INDU Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, February 17, 2000

• 0909

[English]

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

I will just explain the procedure this morning. We're going to hear opening statements from the different departments again. Then we're going to allow members to ask questions. I propose that by 10 o'clock we'll try to move to clause-by-clause. If there are more questions as we go through clause-by-clause, we'll allow that as well.

• 0910

I'm going to begin with the Department of Industry. Do you have an opening statement, Madame D'Auray, or Mr. Mercer? Madame D'Auray.

[Translation]

Ms. Johanne D'Auray (Deputy Commissioner of Competition, Competition Bureau, Department of Industry Canada): Madam Chair, I am pleased to be here before the Committee today to offer my concluding remarks with respect to Bill C-276. You will recall that at the Commissioner's last appearance before this Committee on this matter, he supported the amendments the Hon. Member from Sarnia—Lambton tabled to improve the Bill.

[English]

Since then the committee has heard from stakeholders in the broadcast industry affecting this bill. Those stakeholders followed up on your suggestions, Madam Chair, and they had discussions with the Competition Bureau about the concern with the operational aspect of the amended bill as tabled on December 2.

[Translation]

I am pleased to tell you that solutions have been found to certain technical problems and I understand that corresponding amendments have been introduced to further improve the Bill. Madam Chair, I understand that these amendments have now been circulated among members of the Committee, to the public and to stakeholders.

[English]

I believe the amendments that have been made available to you today will help the bill achieve a degree of technical practicality regarding written notice, which was frequently stated as a concern by stakeholders.

Basically these amendments allow persons engaging in potential negative option marketing to take full advantage of electronic means of giving notice and/or obtaining express consent.

[Translation]

Madam Chair, thank you again for this final opportunity to address the Committee on this Private Member's Bill.

In summary, it is the Bureau's view that making negative option marketing a civil matter under the Competition Act will achieve the objective of the Bill's sponsor to promote informed consumer choice.

[English]

I'm pleased to answer the questions of the committee.

The Chair: Thank you very much, Madame D'Auray.

I'm now going to turn to the Department of Heritage, Mr. Guérette.

Mr. Jean Guérette (Director General, Broadcasting Policy and Innovation, Department of Canadian Heritage): Good morning, and thank you, Madam Chair. Following our last presentation, there has been some evolution in the broadcasting system, but the position we took last time with regard to especially the changes and the amendments that were made that in fact made the bill workable from our perspective are still valid today. So I stand by those comments I made when I came before you.

I can reiterate that we were also part of those discussions with the broadcasters since we last appeared, as Madame D'Auray has just expressed. In fact, I can simply support the position Madame D'Auray just made, that in fact those changes did in fact alleviate some of the problems we found in broadcasting.

Thank you.

The Chair: Thank you.

I'll now turn to the Department of Finance, Mr. Swedlove.

Mr. Cullen.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Madam Chair. If I could make some introductory comments just to give the context... I will be introducing a motion when we go into clause-by-clause, Madam Chair, to remove the banks from this bill. I'd like to give a bit of context to that, if I may.

First of all, none of us likes negative option marketing, and because of the efforts of the member from Sarnia—Lambton, he's brought this bill forward. Originally it was conceived to deal with the cable companies, where we have a highly monopolistic situation. I won't go into all the background. I think you're aware of it. We have banks where the consumer is free to walk, where the number of customers in the service package, for example, is very numerous and complex. To get one hundred percent written consent to changes is impossible.

So the question is, what do you do with those customers for whom you cannot get positive written consent? The banks can put them in à la carte pricing, which would be more expensive and not in their best interest. They can't carry a multitude of packages forever. With the changing technologies and their desire to innovate, we need some changes in this.

What we've proposed, Madam Chair, is to take it out of this bill and introduce changes through the Bank Act and the banking regulations.

I sent a letter to all members of the committee earlier this week. I hope you've received it. If you haven't, I have copies here that I can distribute. What I'm proposing here is that we introduce changes to the Bank Act and the banking regulations.

• 0915

Because of the attention this bill has engendered, the banks certainly have taken notice. In my discussions with them, they've come a long way to try to meet the general principles this private member's bill is trying to achieve. What they're saying is that because the Bank Act changes would not come forward immediately—in fact they wouldn't come forward until April or May, when the full financial sector package is introduced—they are prepared to sign an MOU immediately that would give effect to the notice provisions and money-back guarantee provisions I've described to you in my letter.

Essentially, for those customers who receive statements—and that's only about 30% of bank customers—there would be a 30-day notice. For those customers who don't receive bank statements, there would be a 60-day notice. Following that, if the customer has confirmed in writing, positively or negatively, then that's obviously the way the bank will act. If there's no communication from customers, which will be the majority of cases, the bank will actually implement the service package changes, for example, but give the customers a 90-day period during which time, when they notice the changes on their bank statement or passbook, if they don't want those changes, they can go back to the bank and get their full money refunded, if there was an increment between the package they had and the package that was implemented.

The bank would discuss with them what their options would be at that time. They could either choose to go to à la carte pricing, for example, in the case of service charges, or they could choose another existing package.

So the banks have come some distance, and they're prepared to sign an MOU immediately following, if my amendment passes by the committee. Then we would also incorporate those same changes into the Bank Act and banking regulations as part of the financial services sector reform package, which will come forward later this year.

You have letters from the five or six major banks in Canada—I think they were circulated—indicating to the committee that they're prepared to implement this MOU. Starting today, we would start those negotiations, if this clause comes out.

What I'm proposing is actually in the better interests of consumers so that they can keep pace with technology and innovations, and they can actually end up with lower-cost products than they otherwise would have if we left these provisions the way they are with respect to the banks.

With that, I'll turn it over to Mr. Swedlove if he has anything further to add, or we'll be glad to take questions.

The Chair: Thank you, Mr. Cullen. I should have had you explain the amendment when we got to the amendment, but we've done it now, so I'll turn to Mr. Swedlove now.

Mr. Frank Swedlove (Executive Director, Financial Sector Review Group, Department of Finance Canada): I have nothing to add to that, Madam Chair.

The Chair: Okay.

I'm sure there will be some questions. The bill was a while back, and there are a number of amendments in front of you for a variety of purposes.

Mr. Penson, do you have any questions?

Mr. Charlie Penson (Peace River, Ref.): I have a question of Ms. D'Auray.

In regard to the industry department, in the last paragraph of your presentation, you say it's the bureau's view that making negative option marketing a civil reviewable matter under the Competition Act, with the technical amendments that are already there, would be adequate. Is that correct?

Ms. Johanne D'Auray: Yes.

Mr. Charlie Penson: So rather than being a criminal matter, it would be under the civil category.

Ms. Johanne D'Auray: It would be a civil reviewable matter under the Competition Act, and that's in line with the Bill C-20 changes. Misleading advertising is now a civil reviewable matter, so it's in line with the new amendment of the Competition Act. This would not be linked to a criminal offence. That's the reason.

Mr. Charlie Penson: Okay.

For the finance department, it's the intent, I gather from the parliamentary secretary, that amendments would be introduced to the Bank Act to implement this MOU. If the committee adopted the amendments Mr. Cullen suggested today, the Bank Act would be amended this spring to reflect that MOU implementation.

Mr. Frank Swedlove: That is correct, Mr. Penson.

• 0920

Mr. Charlie Penson: Are you satisfied that the 90 days a customer has to review this and claim it back if they're not interested in that package is an adequate way of addressing this?

Mr. Frank Swedlove: Yes, we are, Mr. Penson. The 90 days would provide a clear opportunity for the customers. If they hadn't seen the notices that had gone out previously, it would provide them sufficient time to recognize there was a change, for example in the pricing of an account, and to check with their institution and explore alternatives.

Mr. Charlie Penson: Has your department received complaints from consumers about charges to their account for the package the banks offer?

Mr. Frank Swedlove: As I mentioned in my last testimony, complaints about service charges do arise, but we don't recall any number of complaints related to a negative option billing situation.

Mr. Roy Cullen: Perhaps I could add to that. I asked the same question of the banks.

The Chair: Mr. Cullen, I'd actually prefer if you would allow the department to answer the questions.

Mr. Charlie Penson: Mr. Swedlove, I gather the banks do the negative option marketing. Do you agree with that?

