- Member of Parliament
- Member of Parliament
- Bloc Québécois
- Joliette
- Quebec
- Voting Attendance: 65%
- Expenses Last Quarter: $132,165.46
- Government Page
Madam Speaker, after that 15-minute break to discuss Bill S-224, I am going to return to my speech on Bill C-69. I want to focus on the division that creates the federal framework for the open banking system and centralizes powers.
As I said before the break, under this bill, banks under federal jurisdiction would have only one set of regulations to follow, whereas an institution under provincial jurisdiction, like Desjardins, would be caught between two governments: the Government of Quebec, for its general operations, and the federal government, for its technological interactions with customers. The fact that these institutions will be subject to two uncoordinated regulatory bodies could be downright dysfunctional and give banks an egregious advantage over co-ops, trust companies, credit unions, Alberta Treasury Branch Financial, and so on. Why always favour Bay Street? This is unacceptable.
Bill C‑69 places Quebec in a dilemma in which there are no good options. If we refuse to join the federal framework, our institutions will stay trapped in the 20th century while their federal competitors step into the technological 21st century. Maybe we could let our financial institutions opt in to the federal framework, but then Quebec would have to waive the right to apply its own laws to their activities that come under the open banking system, which is unacceptable, especially with the Civil Code, consumer protection laws and so forth.
Then there is the worst-case scenario. In order to survive against its federal competitors, an institution like Desjardins could choose to stop being a Quebec institution within the meaning of Quebec's Cooperatives Act and become a federal institution under Canadian co-operative bank legislation. Trust companies would face the same choice. Since the open banking system could eventually be expanded to cover insurance, all of our insurance companies could switch over to federal regulation. That is what is at issue in Bill C‑69.
If this worst-case scenario comes to pass, the entire financial sector and all of its activities will be completely outside Quebec's jurisdiction. That is a serious threat to Montreal's status as a financial hub. In short, by using its power over banks to regulate all companies that interact with them, Ottawa is trying to force Quebec and the provinces out of the financial sector, which it failed to do when it was trying to regulate securities.
Rather than taking the unilateral, centralist route, Ottawa should have chosen co-operation. It could have called a federal-provincial finance ministers' working meeting on open banking. It could have encouraged them to release a joint statement at the end of this meeting in which the governments announce their intention of developing a common regulatory approach with a clear deadline, such as 2025, and possibly setting up a federal-provincial office. It could have sent a clear message to all financial institutions, not just banks, telling them to agree on a common technology, such as a secure data transfer protocol, because open banking is coming. It could have worked on common regulations on accreditation rules for fintech companies, security standards, clarification of financial liability, and consumer and data protection.
We asked the government to take out the division on open banking that centralizes the sector exclusively at the federal level, to take a few months to coordinate with the various players and the provinces and then to come back in the fall with a framework that respects jurisdictions and does not put provincially regulated institutions at a disadvantage. This government rejected our proposal, so now we are going to have to build this new system on a very bad foundation.
Another concern is that, in Bill C‑69, the government delegates the administration of the framework to the Financial Consumer Agency of Canada, an agency that mainly promotes financial literacy and does not have any of the required expertise. In committee, FCAC representatives acknowledged that they did not have expertise in sharing financial data in a way that minimizes the obvious cybersecurity risks. They also told us they do not currently have a plan for developing the expertise needed to oversee the security aspect of open banking.
We also asked several questions that the FCAC representatives said they were unable to answer. For example, since fintech companies are not banks, they are not federally regulated.
Did the government obtain the consent of the provinces, particularly Quebec, which has its own civil laws, before introducing this bill? They are unable to answer.
During the briefing on the notice of ways and means preceding the bill, it was my understanding that provincially regulated financial institutions could opt in to the federal framework provided that the province consents and declines to regulate those activities involving the open banking system. Is that the case? They do not know. They are unable to answer.
Which provincial laws will have to take a back seat to federal laws? They cannot answer this, either.
Who will be tasked with certifying the technology companies? Will it be Ottawa or the Autorité des marchés financiers? They are unable to answer.
Will Quebec's Consumer Protection Act apply to the activities of the open banking system? They are unable to answer. In the event of fraud or damages, will it be possible to launch a lawsuit or class action under the Civil Code or the Consumer Protection Act against a fintech company? Once again, they are unable to answer that question.
