly reviewable infractions, but you can also have civil action, which is quite different. There would be a private right of action. Would you see that as a positive addition to this legislation, to allow a consumer or a class of consumers to proceed with a civil action?

Ms. Jennifer Hillard: I didn't see anything in the bill that would stop that happening.

Ms. Marlene Jennings: There is nothing.

Ms. Jennifer Hillard: If you have to make specific provision for it, yes, absolutely. Should there be need for a class action, obviously the door has to be open. Not being a lawyer, I didn't notice it wasn't there. In my reading of the bill, I didn't notice anything that expressly stopped that.

Ms. Marlene Jennings: Okay. Well, one of the differences is if you have a civil right of private action, you can actually sue for damages—

Ms. Jennifer Hillard: Right.

Ms. Marlene Jennings: —whereas civilly reviewable does not necessarily mean the tribunal would in fact award damages. It would levy a penalty on the company, but that penalty doesn't go to the consumers.

• 0930

Ms. Jennifer Hillard: We're used to that.

Ms. Marlene Jennings: Unfortunately.

Thank you very much.

The Chair: Thank you, Madam Jennings.

Mr. Jones, please.

Mr. Jim Jones (Markham, PC): Actually, my colleague here asked some of my questions.

I noticed during your presentation that you mentioned the banks a lot. What would be nice for Monday, because the banks are coming here, would be if you could submit to the chair all the infractions you think the banks are doing in regard to negative option billing so that we can confront them with this type of marketing and see if they agree or disagree. I've met with the banks too, and one area that they're concerned with in this bill—and I think it might have been changed—is the notices of three consecutive months on a new service, where—

Ms. Jennifer Hillard: Yes, that's actually covered in the amendments. We felt that the amendments, except for the fact that they fail to mention anything other than a return card, which I think in this day and age is maybe not a good idea...they're much less stringent in the amendment.

Mr. Jim Jones: But it would be nice to have, if you have them on file, all the types of different marketing techniques they're using—which you feel are negative option marketing—so that we can question them on Monday.

Ms. Jennifer Hillard: We'll do our best to get them in from the provinces by Monday.

Mr. Jim Jones: Okay.

The Chair: Just to clarify something, I've been having several discussions with a number of people, and there is some discussion about one of the proposed amendments and the wording of it. We'll be hearing from witnesses on Monday with regard to bringing the amendment up to date, into the electronic age. I think maybe you actually mentioned that in your brief as well, that there will be other options.

One of the examples that has been put before me is that the telephone company, for Internet customers, can actually send you an e-mail and ask you if you want a new service, and describe it. You can provide express consent, yes or no, by replying to the e-mail.

Those are different options. So we're looking at the rewording of that. There is still a hurdle, though—and everyone should be aware of this—with the financial institutions in that they still believe it would be extremely difficult to get consumers' express consent even after...if they've mailed three times and they've had no response—they do have millions of customers—and if consumers don't take that initiative after having heard from the bank three times.... I mean, we're looking at options, at suggestions, but that seems to be one of the difficulties out there.

Maybe, Ms. Hillard, you can respond to that.

Ms. Jennifer Hillard: I would suspect that if the banks had sent them stuff three times, then the banks could quite rightly assume that they don't want to pick up on this particular option. That's precisely the point. That's the exact point of the bill.

If people want these things, they'll go for them. People buy packages. People pay for extra convenience if that's what they want. What they don't want is to have it delivered and be paying for it when it's something that they haven't expressly said they want.

The Chair: No, but I guess one of the problems is...and I'm speaking kind of out of turn here. I'm not trying to be a devil's advocate. I'm just trying to throw some suggestions out there because we haven't heard from them yet and we had hoped to hear from them before your presentation.

One of the problems was the fact that they may have a package of services right now and they may be changing all the different packages. So where do you fall as a consumer if you don't reply to their notice that the package of services is changing, that your service no longer exists? How do they operate your bank account? What do they do for you? They no longer have the $5 package. They now have a $4.50 package and a $6 package and there are different options, but you have chosen none of them. What does the bank do?

Ms. Gail Lacombe: The way I would try to answer that is that if the bank can get in touch with someone three times, why wouldn't they turn it around and make it a positive option instead of doing it in a negative option way?

I went through this with one of the members of the Canadian Bankers Association. What I said was that in the province of Quebec I receive a magazine that's called Protégez-Vous. I receive it monthly. It's an excellent consumer magazine. Three or four months ahead of the time my subscription comes to a close, they start to send me renewal notices and ask me if I want it to continue. Why can't the banks do the same thing?