Mr. Frank Swedlove: I guess it really depends on how you define negative option marketing.

Mr. Charlie Penson: Well, as defined in the bill.

Mr. Frank Swedlove: As defined in the bill, they do have packages of accounts, and these accounts are reviewed from time to time in terms of their pricing and the products they offer. It has been the case that at any given time, they will choose to increase the price and also increase the number of products or increase the number of ATM transactions or whatever. Our review of this bill would suggest it would require getting express consent from all their customers to do that.

Mr. Charlie Penson: As opposed to the amendments Mr. Cullen is putting forward, which would mean the onus would still be on the customer in that case to say they didn't want it.

Mr. Frank Swedlove: I'm sorry; I didn't hear the last part of the question.

Mr. Charlie Penson: As opposed to the amendment being suggested to the Bank Act in the MOU, which still has the onus on the customer to tell the banks they don't want that package and therefore want their money back, under the proposal that's being put forward.

Mr. Frank Swedlove: That's correct.

Mr. Charlie Penson: Has this been a steady amount of complaints you've had? How would you categorize this? Is it large? Is it increasing or decreasing? Is there any change in regard to customers complaining about what the banks are doing with their packages?

Mr. Frank Swedlove: Again, the complaints we've seen tend to be general complaints about service charges more broadly—the cost of service charges, rather than changes in their packages.

Mr. Charlie Penson: So there's no trend here that you can anticipate?

Mr. Frank Swedlove: We've not noticed any trend in the complaints we've received.

Mr. Charlie Penson: Would you categorize it as a small problem in relation to the amount of business that's done?

Mr. Frank Swedlove: Again, I wouldn't want to suggest that service charges generally are not a concern of Canadians, because they are a concern of Canadians. But this concept of altering packages and altering price at the same time and the difficulties that creates was not identified in the MacKay report as a concern. We hadn't seen major concerns expressed by consumer groups in the consultations, and it did not form a part of our package in June, which laid out the government's intent for financial sector reform going forward.

That being said, a number of consumer groups, since this bill is being discussed, have supported the concept of the banks being included in the legislation.

Mr. Charlie Penson: I have just one further question. The bill has proposed that the minister has the ability to exempt any area in any case. If the minister chooses to do that, doesn't that make this bill meaningless in many ways?

Ms. Annette Gibbons (Chief, Financial Sector Policy Branch, Department of Finance Canada): Are you referring to the CBA proposal or to the amendments to the Competition Act?

• 0925

Mr. Charlie Penson: I'm referring to the bill as amended proposed by Mr. Gallaway.

The Chair: Is the exemption not with regard to heritage?

Mr. Jean Guérette: My understanding is that the exemption is for anybody for the three areas, but with regard to Canadian Heritage it's specifically done differently under the recommendations of the Minister of Canadian Heritage for broadcasting policy objectives.

The Chair: Mr. Mercer, do you have something to add to that?

Mr. Don Mercer (Head, Amendments Unit, Department of Industry Canada): Yes. I just wanted to add that the bill was designed to provide the specific heritage exemption, as Mr. Jean Guérette has said, and there was a general exemption that would cover finance.

Mr. Charlie Penson: Let me ask about that specific exemption for finance then. My question still stands. If there is a specific exemption for finance, does that not—

Ms. Annette Gibbons: It's not specific to finance. It's a general exemption.

Mr. Don Mercer: It's a general exemption that covers finance, so they could do the exemption through that means.

Mr. Charlie Penson: Well, what's the difference?

Mr. Don Mercer: There is none.

Mr. Charlie Penson: My question still stands.

The Chair: Mr. Penson, your question again.

Mr. Charlie Penson: You want me to repeat my question?

The Chair: Yes, please.

Mr. Charlie Penson: Given that there is a general exemption in the area of finance, that the minister can make a general exemption, does that not make this bill meaningless if the minister chooses to implement that exemption?

Ms. Annette Gibbons: We haven't been focusing on the use of that. We've been focusing instead on an alternative approach, as Mr. Cullen referred to.

Mr. Charlie Penson: That's not very satisfactory. We have a bill and my understanding is that the ministers can bypass it if they like. In the area of the financial sector, they can choose to exercise that exemption. Doesn't that mean that if the minister were to choose that option, none of the aspects of the bill would pertain to the financial sector?

The Chair: Well, Mr. Penson, just to clarify, there are two options before the committee today. There's the bill as it stands and then there's the amendment Mr. Cullen is proposing.

Mr. Charlie Penson: I'm talking about the bill as it stands, then. The amendments haven't been introduced yet, Madam Chair.

The Chair: I understand that, but we are discussing them simultaneously so there's not confusion later on. You have them in front of you so there's not confusion later on.

Mr. Charlie Penson: Yes, that's what I'm trying to get at.

The Chair: You're quite right that there is a provision in the bill for an exemption. That's been there since day one.

Mr. Charlie Penson: So my question to them is what if the minister chooses to exercise that exemption? It should be a pretty straightforward answer. The answer, it seems to me, would be that it negates what's in Mr. Gallaway's bill.

The Chair: It has to meet the requirement though, Mr. Penson, of what it says for the reasons that could provide the exemption.

Mr. Charlie Penson: I would think the finance department can speak for themselves in this, Madam Chair.

The Chair: I'm talking about all the departments. I'm just trying to explain what this section says.

Mr. Jones.

Mr. Jim Jones (Markham, PC): On a point of order, you said we have the amendments. We don't have the amendments.

The Chair: Yes, you do have the amendments.

Mr. Jim Jones: No, we don't.

The Chair: The clerk has circulated the amendments.

The Clerk of the Committee: Not Cullen's.

The Chair: Well, it should be circulated. Everybody's amendments are being circulated. I apologize. They are supposed to be in front of you.

Mr. Penson, does that answer your question?

Mr. Charlie Penson: No, it doesn't. I would like to get an answer from finance.

The Chair: Mr. Swedlove, can you please provide an answer from finance? If the minister chose to use that exemption, if the amendment doesn't go forward...

Mr. Frank Swedlove: I guess the concern in terms of the exemption would be that if we were to simply exempt banks from the provisions that are here, we'd be negating a very large aspect of this bill. We'd rather respond to this bill directly and try to get the benefits associated with what the banks have proposed in our own legislation to deal with the issue.

Mr. Charlie Penson: I understand that. I guess we'll have to wait for the amendments to be brought forward in order to discuss that. It's pretty clear that if the amendments were not adopted and the minister chose to exempt the financial sector, they would not be subject to this bill in the financial services area.

• 0930

The Chair: Mr. Penson, we're going to have to move on from this.

Mr. Swedlove, do you have a final answer on that?

Mr. Swedlove: Yes. My legal counsel advises that it would be the exemption of specific services. So you'd get into a situation of having to list a number of services.

Mr. Charlie Penson: Okay.

The Chair: Madame Jennings had some questions.

[Translation]

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): We now have the amendments suggested by the Parliamentary Secretary, the effect of which would be to exempt financial institutions from the provisions of Bill C-276. Those institutions are regulated under the Bank Act. I would like the representatives of the Competition Bureau to tell us if they feel comfortable with those amendments, which have not yet been officially tabled before the Committee. Since those amendments would mean that the banks will be exempted from the provisions of this Bill, they will not come under your jurisdiction. Do you feel that would be a problem, philosophically or legally?

Ms. Johanne D'Auray: Ms. Jennings, the Bureau is quite comfortable with the Bill as tabled by Mr. Gallaway and as amended.

Ms. Marlene Jennings: You are telling me indirectly what you did not say directly. Mr. Gallaway's Bill with the amendments that have been officially tabled, that is to say all the amendments tabled before February 7, does not exempt the banks.

Ms. Johanne D'Auray: The Bureau feels that negative option marketing cannot be seen as a competitive technique that would be good for consumers. The Bureau believes that consumers should have the opportunity to make an informed choice when buying new services. We have never had and we do not yet have any objection to Mr. Gallaway's Bill, which would apply to banks, the cable industry and broadcasting.

Ms. Marlene Jennings: Thank you.