Will the sharing of financial liability between the financial institution and the technology company necessitate changes to the financial institutions' prudential standards? Will the Autorité des marchés financiers need to change its rules to comply with the federal framework? Again, they are unable to answer.
None of this is surprising. The Financial Consumer Agency of Canada is not well placed to administer this framework. It learned it would be receiving this role the day before the budget was tabled. When it comes to behaving like amateurs and making things up on the fly, this government takes the cake.
To avoid a disaster or some risky backpedalling, we asked the government to remove this division from Bill C-69. We suggested reworking it this summer and coming back with a good bill this fall. The government refused.
We are opposing this bad bill that sets this entire sector up on a terrible foundation. It is unacceptable.
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Madam Speaker, Bill C‑69 is a budget implementation omnibus bill that creates or amends 67 different acts. The government promised never to use this type of thing, but for the past several years, it has continued to do so.
Bill C‑69 enacts, among other things, the consumer-driven banking act, which establishes that it is the federal government alone that regulates this sector and that the Financial Consumer Agency of Canada acts as the regulator.
We asked the government to take this division out of Bill C‑69 and correct some of its shortcomings over the summer so it could come back this fall with a framework that does not give Bay Street an unfair advantage over other financial institutions, that respects the jurisdictions of Quebec and the provinces, and that will be administered by a competent body. However, the government just voted against our request. The government is not working well. It is not listening, it is being partisan, and it is undermining Quebec. That is why we will be voting against this bill.
I am going to talk more about the open banking system, beginning with some context. As things stand, all financial services are based out of financial institutions that people do business with directly. These institutions are legally and financially responsible in the event of fraud or data theft, so they are fiercely protective of our personal data. Under an open banking system, financial institutions will have to share our data with platforms that will enable us to access all our accounts with one click. It would be a minor revolution. Ultimately, we can envision a system in which financial institutions essentially just create financial products, with client relations being handled by tech companies that do not themselves provide financial products, but act as intermediaries and data aggregators. That calls for a framework.
People want the flexibility an open banking system offers. That is why financial technology or fintech companies have already started coming on line despite the legal limbo. They are not well regulated, so they find other ways to evolve. Users themselves provide their credentials. The app goes into a user's account, extracts data from the screen and stores it. Financial institutions' secure networks get regular visits from actors outside the financial sector, and that makes them vulnerable. The more advanced these strategies get, the greater the risk.
We know that the level of risk varies. An aggregator that scans public data to show us mortgage rates at all financial institutions in one click is low risk. When it collects our personal data to give us a detailed picture of our financial situation, that carries more risk for the protection of sensitive personal information, namely financial information. If the app can be used to perform transactions, which implies that it places orders, that opens up a whole new level of risk, the risk of fraud. Let us also not forget that a series of orders quickly placed with the help of an AI system could completely destabilize all financial institutions. What about the principle of needing to know the customer? That principle is the foundation of our anti-money laundering laws. How can a financial institution apply this principle when it is communicating via an app?
Lastly, an important part of risk is the financial capacity to take on risk. Without that, the consumer could lose everything. Prudential regulations have to adapt. What we need is a clear framework with clear obligations and responsibilities.
The financial sector is a shared jurisdiction. The federal government has authority over banks and federally incorporated financial institutions. Financial institutions that are not banks, namely credit unions and trust companies, fall under the jurisdiction of Quebec and the provinces. Financial intermediaries, such as investment dealers and financial advisers, fall under the jurisdiction of Quebec and the provinces. Tech companies in the financial sector are not currently regulated, but they are likely similar to financial intermediaries.
There are different models in all this. There is the Interac approach. The Interac system, which enables exchanges between institutions and allows us, for example, to use our debit card everywhere, was developed by the financial companies themselves. These companies agreed on a common technology and standards to ensure that transactions are secure. Companies that adopt and comply with the common standards can join the system and offer Interac. This is the approach taken by the United Kingdom. In Canada, it is the approach that was favoured by the Advisory Committee on Open Banking in 2021.