The Chair: That's not the point. I guess maybe I wasn't clear. I agree with you on that point. The point is if you don't renew your subscription, it will cease.

Ms. Gail Lacombe: Right.

• 0935

The Chair: If you don't do something about your bank account, what happens to your bank account? If you don't do something about the service package you have...they're no longer going to offer the old package you have, and—

Ms. Gail Lacombe: Okay.

The Chair: —they're offering several new ones, but you've chosen none of the new ones. You've done nothing.

Ms. Gail Lacombe: Does that fall into negative option?

The Chair: Yes.

Ms. Jennifer Hillard: It seems to me that the banks don't have a hard time getting hold of you when somebody has bounced a cheque on you or you defaulted on a loan or you have an overdraft. I don't see why it's so incredibly difficult for the banks to get in touch with you when they're changing your service package.

Maybe the letter should say that you have a package and that unless you choose one of the future ones you'll get charged for individual services. If you don't have a package, the option is that you have a load of individual services.

That would make consumers...I mean, consumers have some responsibility as well. Our association would never suggest that you wrap consumers up in cotton wool and not ask them to take some responsibility for themselves. They have some responsibility to respond to such a request from the bank. If they don't respond, the negative option, in my mind, would be that you put them on individual charges. They'll respond really quickly when they get their first non-package charge.

The Chair: Okay.

Monsieur Brien, then Madam Jennings.

[Translation]

Mr. Pierre Brien: Getting back to your problems with the National Bank, I sympathize with you, but...

Ms. Gail Lacombe: I settled the matter in short order.

Mr. Pierre Brien: I imagine you're quite capable of defending yourself, but some people simply pay up and say nothing. I have a problem, however. I may be wrong, but in your case, you were being offered a free service for three months.

Ms. Gail Lacombe: Correct.

Mr. Pierre Brien: You had to sign a contract to receive this service.

Ms. Gail Lacombe: I didn't sign anything.

Mr. Pierre Brien: You had to give your consent. If no consent was given, then the bank's actions were unlawful. The Consumer Protection Act is there to protect you. For example, the telephone company offers customers free call waiting service. After three months, charges will apply. Often, these conditions are spelled out in the original contract signed. This isn't like negative option billing.

Ms. Gail Lacombe: No, but in my case, it did receive some background material. I got a phone call and I told the person on the line not to send my any information. I wasn't interested. I received the information anyway, but I didn't sign any contract.

Mr. Pierre Brien: In any event, Quebec legislation prohibits this type of practice.

Ms. Gail Lacombe: That may be, but since this was a bank...

Mr. Pierre Brien: The rules are different.

Ms. Gail Lacombe: ... I don't know what would have happened if the matter had gone to the courts.

Mr. Pierre Brien: We probably could check into that more easily than you could, but it isn't clear that federally regulated enterprises are exempted from the provisions of the act. I've seen no evidence of that, Madam Chair.

Ms. Gail Lacombe: That's just it. I don't know if they are.

[English]

The Chair: The researcher and I were discussing this.

The fact is, under the Bank Act there are notice provisions that the bank has to comply with. Because there is federal legislation, provincial legislation can't overrule that. Right now, as long as the bank stays within the notice provisions under the federal Bank Act, that's all they have to do. The only thing we can do is look towards the Competition Act and make changes or go to the Bank Act and make changes. The provincial jurisdiction doesn't apply when there is federal legislation that deals with the same subject.

That's the problem we have here, Monsieur Brien.

[Translation]

Mr. Pierre Brien: That may be true for banks, but it isn't clear that federally regulated telephone and cable companies are exempted from the provisions of the Consumer Protection Act. Right now, there is some kind of agreement in place regarding compliance, but there is no clear evidence that this law does not apply to them. They won't run the risk of taking the matter to the courts and losing and therefore, they comply with the legislation voluntarily. I'd like to hear what the Justice Minister has to say on the subject.

[English]

The Chair: Just so you know, the telephone companies are coming here to make recommendations, and if I understand correctly—now we haven't heard their evidence, but we'll hear them on Monday as well—they have some suggestions for changes that are due to electronics, but they're not opposing the bill in principle. They're accepting that there could be some changes to accommodate what they do.

I'm not sure, but we can ask them very specifically on Monday how they comply with the Quebec law. That may be part of the answer.

[Translation]

Mr. Pierre Brien: If possible, I'd like to have the federal Justice Department give its opinion on the scope of provincial jurisdiction. I don't know what the situation is like in British Columbia, but I'd like to find out. We could discuss that later.