I would now like to address Ms. Gibbons. In answer to Mr. Penson, you stated that the Bill as it is now would allow a whole series of services, financial and other, to be exempted, and that you had not examined the potential problems our financial institutions could face if they were to come under the Bill. Why have you not looked in detail at the possibility that this exemption could be more or less effective, at least until the Minister tables his amendments to the Bank Act, since it would be possible at that time to correct any problems that a general exemption could cause for the banks? You stated that amendments to the Bank Act would come in the spring. I may be mistaken, since this is my first mandate here, but I believe that the process leading to the implementation of a new Bill can be rather long. We still have third reading to go through in this case, when it would be possible to table amendments to the Bill. Then, if that is not debated in the House, the Bill has to go to the Senate which could yet hold its own hearings and consultations. Then the Bill would have to be passed by the Senate where there could always be a debate. So, considering that there would be during that time some days when the House would not sit, during weekends for instance, this could lead us to the month of June, in the best case, if everything worked perfectly well.

• 0935

Mr. Swedlove, you said that the Bank Act would be amended. If so, why not leave this Bill as is? If the banks want to sign an MOU without this Bill being amended, you will have the opportunity to table an amendment in April or May, within your amendments to the Bank Act, in order to change Bill C-276 so that banks be exempted because, among your amendments, there will be some dealing with the way that banks change their services, their information, etc. Therefore, I cannot see any problems.

Ms. Annette Gibbons: Different methods exist to resolve the issues identified by the Department and by Mr. Cullen. Today, Mr. Cullen has suggested a different solution, a more direct and immediate way to face the issue. We are not saying that our approach would not work but only that we have chosen a certain approach.

Ms. Marlene Jennings: Am I right to believe that, if your approach does not work, that is to say if there is a debate in the House and that we cannot get it passed at third reading, and that we then try to get it passed in the Senate and that we still do not succeed, you and the banks will then take the other avenue, which is that you will proceed with amendments to the Bank Act in the spring and that you will include in those amendments a change exempting the banks from the provisions of this Bill? Among the amendments that you will table, there will be some that will establish the process that the banks would have to follow to warn their customers about changes in services or about new services.

There is always a possibility that your preferred option for this Bill would not succeed. In that case, would you move to the other option?

[English]

Mr. Roy Cullen: Madam Chair, could I just interject here for a moment? A question is being posed to the officials about what would be a somewhat political decision. This is a private member's bill. What I've proposed here is an initiative I have presented to try to come to some compromise, to try to get the banks moving on this immediately. Frankly, there's no obligation for the Department of Finance or for the government to intervene in private members' bills.

If my motion today doesn't pass, I think frankly we would back away and let it go wherever it has to go. There's been a certain level of frustration in trying to deal with this and we've tried to interject to try to be constructive and helpful. If these amendments don't go through today, frankly I think it would be my recommendation that we just let the bill take its normal course.

The Chair: Okay.

Mr. Penson has a point of order.

Mr. Charlie Penson: Madam Chair, I have a little problem with the way things are going here. I would think the parliamentary secretary should be part of the speaking order of the government side and should not be answering questions for the department. I'm looking forward to Mr. Cullen introducing his amendment, but I think it has to be in proper order. It's highly unusual that it should take this kind of format and I don't think it should be allowed.

• 0940

The Chair: Okay, we won't allow it any more, Mr. Penson.

Madame Jennings.

[Translation]

Ms. Marlene Jennings: I think I would have to wait for Mr. Cullen's amendments to be officially moved and debated before asking my question, since it bears directly on this matter. I defer to your ruling.

[English]

The Chair: Okay, thank you, Madame Jennings.

Monsieur Brien.

[Translation]

Mr. Pierre Brien (Témiscamingue, BQ): Let's take a specific case and ask some clarification to the members of the Department of Industry. Recently, the CRTC decided to make sure that the Aboriginal channel would be available everywhere in Canada. Could you give us some information about the steps taken by the CRTC to that end? Do you know them?

Ms. Johanne D'Auray: I think it would be better for you to ask the CRTC directly.

Mr. Pierre Brien: What about Heritage Canada?

Mr. Jean Guérette: I can confirm, Mr. Brien, that the CRTC's decision made that service compulsory everywhere in Canada.

Mr. Pierre Brien: Were consumers consulted? Were they asked to give their consent?

Mr. Jean Guérette: This issue was raised during the CRTC hearings related to the granting of all the new licenses. All the stakeholders had the opportunity to express their opinion. Then, after those hearings, the CRTC decided that that channel should be provided everywhere in Canada on a compulsory basis. That CRTC decision could have been appealed but nobody did so.

Mr. Pierre Brien: So, consumers did not provide their express consent to that service.

Mr. Jean Guérette: No, not in that case.

Mr. Pierre Brien: If Bill C-276 is passed, would that mean that the CRTC would not be able in the future to make such a broadcasting service compulsory for reasons of cultural policy?

Mr. Jean Guérette: My colleagues at Industry are perhaps more aware than I am about this aspect of the Bill. As I understand, there has been an amendment stating that the Bill would not apply in the case of an order making a service compulsory. So, the CRTC would still have been able to make this service compulsory.

Mr. Pierre Brien: I would like you to explain this because that is not how I read the Bill.

[English]

The Chair: Are we clear on what Monsieur Brien is requesting?

Monsieur Guérette.

• 0945

Mr. Jean Guérette: I'm clear on what the request is. The discussion I'm having with my colleagues from the Competition Bureau is that they are referring to the power of exemption the minister has. In fact, yes, an exemption could be made for that service if it were required the by Governor in Council. However, I also was looking at the amendment at paragraph (c), and it says:

where the enterprise is required by law to provide or sell the new service and is authorized to charge a fee to the client for that service.

My interpretation of that would have been that if it is in fact required under the Broadcasting Act, which is administered by the CRTC, then this clause would apply to the service and therefore could be offered in that manner.

[Translation]

I'm sorry for having started in English.

Mr. Pierre Brien: Could you repeat what you said in French? I'm not sure I understood.

Mr. Jean Guérette: I only have the English version of the Bill with me but it says that, if the service is authorized by legislation at a specific rate... As far as I know, the distribution of a channel could be provided for everywhere in the country under the Broadcasting Act, which is administered by the CRTC. The Bill would not apply in that case because there would a legal provision making the service compulsory.

Mr. Pierre Brien: Would a distinction be made between new services and existing services that would be changed?

Mr. Jean Guérette: This always refers to new services. It only applies to new services.

Mr. Pierre Brien: So, what you are saying is that no special exemption would be required. The CRTC could still grant its authorisation on the basis of this exemption, without asking for any ministerial authority. Is that what you are saying?

Mr. Jean Guérette: I could ask for legal advice on that. From what I read here, the Broadcasting Act, which allows the CRTC to make a service compulsory, means that the CRTC could authorize it. The Bill as it is drafted now stipulates that, in such a case, the consent of the consumer would not be required.

Mr. Pierre Brien: Some people believe that the CRTC could not make new channels compulsory, but you are telling me that it would still be able to do so without asking for the consumers' consent.

Mr. Jean Guérette: What I am telling you is that the way the Bill and the amendments have been drafted gives the CRTC the authority to make a service compulsory, which it did in the case of the service you've mentioned, as well as in the case of the new TVA service across the country.

Mr. Pierre Brien: I will come back later.

[English]

The Chair: Mr. Gallaway, please.

Mr. Roger Gallaway (Sarnia—Lambton, Lib.): Mr. Swedlove, the last time you were here was on November 18. At that time you were asked a question by Mr. Penson. The question was, and I'm quoting:

So your opposition to this particular bill is reflecting the financial services companies' concerns.

You answered in reply to Mr. Penson, and I'm quoting again:

I have not talked to them directly about this, but they are concerns that we in the department have, given what is in the bill.

That was on November 18. I have a letter I obtained through the access to information process that would indicate that at least the Canadian Bankers Association had communicated with you prior to that date. Is that correct?

Mr. Frank Swedlove: Yes. When I was asked a question by Mr. Penson I responded in the context that they were the views of the Department of Finance that we were expressing. I had not talked directly with individual banks, but indeed I had received a letter from the Canadian Bankers Association, which you referred to.

Mr. Roger Gallaway: So you hadn't dealt with a particular bank but you had dealt with their umbrella organization. Is that what you're saying then?

Mr. Frank Swedlove: I had received a letter from the Canadian Bankers Association.

