DISSENTING OPINION OF
THE OFFICIAL OPPOSITION (REFORM PARTY)

MacKay Task Force Hearings

The Official Opposition of Canada is grateful for the opportunity to present the following minority report on the Standing Committee on Finance hearings concerning the MacKay Task Force.

Overall, we believe that the findings of the MacKay Report open the door to more competition in the banking sector that will lead to substantial benefits for consumers. More competition and better service in banking is something Canadians want, need and deserve.

This is the message we also heard from the majority of witnesses. Witnesses testified that measures must be taken to enhance and increase competition in Canada's financial services industry. We therefore feel that it is incumbent upon the Liberal Government to immediately begin implementing such measures. Continued delay hurts Canadians as well as our financial services industry that must be able to prepare to meet the challenges of global competition.

Areas for increasing competition recommended by the Official Opposition include the following:

1. Foreign Bank Entry: The Liberal Government must end their long delay in allowing foreign bank branching. Direct foreign bank branching is the norm in most other countries.

2. Payments System: Opening access to all federally and provincially regulated financial institutions would: (1) End the monopoly over payments in Canada. (2) Increase financial services competition and provide a more level-playing field. (3) Moderate the increasing concentration that could arise as a result of the approval of the proposed bank mergers. (4) Increase consumer choice by allowing a wider range of financial institutions to provide payment and settlement services.

3. Taxation: A comprehensive review of the taxation regime encountered by Canadian financial institutions is required with the aim of improving competitiveness.

4. Division of Powers: Federal and provincial governments must make concerted efforts to reduce regulatory overlap and duplication to ensure equality and a cost-effective regulatory structure at every level.

Other areas of financial services regulation that the Official Opposition feels must be considered include the following:

1. Mergers: The Official Opposition does not believe that bank merger proposals should be arbitrarily ruled out. However, before considering the merits of any formal merger proposal, legislative changes that provide the opportunity for increased competition, from both domestic and foreign sources, must be firmly in place. In addition, the impact of mergers on rural customers must be lessened to an acceptable degree through realistic mitigation planning that must form part of any merger approval request. Finally, the potential impact of any bank mergers must be fully debated in an open forum such as Parliament.

2. Ombudsman System: The Canadian Banking Ombudsman must be (1) independent from the banks, (2) funded by the banks by way of fees with additional funding paid by the banks based on the number of complaints received against them, (3) able to make binding recommendations with the power of penalty enforcement, and (4) must produce an annual report to Parliament naming violators that have been assessed penalties and given binding recommendations.

3. Insurance: Banks should not be permitted to enter this industry in which vibrant and dynamic competition already exists. There is a consensus opinion that if banks are allowed entrance, we would very rapidly see a dominance in that industry on the part of the major banks and those few insurance companies that survive. The result would be a less competitive environment dominated by a few big players.

4. Auto Leasing: Maintaining the restriction on bank entrance into the auto leasing business is necessary to avoid unduly concentrating financial power in the hands of the banks. In addition, many new car dealers rely upon the banks for financing, and banks could refuse to lend to them to protect their own leasing sales.

These areas for increasing competition form a plan for increased choice and competition in the financial services sector that is based on our report, "Competition: Choice You Can Bank On."

This report is a plan that will ultimately offer Canadians better service and lower costs through more choice. It will also ensure that Canadian financial institutions are able to compete in the global marketplace, while ensuring that the services they offer will clearly remain in the best interests of Canadian consumers and business. It is a sound plan for choice and better service that is long overdue.

The Liberal Government must provide the leadership that Canadians seek and deserve. They must take action to end public concern about many aspects of our financial services industry. The Liberal government must immediately begin the process of enacting legislation that would open the financial services industry to competition and choice and end their five-year delay.