[English]

The Chair: Monsieur Brien, that's going to be extremely difficult, because we asked everyone to submit witnesses well over a month ago and, as it stands right now, we're scheduled to go to clause-by-clause on Tuesday. I asked several times at this committee for people to suggest witnesses and no one ever raised the point that they wanted the Minister of Justice.

• 0940

[Translation]

Mr. Pierre Brien: I'm not asking that we hear from a witness. I would like the Justice Department to issue an opinion and I will tell you what it is exactly I'd like to know. I can get this to you by tomorrow.

[English]

The Chair: I don't know if we can get it from the Department of Justice, but I've asked the researcher to take a look, and we'll see what kind of information we can come up with by Monday.

[Translation]

Mr. Pierre Brien: Otherwise, we can vote later. We're not within a week of taking a vote.

[English]

The Chair: I misunderstood.

[Translation]

Mr. Pierre Brien: I want to know that we understand each another clearly. When a person has signed a contract and has received notice that he will be billed after three months, this is not a case of negative option billing.

Ms. Gail Lacombe: Provided the person has signed a contract.

Mr. Pierre Brien: Or provided that person has consented to the offer.

Ms. Gail Lacombe: Yes, provided consent has been given.

Mr. Pierre Brien: Fine then.

[English]

The Chair: Ms. Jennings, please.

Ms. Marlene Jennings: Yes. I just want to touch on two points. One is when Madam Chair was speaking about some of the issues of the banking institutions and the fact that they're completely changing the different packages. If you don't respond, how do they deal with the services you're using the bank for on your account? You were saying, Mrs. Hillard, that they should just do the individual charges.

I understand that one of the things the bank is possibly proposing to amend in terms of banking services, which might not be as onerous as the one you've suggested, would be that if the servicing package is being completely changed, they would send the three-month notices, and if they don't hear anything, they would be able to start billing. If the consumer, within a time limit after that, suddenly wakes up and says, wait a minute, these aren't the charges I used to have, and then calls and gets informed about what has happened and decides they don't want that package, they would be reimbursed for up to a certain number of months. What would you think about that?

Ms. Jennifer Hillard: Obviously, from a consumer perspective that sounds very nice. It doesn't sound terribly fair to the banks. The last thing I want to do is sit up here and defend the banks, but you have to treat business fairly and reasonably.

If the consumer hasn't responded for one reason or another.... We have a lot of snowbirds in this country. I don't know what they do with their mail while they're down in Florida for six months—or, I guess, five and a half months now that they've changed the health insurance rules.

My bank just changed my package. I haven't been at home in Manitoba on a day when the bank's been open to go down and straighten it out, and now I've got all these horrible charges for using my debit card. Until I take the responsibility of making sure that when I'm home I make time to get to the bank when it's open, I just have to live with that. I wouldn't dream of going down, in that particular case, and saying to the bank that I want a rebate on these things.

Now, if I had gotten a charge previously when I had a no-charge debit card, if a charge had shown up, I'd have been down there in a minute saying reverse this charge. But I had the notice. I haven't been able to respond, so I live with the consequences.

Ms. Marlene Jennings: But when the bank comes to testify before us on Monday, if they do make a suggestion for an amendment that would be in that vein, you wouldn't have an objection?

Ms. Jennifer Hillard: Not at all. I just would be very surprised if they were willing to do something so generous for Canadian consumers.

Ms. Marlene Jennings: I'm very interested to hear what the banks have to say, but if in fact that's the way their proposal is going, it would be because if the individual doesn't at one point accept one of the packages, it means they're going to move their account from the bank.

Ms. Jennifer Hillard: Right.

Ms. Marlene Jennings: So they're not going to be losers. They'd prefer to reimburse a certain amount. The individual is still going to have to choose a package in order to be able to continue banking there.

Ms. Jennifer Hillard: Yes.

Ms. Marlene Jennings: So I don't think they're going to be losers in the end, and chances are most people will end up choosing one of the packages, even if they do get a certain amount of reimbursement.

Thank you very much.

On the issue of getting an opinion from the justice department, I really don't think that would be a large problem.

The Chair: In fact, the justice department will not give an opinion to the committee as a department. We've just been discussing that—

Ms. Marlene Jennings: Right.

• 0945

The Chair: But as I said earlier, the researcher will do some work and will provide an opinion to the committee. He is a lawyer, and that is his job, to provide advice to the committee. That's what we'll have to go on. Everyone is entitled to go out and get their own advice as well, but that's where we'll be at for next week. Okay?