Mr. Roger Gallaway: That letter says “Dear Mr. Swedlove”. Then it says “Dear Frank”. I assume you know this individual, R. Alan Young, who sent you this letter. Is that correct?

Mr. Frank Swedlove: Yes. As part of my job, Mr. Gallaway, I have contacts with people in the banks, with the CBA and other stakeholders.

Mr. Roger Gallaway: The first line of this letter says “Thank you for providing the banking industry with the opportunity to share with you its concerns about Bill C-393”, as it was known then. That would suggest you had already had discussions. Did you have discussions with Mr. Young prior to this?

• 0950

Mr. Frank Swedlove: I did not have any substantive discussions with the bank.

Mr. Roger Gallaway: I'm not asking if you had substantive discussions, I'm asking you if you had any discussions.

Mr. Frank Swedlove: I cannot recall whether I had any kind of discussion outside of noting that this bill was before Parliament and it was being considered by Parliament, and that the banks were expressing that they had concerns. I do not recall any detailed discussions.

Mr. Roger Gallaway: Is it possible that you just can't remember them?

Mr. Frank Swedlove: I cannot recall detailed, substantive discussions.

Mr. Roger Gallaway: At the end of the letter, it states “If you have any questions about the above or wish to discuss our comments further, please call me or Linda Routledge.” Do you know Linda Routledge?

Mr. Frank Swedlove: Yes, she is another person who works at the Canadian Bankers Association.

Mr. Roger Gallaway: Do you know Linda Routledge?

The Chair: Mr. Gallaway, he has answered that question. He said yes.

Mr. Roger Gallaway: All right.

Did you call them?

Mr. Frank Swedlove: No, I did not call them.

Mr. Roger Gallaway: Did you have any subsequent discussions with them surrounding this bill, C-393, as it was then, or C-276, as it is now?

Mr. Frank Swedlove: I did not have any substantive discussions with the banks on that bill or on this bill that's before us today.

Having said that, from time to time meetings have taken place on other issues. For example, after a meeting there was mention of the fact that I was asked whether or not I was appearing. I said yes, and I recall that I asked them if they were appearing. They said they weren't sure yet, and they said they continued to have concerns about the bill. That is the conversation that I do recall.

Mr. Roger Gallaway: I assume you prepare briefing notes for the Secretary of State for International Financial Institutions.

Mr. Frank Swedlove: Yes, we do.

Mr. Roger Gallaway: I would note that on May 10 the Secretary of State for International Financial Institutions voted for this bill. Had you prepared a briefing note for him to vote against it—or did he make a mistake?

Mr. Frank Swedlove: Could you repeat the question?

Mr. Roger Gallaway: On May 10 this was up for a second-reading vote. Mr. Peterson voted for this bill as Secretary of State for International Financial Institutions. Would you have prepared a briefing note for him?

Mr. Frank Swedlove: I would have to check our files in terms of determining that.

Mr. Roger Gallaway: Is it possible?

Mr. Frank Swedlove: Is it possible that we provided a briefing note? It is possible.

Mr. Roger Gallaway: All right, but you don't recall one way or another.

Mr. Frank Swedlove: I don't recall whether we provided a briefing note.

Mr. Roger Gallaway: Because he won't come to the committee, and you're here in his place, would it not be unusual for Mr. Peterson to vote for a bill that his department now opposes? Is this not rather unusual?

Mr. Frank Swedlove: This would be an issue for Mr. Peterson. I'm sorry, but I'm not in a position to respond to that.

Mr. Roger Gallaway: Okay, then perhaps I can pose that question to—

The Chair: Mr. Gallaway, we didn't invite Mr. Peterson to the committee; we invited the finance department officials.

Mr. Roger Gallaway: All right, then perhaps I can put that question to Mr. Cullen, who voted for the—

The Chair: No, Mr. Cullen is not appearing as a witness today. He's actually here as a member of the committee. You can't ask other members of the committee questions until we get to the amendment stage, when they're officially moved.

Right now, I have allowed the amendments that we have in front of us because of the complexity of the amendments since day one with regard to this bill. We'll have to—

Mr. Roger Gallaway: I was going to pose the question on a point of order, on a parallel to what Mr. Penson raised. Mr. Cullen has spoken for the department at the front end, so it is a normal procedure in any quasi-judicial setting that those who present evidence be questioned. Having regard to the fact that Mr. Cullen is firmly on the record—

The Chair: Mr. Gallaway, any member could have objected to Mr. Cullen's intervention at the beginning. No one did.

Mr. Roger Gallaway: No, it wasn't—

The Chair: He's here as a member of the committee. I didn't introduce him as a witness, and I didn't say he was a witness. He said he wanted to put a political part on the record, and no one interrupted his speaking.

I referred to the deference of the committee at that point. It didn't happen at that time. Since Mr. Penson has raised it, I have ended it. I have ceased it, and I will continue to have it ceased until we get to the amendment, which we're going to get to very shortly. You can ask questions when we get to the amendment.

Mr. Roger Gallaway: Okay, then I'll proceed by asking Mr. Swedlove.

Mr. Swedlove, Mr. Cullen has circulated materials and has apparently drafted his own regulations. Have you seen those regulations?

Mr. Frank Swedlove: Yes, these are regulations that have been drafted.

Mr. Roger Gallaway: Have you see them?

Mr. Frank Swedlove: Yes.

• 0955

Mr. Roger Gallaway: Is it not unusual for a parliamentary secretary to draft regulations? Is that not normally a function of the department?

Ms. Annette Gibbons: Are you referring to the CBA proposal?

Mr. Roger Gallaway: I'm a little confused as to whose proposal it is. I'm not certain who is speaking here. Is it the CBA or is it the Department of Finance? Mr. Swedlove and you, Madam Gibbons, are here as representatives of the department. There's no one here from the banks or the Canadian Bankers Association, so I can only pose the questions to you. Who are you appearing for, the Canadian Bankers Association or the Department of Finance? Whose materials are they? Are they your materials or are they the Canadian Bankers Association's materials?

Mr. Frank Swedlove: The parliamentary secretary and the minister's office had discussions with the Canadian Bankers Association. My understanding is that the Canadian Bankers Association had made a proposal to try to deal with the issue of negative option billing. We have seen that proposal, which we think would work in terms of drafting in our legislation.

Mr. Roger Gallaway: Let me just refresh your memory then.

The Chair: Mr. Gallaway, when we get to the amendment you can ask questions with regard to the amendment that is going to be presented at that time.

Mr. Roger Gallaway: I'm not talking about an amendment, I'm talking about draft regulations that have been enclosed in a package.

The Chair: Okay.

Mr. Roger Gallaway: On the draft regulations, Mr. Swedlove, who drafted those? Was it Mr. Cullen, was it you, was it the department, or was it the Canadian Bankers Association?

Mr. Frank Swedlove: The copy that I had seen was provided by the Canadian Bankers Association as a recommendation of draft regulations.

Mr. Roger Gallaway: Okay, so we're now dealing with Canadian Bankers Association amendments or draft regulations, is that correct?

Mr. Frank Swedlove: It is a proposal that the Canadian Bankers Association has made. In the normal course of events, stakeholders often do provide us with suggested legislation or regulations.

Mr. Roger Gallaway: Okay, thank you.

Now, when this bill was up in the House previously, the member for Etobicoke North—that's Mr. Cullen—made a statement. The question was why Canadians should be required to be eternally vigilant against unsolicited sales. I want to just show you something I received in the mail from a person out there who is following this. It's from the Toronto Dominion Bank, and it's about Visa card theft coverage. They're going to give it to you free for six months, and then they're going to charge you at some point. You'll have to say no otherwise, or you're going to be zinged for twenty bucks. Do you think the draft regulations as proposed by the Canadian Bankers Association will cover this?

Let me phrase it to you another way. As I understand the package, which I've just seen this morning, I would have to become aware of the fact that I have received a service I don't want. Assuming that I did become aware of it, I would then have to go back to the bank and request a refund. Is that going to be covered, or am I still going to be zinged? In other words, the bank could do it. Once I became aware of it, I would have to get around to the bank, so the onus is always on me to do something about it.

Mr. Frank Swedlove: I don't know the product you're referring to, Mr. Gallaway, but my understanding from the proposal put forward by the CBA is that if it's a new product—that is, if it's an insurance product they're adding onto the Visa card, for example—they would not provide that unless expressed consent was given.