The advantage of this approach, which is the simplest and most flexible, is that each government retains full regulatory power and adopting the open banking system does not result in any transfer of power. The disadvantage is that it is a form of self-regulation. The standard adopted may very well be aimed primarily at developing the sector rather than protecting citizens. Personal information, financial risks and fees come to mind. The banks, which initially advocated self-regulation, realized that squeezing out the legislator would not work and that co-operation would be a more realistic option.
Another approach, the one that we advocate and prefer, is the securities approach. Securities fall mainly under provincial jurisdiction, but Ottawa has laws governing federally incorporated companies. The Supreme Court of Canada has also recognized federal jurisdiction over systemic risk in the financial sector. In Quebec, the Autorité des marchés financiers is the regulator. To ensure that businesses could raise capital across Canada and that registrations in one province would be recognized everywhere, governments decided to coordinate. That is why Quebec's corporations legislation is very similar to the federal corporations legislation and to the corporation laws of all the other provinces. The same is true for all legislation governing the various aspects of securities. Quebec retains its legislative powers. The Quebec act may be stricter in some respects. For example, Quebec is the only province that requires a French version for all corporations registered with the Autorité des marchés financiers. However, this version must comply with the common standard adopted by all governments.
For years now, the federal government has wanted to centralize securities regulation in a single commission and concentrate the entire financial sector in Toronto, to the detriment of Montreal in particular. Quebec and the Quebec business community have always opposed this. In 2021, my party successfully amended the budget implementation bill to close the federal office responsible for creating a single securities commission. It was a really nice moment in a committee meeting over Zoom. I remember it clearly. The model of co-operation between governments, which has survived repeated attacks by the federal government, is still going and is working well. As I was saying, the securities model is the approach that my party and I favour for the open banking system.
However, in Bill C‑69, Ottawa is opting for unilateralism and centralization. As I was saying earlier, Bill C‑69 enacts the consumer-driven banking act, which would make the federal government the sole regulator of this sector, with the Financial Consumer Agency of Canada serving as the regulator. That is a problem, too. The agency does not have the qualifications to do that at all. Since fintechs are not under federal jurisdiction, Ottawa has opted to regulate them indirectly by regulating how banks can transact with them.
Specifically, Bill C‑69 provides that banks and other federally regulated financial institutions will be covered by the new act. They will be required to co-operate with fintech companies, but they may do so only in accordance with federal rules and standards. Institutions that are not federally regulated will be ignored. They can opt in voluntarily with approval from their province, which would then have to waive the right to apply its own laws to the portion of their activities that comes under the open banking system. For now, Bill C‑69 does not affect insurers, because of the sensitive nature of the medical data they hold, or intermediaries such as brokers, but the framework will likely expand to cover them in the future.
The specific rules and standards that will apply to the sector, particularly in terms of consumer protection and financial liability, will be set out in another bill that is due out in the fall, but the decision to make it exclusively federal is being made now, in Bill C‑69.
In practical terms, the Quebec Consumer Protection Act and the Quebec act respecting the protection of personal information could cease to apply to financial institutions for any activities related to open financial services. That is no small thing.
We are getting ready to pass this bill at third reading in the House, but the impact of an exclusively federal open banking system on the prudential obligations of Quebec financial institutions, as set out by the Autorité des marchés financiers, is still unclear.
In addition to forcing Quebec to transfer legislative power to Ottawa, Bill C-69 puts Quebec's institutions at a disadvantage with respect to federal institutions. While banks will have only one set of regulations to follow, under this bill, an institution like Desjardins would be caught between two governments: the Government of Quebec, for its general operations, and the federal government, for its technological interactions with customers. That is ridiculous.
The fact that Quebec institutions will be subject to two uncoordinated regulatory bodies could be downright dysfunctional and give banks an egregious advantage over co-ops and trust companies. That is unacceptable.
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Mr. Speaker, I thank the hon. parliamentary secretary for his remarks. I really like working with him too.
Bill C-69 seeks to amend 67 different statutes. It contains some good things and some that are not so good.
For example, it contains the global minimum tax aimed at countering tax havens, and that is good. My colleague was talking about credits for what the government calls “clean” hydrogen. In fact, this is an $11-billion subsidy for the oil companies and the hydrocarbon industry to help gas companies with that. We do not support this. However, we do support the measure that earmarks $1 billion for the school food program. This was one of our asks.