Ms. Marlene Jennings: Okay.

[Translation]

Mr. Pierre Brien: That's fine with me.

[English]

The Chair: Just to pick up, I want to make sure we're talking here in the same vein. As Madam Jennings and I and others have said, there's discussion about the amendments and the wording. We're not talking just about the banks. We're talking about all the federally regulated institutions that are covered by this bill. So if there was a change that instead of it saying “and” express consent, it would say “or”....

I want to make sure we're clear on this, that it would no longer be that the consumer would have to give their express consent. It would be “or”. The service could start and then there would be this opportunity for refund for up to.... In the B.C. example that currently exists, it's for two years. I don't know what's reasonable for the federal institutions that are going to be before us. There's been some talk of six months, some talk of one year, and I know B.C.'s is two years. I just want to make sure, Ms. Hillard, that we're talking about the same thing and that we understand where you're at on this.

Ms. Jennifer Hillard: So even if a cable company used negative option, they would also rebate if you came in afterward and said you had missed the date and you don't want this?

Ms. Marlene Jennings: Yes, it would be applicable to everyone. There wouldn't be a carve-out just for the financial institutions. So the amendments that are being suggested are that you would have the pre-notice of three months—three notices, one per month—or you've received express consent, which means.... The way it reads now in the bill, even if after you receive your first month's notice, you call up or you write in and say you want the service, the company would have to continue sending two other—

Ms. Jennifer Hillard: Which is silly.

Ms. Marlene Jennings: Yes. The other thing is, it would be three notices or the expressed notice. At the end of the three months, if the individual has not given express notice, implied consent would then operate, but the consumer would have a right for a period of time after the billing started—and that's where the discussion is, whether it should be six months, a year, two years—

The Chair: We'll just clarify—

Ms. Marlene Jennings: —to be able to—

The Chair: There's a lot of discussion going on, and I just wanted to try to get different—

Ms. Marlene Jennings: Those are some of the proposals that are being made.

The Chair: Yes. As I understand it, this has been one of the big hurdles for most consumers' associations and consumers' groups, that there would not be expressed consent before a charge would take place. So I just throw that out there, and if you want to take a look at the B.C. law and get back to us before Monday, we'd appreciate that.

Ms. Jennifer Hillard: Yes, we'd probably need to debate. It sounds good to us, but when you flip over and you look at a consumer with literacy problems—

The Chair: That's right. That's the issue.

Ms. Jennifer Hillard: —are they going to understand this? Is it going to be in the notice? What we could be doing is undermining the value of the bill to deal with a very peculiar situation that exists in the banks only, which is the whole issue of banking packages.

The Chair: Yes. I have to move back to Mr. Brien, but I do think you've just identified one of the big problems with going with an amendment like this or looking at something like this—the illiterate society that we do have, people who don't have that. And we know there are numerous bank accounts that people don't access for years and years. So there are some problems out there.

We'll move to Mr. Brien.

[Translation]

Mr. Pierre Brien: I would like to comment on the amendments before the end of the meeting, Madam Chair. I'll come back to this later.

In your brief, you acknowledge that where French language television is concerned, negative option billing is desirable from a cultural development standpoint and so forth. You also say that the CRTC will have the power to continue managing these situations. As I understand it, much will depend in future on the exemption that the minister, and not the CRTC, can grant. I have a problem with the fact that this exemption is the result of a political process, rather than something granted by the governing body.

[English]

Ms. Jennifer Hillard: We're a big player in the CRTC, so for us it's where we deal with broadcasting issues. I understood that the culture minister had some influence on what the CRTC did in that direction. I guess it was the report to the Minister of Industry, right? I believe, unless I'm wrong, the Minister of Canadian Heritage has some influence over such things as Canadian content and the number of French channels.

• 0950

I'm not sure if we would support a purely political decision on this. We're very supportive of the sort of open consultative process of the CRTC, where all the arguments go on the table and a fair and logical decision is taken. That's not to say we're anti-Canadian content and all the very special peculiarities of Canadian culture, but I'm not sure if switching something that's taken in that sort of quasi-judicial tribunal over to a political decision really helps anybody. I certainly don't think it ever helps the minister.

I've seen too many situations where they've actually taken something from a minister and given it to a quasi-judicial tribunal, almost to give the minister a layer of protection from the decisions that are taken. We would generally support the tribunal. We generally support having utility boards and regulatory agencies make decisions rather than recommendations, because the political influence can frequently create problems for both the recipients of the decision and the person making the decision.