Mr. Roger Gallaway: I'm glad you mentioned expressed consent.

The Chair: Mr. Gallaway, I have to tell you that this is your last question. We have to move to two other people, and I wanted to move on to clause-by-clause.

Mr. Roger Gallaway: All right.

Mr. Cullen, in his testimony—and I'm not asking Mr. Cullen—referred to expressed consent as being written consent. You and I know that's false, that it's not true. This bill doesn't presume that one must have written consent. Expressed consent can be something other than written consent. It can be taken in many forms. Would you agree that Mr. Cullen, in his statement, was incorrect in talking only about written consent as being what the banks were looking for?

Mr. Roy Cullen: Ms. Chair, I don't know how the officials can answer for me.

The Chair: Mr. Gallaway was asking a question about an opinion on what kind of consent is required.

• 1000

Mr. Frank Swedlove: My understanding is that expressed consent could be provided in other than written form, but I can't comment on Mr. Cullen's statement.

The Chair: Thank you, Mr. Gallaway.

Mr. Jones.

Mr. Jim Jones: Thank you, Madam Chair. I'll yield my time to Mr. Gallaway if he wants to continue.

The Chair: No, Mr. Jones. We're already over our time.

Mr. Pickard, please.

Mr. Jim Jones: I will ask a question then.

Tell me what undue hardship we'd be putting on the bank if we approved Mr. Gallaway's bill.

Mr. Frank Swedlove: The concern of the department is not related to undue hardship on the banks; it's a concern about the impact it may have on consumers.

Mr. Jim Jones: Tell me what impact it would have on consumers.

Mr. Frank Swedlove: As I expressed in my previous testimony, our concern is, for example, in the case of a deposit account where annually, or every two years, there is a review of the account, and there may indeed be a price increase associated with that account and the package of services that go along with it. At the same time, the banks tend to also do a review of the package itself, the kinds of services that are provided. For example, they may wish to add Internet access to that account. Our concern is, because of the difficulty of obtaining expressed consent from consumers, there may be a tendency by the banks not to review the package and try to improve it, but rather simply to increase the price.

So our concern is that consumers in some sense would be worse off because of it.

Mr. Jim Jones: What obligation do the banks have of informing if they don't have to do it through this bill, then? How are they going to inform me of new services or improving something?

Mr. Frank Swedlove: There is a requirement in the legislation now that notice be given of any change in the cost of services. It's 30 days notice in written form—if a statement is sent out—and 60 days notice in the branches and at ATMs.

Mr. Jim Jones: Thank you.

The Chair: Are you finished? Thank you, Mr. Jones.

Mr. Pickard.

Mr. Jerry Pickard (Chatham—Kent Essex, Lib.): That's fine, Madam Chair, I had my questions answered. Thank you.

The Chair: We have on the schedule that we would move to clause-by-clause at 10 o'clock, and it's after 10 o'clock now. I wonder if there's a wish to suspend for a few minutes and then move to clause-by-clause, or do you just want to proceed?

We'll proceed then. Mr. Cannis.

Mr. John Cannis (Scarborough Centre, Lib.): I was just going to ask, showing the flexibility that you have—and I very much appreciate it—and seeing that the committee has gone in different directions, if it would be okay with you and the committee members to take a five-minute break.

The Chair: We'll suspend for five minutes.

[Translation]

Ms. D'Auray.

Ms. Johanne D'Auray: I would like to explain Mr. Brien's comment.

According to the new Bill as amended, if the CRTC wanted to exempt a service, such as the Aboriginal channel, it could use the exemption. The Bill applies to the sale of new services by a company but, since the Broadcasting Act provides enabling power to the CRTC, that organization could still use clause 74.051(3)(c) in a case such as that of the Aboriginal channel.

The Chair: All right.

Ms. Johanne D'Auray: That was just a clarification. I have to tell you that I will have to leave before clause-by-clause study, but my colleague Don Mercer will stay.

[English]

The Chair: Okay, we understand that, Madam D'Auray.

We're going to suspend for five minutes. I'm going to ask members to please return as quickly as possible after the five minutes, and we'll move as quickly as we can.

• 1004

• 1021

The Chair: Could I ask everyone to take their seats, please? We'd like to resume. I'm going to call the meeting back to order.

Madame Langlois, who is legal counsel for the Department of Industry, is now sitting at the table as well. Is that correct, from industry? Okay.

I'm going to explain what we're going to do. We're going to go to clause-by-clause consideration now, and for clause 1 we have eight proposed amendments.

In front of you you have a package. You will see it has two columns, the left-hand side and the right-hand side. Not everyone has that. Does everyone have this in front of them?

Mr. Charlie Penson: What's the date?

The Chair: December 9, 1999. Does everyone have this?

An hon. member: No.

The Chair: No. Okay. We'll have the clerk make sure everyone has a copy.

On the right-hand side were the originally proposed amendments that we started to discuss at the beginning of this process. On the left-hand side are the new, revised amendments that we will be dealing with today. So don't confuse the right-hand side as just the bill.

Is that correct?

The Clerk: Those were the original amendments.

The Chair: Those were the original amendments. But we're dealing with the left-hand side.

Also, you should have two pages in front of you—one with about one line on it, clause 1, page 1; another one that has clause 4, page 4. Does everyone have that? No, everyone does not have that. Mr. Pickard doesn't have it. Does anybody else not have this?

We're going to move very slowly, Mr. Penson. Don't worry. We'll move slowly enough for the chair, and that should be slow enough for the rest of us.

I'm going to explain that for clause 1, we have eight proposed amendments. We need to do them in order; we cannot do them together. If you take a look at page 2 on the left-hand side, you'll see a box that says “Motion to amend Clause 1”. You'll see another box at the bottom that says “Motion to amend Clause 1”.

I want to let you know now that the one page you have with the one line that says “Page 1, Clause 1,” the amendment Mr. Cullen is proposing, will be coming in between those two amendments, so there's no confusion in the order.

Mr. Cannis, I believe you're...

Mr. Roger Gallaway: I have a point of order.

The Chair: Sure.

Mr. Roger Gallaway: Everybody knows the precedence that's already been made here. I'm referring now to the rules of procedure, and at sections 87(3) and 87(4) of this book with respect to private member's bills it makes reference to promoters or witnesses who are opposed to a bill appearing before a committee. It says that no member before the committee may act as an opponent of the bill and then vote on that bill without permission of the House.

We've had Mr. Cullen speak with respect to his opposition to certain parts of the bill, and I take note and accept the fact that you noted that no one raised any objections. But it is not unheard of in this place for parliamentary secretaries to appear as witnesses for departments before committees. Indeed, I know in my case, and I assume in Mr. Penson's case—and I don't presume to speak for him—that no one objected because it was presumed he was speaking for the department. Indeed, Mr. Swedlove added in his testimony that he had nothing to add after Mr. Cullen had spoken, that indeed Mr. Cullen had said it all for the department.

• 1025

Based on that, I would ask that Mr. Cullen therefore, as an opponent or as someone who has spoken to this bill, be disqualified from now voting on it.

The Chair: Again, Mr. Gallaway, as I explained earlier, Mr. Cullen was not appearing here today as a witness; Mr. Cullen is here today as a member of the committee.

I believe Mr. Swedlove's comments were very similar, in a sense, to Mr. Guérette's comments, where neither one had an official statement for today and had really nothing to add to the debate that had already taken place at the beginning.

Although Mr. Swedlove may have said he had nothing further to add to Mr. Cullen's comments, that was in deference to... I'm not going to presume why that was said. I stated quite clearly that Mr. Cullen was not here as a witness; he's here as a member.

With all due respect, I believe and the advice I'm receiving is that Mr. Cullen is here as a member. He was not here as a witness, and he sits today as a member.

Mr. Charlie Penson: On the same point of order, I gathered partway through this proceeding that Mr. Cullen was here as a member, but it was not very clear to begin with. I think it could be sort of assumed that the way he was presenting it, he was here as a witness to begin with. It became clear as things went on that this wasn't the case, and that's when I interjected, but it sure sounded like he was here as a witness to begin with.

The Chair: I apologize for any confusion.

Mr. Cullen.