And so it goes. There are things we support and things we do not support. Overall, the cons outweigh the pros, so we will not be voting for this bill.
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Mr. Speaker, thank you. I also thank my colleague from Lac-Saint-Jean.
Bill C-69 places Quebec in a dilemma in which there are no good options.
If we refuse to join the federal framework, our institutions will stay trapped in the 20th century while their federal competitors step into the technological 21st century. Maybe we could let our financial institutions opt in to the federal framework, but then Quebec would have to waive the right to apply its own laws to their activities that come under the open banking system.
Then there is the worst-case scenario. In order to survive against its federal competitors, an institution like Desjardins could choose to stop being a Quebec institution within the meaning of Quebec's Cooperatives Act and become a federal institution under Canadian co-operative bank legislation. Trust companies would face the same choice. Since the open banking system could eventually be expanded to cover insurance, all of our insurance companies could switch over to federal regulation.
If this worst-case scenario comes to pass, the entire financial sector and all of its activities will be completely outside Quebec's jurisdiction. That is a serious threat to Montreal's status as a financial hub. In short, by using its power over banks to regulate all companies that interact with them, Ottawa is trying to force Quebec and the provinces out of the financial sector, which it failed to do when it was trying to regulate securities.
Rather than taking the unilateral, centralist route, Ottawa should have chosen co-operation. It could have called a federal-provincial finance ministers' working meeting on open banking. It could have encouraged them to release a joint statement at the end of this meeting in which the governments announce their intention of developing a common regulatory approach with a clear deadline, such as 2025, and possibly setting up a federal-provincial office.
It could have sent a clear message to all financial institutions, not just banks, telling them to agree on a common technology, such as a secure data transfer protocol, because open banking is coming. Lastly, it could have worked on common technical regulations on accreditation rules for fintech companies, security standards, clarification of financial liability, consumer and data protection, and other such matters.
This is what we are asking the government to do today. We are asking it to take out the division on open banking that centralizes the sector exclusively at the federal level. We are asking it to take a few months to coordinate with the various players and the provinces and then to come back in the fall with a framework that respects jurisdictions and does not put provincially regulated institutions at a disadvantage.
The government could have chosen another model for the open banking system. There is the Interac approach based on self-regulation, as well as the securities approach. Securities fall mainly under provincial jurisdiction, but Ottawa has laws governing federally incorporated companies. The Supreme Court has also recognized federal jurisdiction over systemic risk in the financial sector. In Quebec, the Autorité des marchés financiers is the regulator.
To ensure that businesses could raise capital across Canada and that registrations in one province would be recognized everywhere, governments decided to coordinate. That is why Quebec's Business Corporations Act is very similar to the Canada Business Corporations Act and to the corporation laws of all the other provinces. The same is true for all legislation governing the various aspects of securities.
Quebec retains its legislative powers. The Quebec act may be stricter in some respects. For example, Quebec is the only province that requires a French version for all corporations registered with the Autorité des marchés financiers. However, this version must comply with the common standard adopted by all governments. This is the approach I prefer. This is the approach preferred by the Bloc Québécois.
There is another concern. In Bill C‑69, the government delegates the administration of the framework to the Financial Consumer Agency of Canada, an agency that mainly promotes financial literacy and that does not have any of the required expertise. In committee, FCAC representatives acknowledged that they did not have expertise in sharing financial data in a way that minimizes the obvious cybersecurity risks. They also told us they do not currently have a plan for developing the expertise needed to oversee the security aspect of open banking.
We also asked several questions that the FCAC representatives said they were unable to answer. For example, since fintech companies are not banks, they are not federally regulated. We asked if the government had obtained the consent of the provinces, particularly Quebec, which has its own civil laws, before tabling this bill. They were unable to answer. The answer is no.
During the briefing on the notice of ways and means preceding Bill C-69, it was my understanding that provincially regulated financial institutions could join the federal framework if they so chose, provided that the province consents and declines to regulate on its own those activities involving the open banking system. Is this in fact the case? I am unable to get an answer.
Which provincial laws will have to take a back seat to the federal laws? There is no answer.
Who will be tasked with certifying the technology companies, Ottawa or the Autorité des marchés financiers? I am unable to get an answer.