[Translation]

Mr. Pierre Brien: In your opinion, who should be authorized to grant this exemption? Who should be allowed to authorize negative billing in this sector? As you see it, who has this authority, the minister or the CRTC?

[English]

Ms. Jennifer Hillard: I read it that the CRTC would take the decisions and then, I would assume, the minister responsible for this bill would have to take the ruling that they didn't have to fall under this bill. But as I said, I'm not a lawyer, so I'm just reading it as the way that would seem logical for it to work.

[Translation]

Mr. Pierre Brien: Therefore, if I understand correctly, if ever that were not the case, you would like to see the power to grant exemptions in the hands of the CRTC, and not the minister.

[English]

Ms. Jennifer Hillard: Isn't the CRTC under the same minister as this?

The Chair: Yes.

Ms. Jennifer Hillard: They're both under the industry minister, so I really don't see where there's a problem. But as I said, you're talking to somebody who's not a lawyer.

This sounds like a very intricate sort of legal problem. Who takes the final decision? The rulings will come from the CRTC on the sorts of channels that are necessary. I guess they could come with a recommendation that these be marketed under the negative option.

[Translation]

Mr. Pierre Brien: However, ministerial approval is required.

[English]

The Chair: You're talking about the Minister of Heritage's approval.

[Translation]

Mr. Pierre Brien: Yes. The Minister of Canadian Heritage must approve any negative billing practices. Permission to resort to this practice cannot be given by the CRTC.

[English]

The Chair: I think, from the discussion we had the other day, there was a suggestion that it would actually work the opposite way. The minister would consult the CRTC and the CRTC would make recommendations.

Mr. Pierre Brien: It's not quite clear right now how it's going to work.

The Chair: Those are things we've actually asked the witnesses that were before us to meet with the Competition Bureau on, and they've done that. The Competition Bureau will be coming back and discussing that as well on Monday.

Mr. Pierre Brien: But I want to have their opinion on whether they prefer to have the final word on the political process or if it should be at the CRTC level. It's a question I want their opinion on.

Ms. Jennifer Hillard: Our general position in this situation would always be to go with the tribunal, rather than the political decision. I'm saying this based on our past positions on stuff like this. Normally, before we made a statement this bland, we would consult with our issues people. So you're getting what I think would be my response, based on our stand on other issues. But it's not the sort of consultation we would normally have with our organization.

The Chair: If you wanted to clarify that, you could send us a letter by Monday and let us know.

Ms. Jennifer Hillard: Okay. We'll do our best.

The Chair: Mr. Jones, do you have a final question?

Madam Jennings and Mr. Brien, do you have something? No.

• 0955

I want to thank you. I promised everyone this would not take more than one hour, and I gave my undertaking to all the parties as well. So I appreciate it very much.

Ms. Jennifer Hillard: I thank you all very much, after such a stressful night, which I understand is still not over.

The Chair: Mr. Brien.

Mr. Pierre Brien: I have a small comment. You mentioned some amendments you are discussing. Both of you seem to be informed—

Ms. Marlene Jennings: Somebody came to see me; if they didn't go to see you, call the—

Mr. Pierre Brien: But if there are government suggestions about amendments or—

The Chair: During the last 36 hours, while we've been voting, we've been having some discussions amongst ourselves. I was approached by the banks.

Ms. Marlene Jennings: I was approached by the banks.

The Chair: I'm assuming the banks have met with other members of the committee. I've also sent the two groups to meet with the Competition Bureau—

Mr. Pierre Brien: Yes, I'm aware of that.

The Chair: —to have them meet with them. The Competition Bureau is working with them on the wording.

My understanding is that in the government amendments that have been put before the committee—you've already seen those—

Mr. Pierre Brien: Yes.

The Chair: —there might be some slight variation, but not as far as what Madam Jennings was suggesting, so far.

Ms. Marlene Jennings: So I may have to do it myself.

Mr. Pierre Brien: But will you let us know if you have this before Monday?

The Chair: The Senate doesn't address the illiteracy problem.

Mr. Pierre Brien: As soon as you have some kind of amendment, can you inform us?

The Chair: Definitely. There have been no changes yet, officially, whatsoever.

Mr. Pierre Brien: Okay.

The Chair: We're still working on it. We will do that for sure, Mr. Brien.

Mr. Pierre Brien: Thank you.

The Chair: I want to thank you all.

The meeting is adjourned.