Mr. Roy Cullen: I don't know if you've ruled on this point of order yet, but I wonder about the status of the member for Sarnia—Lambton. Is he here as a member of the committee, or in what capacity?

The Chair: Mr. Gallaway is the sponsor of the bill, and as a member of Parliament, he has the right, first of all, to attend every committee and sit as a member, whether or not an official member of the committee.

He does not have the ability to vote today, but he has all the other privileges as a member of the committee. As well, as a sponsor of the bill, he should be here and partaking in the discussion.

We're going to go back to clause-by-clause.

Mr. Cannis, maybe you should read your motion on clause 1.

Mr. John Cannis: Thank you, Madam Chair.

I move that Bill C-276, in clause 1, be amended by (a) replacing lines 5 and 6 on page 1 with the following, using the marginal notation of “definitions”:

adding the following after section 74.05:

And for the benefit of time, I will dispense with reading it, if there's agreement.

The Chair: Does everyone agree to dispense with reading it?

[Translation]

Mr. Antoine Dubé (Lévis-et-Chutes-de-la-Chaudière, BQ): No.

[English]

The Chair: You want him to continue reading the amendment?

[Translation]

Mr. Antoine Dubé: Why not?

[English]

The Chair: Okay, keep reading it, Mr. Cannis.

Mr. John Cannis: Okay.

74.051 (1) The definitions in this subsection

Secondly, I would replace lines 15 to 25 on page 1 with the following:

(b) a broadcasting undertaking within the meaning of the...

The Chair: No, your first motion. You stopped reading it after “definitions”. So if you could just read the last line of your amendment...

Mr. John Cannis:

74.051 (1) The definitions in this subsection

The Chair: That's the proposed amendment. Is there any discussion on the amendment?

Mr. Dubé.

[Translation]

Mr. Antoine Dubé: Madam Chair, since I do not want to waste the time of the Committee, I will speak only once today in order to remind you of the general opposition of the Bloc Québécois to the Bill in its entirety. As far as we are concerned, this Bill is not constitutional since it relates to commerce and other fields that come under provincial jurisdiction.

• 1030

When the time comes, we will vote against each provision of the Bill. However, since I do not want us to waste any time and I want everybody to stay calm, I will not repeat the same position each time. I intend to stay here but I will vote against the Bill.

[English]

The Chair: Thank you.

Mr. Penson.

Mr. Charlie Penson: I would like a recorded vote on these.

The Chair: You want a recorded vote on each amendment?

Mr. Charlie Penson: Yes, please.

(Amendment agreed to: yeas 10; nays 1)

The Chair: We'll move on to the next amendment in clause 1. Mr. Cullen.

Mr. Roy Cullen: Thank you, Madam Chair.

I move that Bill C-276, in clause 1, be amended by deleting line 14 on page 1.

[Translation]

I move that Bill C-276, in clause 1, be amended by deleting line 14 on page 1.

[English]

Madam Chair, do I have an opportunity to comment briefly on the motion?

The Chair: Yes.

Mr. Roy Cullen: I won't go over what I've already said. I just want to touch on a couple of points.

First of all, regarding the example cited by my colleague from Sarnia—Lambton, explicitly, under the regulations that have been proposed, that would be prohibited, because it is an unsolicited new service—just so there's no ambiguity around that.

As far as the discussion around exemption is concerned, I'm a little confused myself in the sense of what has been proposed today, because if this bill goes through today, as it is, without amendment, the Minister of Finance cannot introduce changes in the Bank Act that would unravel that. I suppose one could say the Minister of Industry, in consultation with the Minister of Finance and the government as a whole, could introduce such amendments.

My point is, first of all, why would you wait until later to fix something that isn't working? If it's not going to work, why don't we fix it today?

Secondly, the banks right now are changing packages yearly, monthly, quarterly. I ask members here, how many calls have you had to your office that the banks proposed a change in the service package and they didn't agree in writing to those changes? This is happening all the time.

In fact, I put the very question to the banks: What kinds of complaint levels do you have? I'm convinced the five major banks went around the table, and they do have some complaints when this happens, at very minor levels. But from the banks' point of view this is working; it doesn't need fixing.

The initiative I propose recognizes that there is some concern. So we've proposed a compromise position. If my amendment goes through, the banks will immediately enter into an MOU, which gives better notice than is there today, gives a money-back guarantee, and they're prepared to move on that immediately.

As far as the banking legislation package is concerned, the reform of the financial services sector, that will come before the House in April or May, somewhere in that order. In the white paper and all the consultations... In fact the Consumers' Association has been fulsome in its praise of the white paper and hasn't raised it as an issue.

The government can take whatever action it wishes, but as it's contemplated now, I couldn't for the life of me see why the kinds of changes that are being contemplated here would be incorporated into the new banking legislation. It's not seen as a problem by the banks or by the government. The government can act in any way it wants at any point in time; I'm just saying that would be a surprise to me.

• 1035

I would urge members to act in the best interests of consumers by supporting my motion so that customers of banks can immediately get the benefit of this memorandum of understanding. Otherwise they're going to have to wait, assuming this bill passes, for many more months. And if the bill doesn't pass, they don't even have those protections.

So I think if you're acting in the best interests of consumers and your citizens, you will support this amendment and give better protection starting almost immediately to customers compared with what the alternative is, which may be nothing in the final analysis.

Thank you.

The Chair: I have some people who want to add to this discussion, but I need to clarify something before I move on.

Mr. Cullen, just to clarify for the record, when the government introduces a bill to amend an act, they can amend other acts within that bill. It would be incorrect to leave the presumption in people's minds that in the amendments to the Bank Act they could not then amend the Competition Act and other acts. They can in fact do that. But you cannot add an act when you get to committee stage or an amendment. I want to clarify that.

Mr. Cullen.

Mr. Roy Cullen: If I could add to that, I presume you're right, Madam Chair. I would think it would be highly unusual for the Minister of Finance to act unilaterally without consulting the Minister of Industry on changes to the Competition Act so that you're ending up with the same situation. Basically the Minister of Industry and the cabinet would have to be onside.

The Chair: There's obviously another process. I just wanted to clarify, because there was some misunderstanding of what an act to amend can do, and I wanted to clarify that for the committee's sake, for those who did not understand.

Now I have a number of people who want to speak to this. I have Mr. McTeague.

Mr. Dan McTeague (Pickering—Ajax—Uxbridge, Lib.): Thank you, Madam Chair.

I wanted to articulate my concern with the notion that whatever's passed here today would somehow be crystallized to the point that no one could respond. Pursuant to the comments of Mr. Cullen, my understanding is that this committee's merely a constituent part of Parliament. Parliament can decide what to do what it wants after the fact. I don't see how it would be binding the hands. Of course that's my opinion, but I think it's well founded and steeped in tradition. Parliament is in the position of having the liberty of doing whatever it wants at report stage and third reading, and there's ample time within that period to effectuate that end.

Thank you, Madam Chair.

The Chair: Thank you.

Mr. Gallaway, no comments? I'm sorry, I thought you had some earlier.

Mr. Murray?

Mr. Ian Murray (Lanark—Carleton, Lib.): Thank you, Madam Chair.

I want to put a few comments on the record, because I've rarely struggled with an amendment to a piece of legislation the way I've struggled with this.

For me it comes back to a principle. It may be a very simple principle, and some may think it simplistic, but if we're agreed that negative option billing is a bad thing, that it's wrong, then for me it's wrong and I have to be persuaded that the amendment that's suggested to us somehow overrides that. It's possible that by not supporting this amendment I could be acting in a way that is not in the best interests of my constituents.

That may suggest I'm confused about this. I don't think I am. Essentially, I'm suggesting that consumers have a responsibility themselves here as well. It's not just up to institutions to make up consumers' minds for them and we all have to be responsible when it comes to purchasing whatever goods and services we want to purchase. But I do not agree with the idea that anybody should be allowed to, essentially no matter how many chances you get to say no, inflict something new on somebody that they haven't expressly asked for.

That being said, Madam Chair, I want to be on the record that I think it's a question of a fairly simple principle here, and the fact that it can be changed later, as a colleague just mentioned, before final passage in the House, is probably important. I'm willing to be corrected if I'm wrong in my approach here. That's all I have to say on this.