Will Quebec's Consumer Protection Act apply to the activities of the open banking system? There is no answer.
In the case of fraud or damages, will it be possible to launch a class action suit under the Civil Code or the Consumer Protection Act against a fintech company? Again, I am unable to get an answer.
Will the sharing of financial responsibilities between the financial institution and the technology company necessitate changes to the financial institutions' prudential standards? Will the Autorité des marchés financiers need to change its rules to comply with the federal framework? Here again, I cannot get an answer.
None of this is surprising. The Financial Consumer Agency of Canada is not well positioned to manage this framework. It learned it would be receiving this role just before the budget was tabled. This is ridiculous.
To avoid a disaster or some risky back-pedalling, let us act today. Let us take this division out of Bill C-69, do our job better and come back with a good bill this fall.
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Mr. Speaker, Bill C-69 is an omnibus budget implementation bill that creates or amends 67 different acts. It enacts the consumer-driven banking act, which makes the federal government exclusively responsible for regulating this sector, with the Financial Consumer Agency of Canada serving as the regulator.
Today we are calling on the government to take this division out and fix its flaws over the summer. We want the government to come back in the fall with a framework that does not give Bay Street an undue advantage over other financial institutions, that respects Quebec's and the provinces' jurisdiction and that delegates the administration of the framework to an appropriate agency.
Since financial technology or fintech companies are not federally regulated, Ottawa has opted to regulate them indirectly by controlling the manner in which the banks can transact with them. Specifically, Bill C‑69 provides that banks and other federally regulated financial institutions will be covered by the new act. They will be required to co-operate with fintech companies, but they may do so only in accordance with federal rules and standards.
As for institutions that are not federally regulated, they are ignored. They can opt in voluntarily if they get the approval of their province, which would then have to waive the right to apply its own laws to the portion of their activities that comes under the open banking system. For now, Bill C‑69 does not affect insurers, due to the sensitive nature of the medical data they hold, or to intermediaries like brokers, but the framework is likely to expand to cover them in the future.
The specific rules and standards that will apply to the sector, particularly in terms of consumer protection and financial liability, will be set out in another bill that is due out in the fall, but the decision to make it exclusively federal is being made now, in Bill C‑69. We urge the government to take out this division, improve it over the summer and present us with a better law this fall. Taking out this division will not delay the bill's coming into force.
In practical terms, under this section of Bill C-69, the Quebec Consumer Protection Act and the Quebec Act Respecting the Protection of Personal Information could cease to apply to financial institutions for any activities related to open financial services. The impact of an exclusively federal open banking system on the prudential obligations of Quebec financial institutions, as set out by the Autorité des marchés financiers, is unclear at this point.
In addition to forcing Quebec to transfer legislative power to Ottawa, Bill C-69 puts Quebec's institutions at a disadvantage with respect to federal institutions. While banks will have only one set of regulations to follow, an institution like Desjardins would be caught between two governments: the Government of Quebec, for its general operations, and the federal government, for its technological interactions with customers.
Being subject to two uncoordinated regulatory bodies could be downright dysfunctional and give banks an egregious advantage over co-ops and trust companies. Bill C-69 gives Bay Street an advantage over other institutions like co-ops and credit unions. As a result—
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Madam Speaker, I thank the hon. member for her very interesting speech. She raised some important issues.
I sit with other colleagues on the Standing Committee on Finance. Introducing mammoth bills, budget implementation bills that affect a whole bunch of different acts, seems to be the government's way of doing things at the moment. It is positioning itself above the provinces, above other jurisdictions, above other governments and telling them how things are going to be done.
The latest example is Bill C-69, in which the government legislates on the whole issue of open banking. Institutions under provincial jurisdiction must ask the province for permission to opt in to federal regulation if they want to be able to compete with federally regulated banks. That always seems to be the way. This government does not seem to understand that the compromise of the federation was to create separate governments, each of which is sovereign in its own areas of jurisdiction. In the House, the government always says that it conducted consultations, but when we talk to the governments, we find out that it did not, or that the consultations were too little, too late and always conducted with a paternalistic approach. Ottawa knows best and decides what the naughty little children should do.
Is that acceptable?
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