The Chair: Thank you, Mr. Murray.

Mr. Penson?

Mr. Charlie Penson: This is one of these interesting situations, as Mr. Murray has just suggested.

In principle I am opposed to the idea of negative option marketing as well. I really haven't had a lot of complaints in this particular area from constituents, and my understanding from talking to the members in our party is that it is the same situation. But I understand what Mr. Cullen is proposing, and it seems to me though that the same ability exists in this bill right now. As Mr. Gallaway suggested, there could be an exemption whereby if the minister decides he wants to exempt this industry in this type of package, that is available to the minister, assuming this goes through. And as has been pointed out by a couple of my colleagues on the other side, this has a way to go yet, including report stage and third reading, before it does get through.

• 1040

So I think I would like to see it proceed the way it's going, and if it passes in its current form then the minister would have to answer to Parliament why he wants to exempt the industry. I think if he makes a good case for it, people will be in agreement with him.

While I sympathize with Mr. Cullen that he wants to resolve this quickly, I do think that the process isn't that bad, that we still have an opportunity at a couple of more stages to discuss this further, to hear from constituents, and the exemption is there if it is required.

The Chair: Mr. Penson, thank you.

Madam Jennings.

[Translation]

Ms. Marlene Jennings: I thank you for those clarifications relating to the possibility of amending a bill through another bill.

I would like to express my disagreement with my honourable colleague of the Bloc Québécois. Were the Bill challenged in Court under the Constitution, I am sure it would pass that test. I may be mistaken, because we always make mistakes, every day. When the Bloc Québécois and the provincial governments claim that a federal legislation violates the Constitution, it happens some time to time that the Supreme Court of Canada disagrees.

Of course, it is conceivable that the federal government could be mistaken in believing that this field comes under its jurisdiction, and that the Supreme Court of Canada would come to that conclusion. However, my research so far leads me to believe that this Bill would resist such a challenge.

I must admit that I am quite tempted to support Mr. Cullen's amendment but I will not do so, for various reasons.

First, there is already in the Bill a provision allowing the Minister to exempt some services. Let us suppose that Bill C-276 has been passed and has received Royal Assent. If the banks, which always want first of all to protect the interests of their consumers, believe that this Bill creates an undue burden for them and is not good for their consumers, we will have an opportunity to bring proper amendments later on. Furthermore, if we believe that the exemption provided for in the Bill is not viable, we will have the opportunity, as Madam Chair mentioned, to move amendments to the Bank Act in order to exempt the banks from the provisions of Bill C-276. We could use that other option to protect the interests of consumers while still allowing for healthy competition to be maintained and for financial services to continue to evolve during the third millennium.

[English]

The Chair: There have been a couple of comments made, and I want to clarify for the sake of the committee, first, that the exemption doesn't allow a minister to exempt an industry; it's a service. So the individual...

Mr. Dubé, I want to make another comment and then I'll go to you.

There's been some discussion about third reading and report stage. There is a standing order, 76.1(5), in which the endnote talks about how if an amendment is defeated at committee the same amendment cannot be raised in the House except in exceptional circumstances. I want to make that clear for members.

• 1045

[Translation]

Mr. Dubé.

Mr. Antoine Dubé: Madam Chair, I would not have asked for the floor again but for Ms. Jennings' statement. I shall be brief.

Twice at least the Supreme Court has sided with the government of Quebec about clauses 92.13, 92.16 and 93. It has indeed happened in the past.

Ms. Marlene Jennings: I admitted as much. I was only stating that it has already happened also that the Supreme Court sided with the federal government.

Mr. Antoine Dubé: Yes.

Mr. Dan McTeague: On a point of order.

Ms. Marlene Jennings: There is no point in debating that here.

[English]

Mr. Dan McTeague: I'm sorry, I have a point of order.

Madam Chair, if I heard you correctly, you said that an amendment that is defeated at committee cannot be reintroduced in the House. In my understanding, through precedents on Bill C-235, that is not the case. I did exactly that same thing, which many of the members of the committee know, at the report stage, which is not of course under C-201 at this point but was done in C-235 for a period of two months.

The Chair: What I said the note said, Mr. McTeague, was that according to the rule and according to the note, the Speaker can rule in exceptional circumstances that it can be reintroduced. I wanted to clarify this so that there was not a presumption by the committee that it was an automatic. It's not an automatic.

Mr. Dan McTeague: All right.

The Chair: I know there's a precedent that's been set by Bill C-235, and I'm not disputing that. The note already says that this could take place. I wanted to clarify that for the committee's sake. That's all.

I apologize, Mr. Dubé.

[Translation]

Mr. Antoine Dubé: Madam Chair, I see that there is some dissent within the Liberal Party. This is often what happens during a second mandate.

[Editor's Note: Inaudible]

Ms. Marlene Jennings: —

Some Members: Oh!

M. Antoine Dubé: I could be open to Mr. Cullen's argument but, since I have already stated that I will vote against the Bill which, to my mind, will lead to overregulation, because there are already other bills that apply, I am faced with the same dilemma as Ms. Jennings and I will still have to vote against.

[English]

The Chair: Mr. Gallaway.

Mr. Roger Gallaway: I think that what this amendment proposes is to—

Mr. Roy Cullen: I have a point of order, Madam Chair. To clarify in terms of the rules, Mr. Gallaway is not voting on this, so is he entitled to speak on it?

The Chair: He's entitled to participate in the debate, yes, Mr. Cullen.

Mr. Roger Gallaway: Sorry about that, Mr. Cullen.

What Mr. Cullen is by this amendment proposing is a fundamental change to this bill. It's a very fundamental change. It's being brought to us at the 11th hour, 59th minute. Members, and I'm assuming opposition members, have also received the sizeable package of letters from the chartered banks. They're at the courtroom door now and they want to settle.

What he is suggesting is to follow his memorandum of understanding. Members should understand that a memorandum of understanding is exactly that. It's a promise. It's like being on parole. You promise to be good. That's very different from having a law that would say you must be good, and if you're not then here are the repercussions.

So I would suggest to members—and this is only my opinion—that because this is coming at the 11th hour, 59th minute, that they defeat this motion acknowledging that there's ample opportunity both in the House and in the Senate to amend this law if indeed the department does come forward with a package of legislation that would render this section redundant or unnecessary. But to be stampeded into fundamentally changing a law the morning of the consideration of that law by a package of letters from chartered banks and representations from people on the edges of either the department or who are working the hallways I think is a sad commentary on private members' business, which is to be openly debated.

I think the committee members imperil themselves by taking it upon themselves to fundamentally change a law this morning when in fact they could shift that to the House of Commons and allow the House to do it. But we have had agreement with respect to the package of amendments, and sadly we've had this last-minute repentance by the industry, who want to be good again. I would say let the full House do it.

• 1050

The Chair: Mr. Shepherd.

Mr. Alex Shepherd: I'd just like to interject.

I have some problems. I have in the past supported Mr. Gallaway's bill. However, I'm sympathetic with the concept of the financial services industry. I think what we're trying to do is to wrestle with why there's a difference in approach in one industry as opposed to the other. In my own mind I think of broadcasting and the receipt of cable services and others as some kind of personal choice people make with regard to accessing the programming that comes into their houses, whereas financial services are significantly different.

It seems to me people are saying that in the financial markets today they want a seamless interface with financial services. In other words, they want that to be easy, quick, and easily understood. It seems to me that the banks are somewhat responding to that by putting in place a system whereby you have a 90-day period in which to object to certain services. On the other hand, I see the inconvenience for a lot of customers of the banks every time they change a service. Essentially, we're asking for some kind of confirmation, and it almost gets to the point where it's inoperable. I'm not so sure my constituents want to be inconvenienced in that way. So I support Mr. Cullen's amendment, and I think it's consistent with what people would like us to do.

I see it differently in the broadcasting area, because I think that is an area where people are making a personal choice. While they've made a personal choice, they would like information as to why in fact their services have increased in cost and actually to have a consent mechanism. So I think there's some consistency with that.

The Chair: Mr. Pickard.

Mr. Jerry Pickard: Thank you, Madam Chairman.

As I look at the bill, I have to make a determination as to what is best for my constituents and the Canadian public in general.

It seems to me that the concept of the bill itself is an excellent one, and I applaud Roger for bringing that concept forward. There are always going to be problems with issues that come forward, and in this particular case the debate seems to centre around whether part of the bill is practical when we start looking at application. I hear a very strong, concerned voice that although the concept is a good, pure one, the reality of application in a changing society is not one that is as easily done as one might say.

We're looking at the financial institutions around the world coming together and dealing with different issues. If we just look at the changes that have occurred in the last ten years, we see dynamic and tremendous changes. In order to stay attuned to the public's needs and concerns, banks obviously have to change packages on a regular basis in order to make those the most applicable for the public itself.

Would this legislation in fact end up interfering with the banks offering the best process they can to the public? That's the question I'm struggling with. That's the difficulty I have. I hear the arguments on both sides. The argument on one side suggests very strongly that if there are changes to be made, let the Senate and the House deal with those changes. Quite frankly, I think that's moving away from the committee's responsibility.

I strongly think that I want to make sure that the opportunity for changes and for new offerings is there, yet I don't want the public to be vulnerable to unrealistic proposals that might be put forward. As a result, I perceive the package of amendments that has been put forward, which suggests that new services must have a customer's permission, to be pretty strong and pretty important in this argument.

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I see the packages that are already in place as requesting or requiring alteration from time to time. If after sending a notification to people we're getting back as bad a response as we are suggesting, of 10% or 15%, I really think some communication has to be changed within the banking structure and all structures.

On the whole, it seems to me that my constituents would be best served by making sure that the open opportunity for banks to introduce services is there. That's where I focus on this argument. It's not that either side is good or bad, because there are a lot of arguments made on both sides. But I tend to think we have to make sure that in Canada we give the opportunity to banks and to consumers to make alterations to packages as expediently as possible. At least that's where I place the argument in my own viewpoint, and therefore I perceive the suggested changes in the amendment to be positive ones.

Thank you.

The Chair: Thank you.

On my list I have Mr. McKay and then Mr. Cannis.

Mr. John McKay (Scarborough East, Lib.): Thank you, Madam Chair.

It seems to me that this bill feeds Canada's two national sports: hating Toronto and bashing banks. Being from Toronto and having quite a number of constituents who are bankers, it doesn't sit too well with me.

I understand the concept of negative option billing and have been victimized by it. I don't have a great deal of time for companies that use their disequilibrium in bargaining power to their advantage. So as a general proposition, I think Mr. Gallaway's approach is a sensible one.

The curse of this bill, however, is that in trying to repair what is obviously a flaw, there might in fact be a perverse consequence. The perverse consequence will be that banks will not be able to offer other services in what one might call a seamless fashion, and the cost of that to the consumer will in turn be potentially quite substantial. So in our enthusiasm to protect consumers, we may actually be doing a disservice to consumers.

I have not had the privilege and opportunity to listen to all the evidence. I've been here now for two hours. Frankly, I think it would be a dishonour to my colleagues to vote on this. So I wanted to say that as I abstain from a vote. In my view, the colleagues who have sat here over the course of the hearings and actually listened to the evidence are in a much better position to make that decision.

I don't buy the argument that we should simply defer to the House or to the Senate to deal with the bill. I think this committee is the one to deal with it. As I watch members struggle who have actually listened to the evidence and heard witnesses, in good conscience I cannot put myself in the position of overriding by my vote one way or another. So I want my vote to be recorded as an abstention.

The Chair: Thank you, Mr. McKay. We haven't taken the vote yet, but when we do...

Mr. Cannis.

Mr. John Cannis: Thank you, Madam Chair. I'll be very brief, and I hope that what I have to say will permit my colleague John McKay to vote.

I want to touch upon one comment, as I compliment Roger for his tremendous effort and the good he wants to do. In describing the ups and downs of this legislation, he said here are the financial institutions today, and it's like being on parole where you promise to be good. I'm not a lawyer, Madam Chair, but maybe I understand the system a little bit. Anybody who is a practising lawyer can correct me. If one is on parole and violates the parole conditions, my understanding is that there's a mechanism by which punishment will take place. This is the message I got today from the presentation by Roy Cullen.

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I'm not here to comment either way, to sway people how or how not to vote, but I appreciate that Roy Cullen has done his homework, as he was asked, and come back with his findings to present to the committee what I can describe as a very good presentation.

Thank you.

The Chair: Thank you, Mr. Cannis.

I have Mr. Penson and Mr. Dubé, and then I assume we'll go to the vote.

Mr. Charlie Penson: I have just a short comment dealing with Mr. McKay's concern that there may be some negative consequences. That in fact may be the case, but we don't know that at this stage. I would just like to remind the committee that I think Mr. Gallaway has already anticipated there may be some problems, and has built in a process so the minister can exempt certain services, if that were to take place. So I think there is a built-in safety loop, in that regard.

The Chair: Mr. Dubé.

[Translation]

Mr. Antoine Dubé: I said a while ago that I would vote against this amendment because I'm opposed to the Bill. After having listened closely to the various arguments, I indicated that I could be open to Mr. Cullen's reasons. Furthermore, I am extremely open to the principle that a member be allowed to move and defend a Private Bill, since I did so myself with a bill that is still in the channel. So, I will change my position slightly. I will abstain and let the Liberals tear themselves apart.

[English]

The Chair: Mr. Jones, do you have any comments?

Mr. Jim Jones: The only concern I have with exempting the banks is we should look at the banking association and whoever their members are. I'm thinking about all the foreign banking services and how this is applicable to them. I have a lot of concerns that it covers the foreign banks and all the foreign services that are coming over the Internet and all that. So I have some concerns about exempting at this time.

The Chair: Okay. We'll now take the vote. Mr. Penson asked earlier that all votes be taken as a roll call.

(Amendment negatived: nays 5; yeas 4) [See Minutes of Proceedings]

The Chair: We now move on to the next amendment. Mr. Cannis.

Mr. John Cannis: Madam Chair, I move to amend clause 1 by replacing lines 15 to 25 on page 1 with the following:

(b) a broadcasting undertaking within the meaning of the Broadcasting Act and

(c) a Canadian carrier within the meaning of a Telecommunications Act.

The Chair: Is there any discussion? Do you want a recorded vote on this as well?

Mr. Charlie Penson: The last motion passed was the controversial one. I would be in agreement that we don't have to have a recorded vote from here on in.

The Chair: Thank you, Mr. Penson.

Mr. Dubé, do you want this to carry on division? Are you opposed?

Mr. Antoine Dubé: Division.

(Amendment agreed to on division)

The Chair: We will move to the next amendment.

Mr. John Cannis: I move to amend clause 1(c) by replacing lines 3 to 5 on page 2 with the following:

Negative option marketing without notice and express consent

(2) An enterprise engages in renewable conduct if it charges or receives from a client any payment for the provisions or sale of a...

The Chair: Mr. Gallaway.

Mr. Roger Gallaway: Just on a point of clarification, I thought he said “renewable” but the wording is actually “reviewable.”

The Chair: I'm sorry, it was “reviewable”. I didn't hear that.

(Amendment agreed to on division) [See Minutes of Proceedings]

The Chair: On the fifth amendment, Mr. Cannis.

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Mr. John Cannis: This is a motion to amend clause 1 by replacing lines 6 to 8 on page 2 with the following:

(a) the enterprise gives the client at least once a month for the three consecutive months a notice, by any means of communication, including electronic or digital means of communication, containing

(Amendment agreed to on division)

The Chair: Sixth amendment.

Mr. John Cannis: Thank you, Madam Chair. I move to amend clause 1 by replacing lines 16 to 18 on page 2 with the following:

the new service by responding to the enterprise by the means described in the notice, which may be any means of communication, including electronic or digital means of communications, and

(Amendment agreed to on division)

The Chair: Number seven.

Mr. John Cannis: Thank you, Madam Chair. I move to amend clause 1 by replacing line 21 on page 2 with the following:

(b) the enterprise has received, by any means of communication, including electronic or digital means of

(Amendment agreed to on division)

The Chair: We will now turn to page 6, where you'll see the eighth amendment.

Mr. John Cannis: Thank you, Madam Chair. I move to amend clause 1 by replacing lines 28 to 36 on page 2 and lines 1 to 12 on page 3 with the following:

charged to the client;

(b) where the new service is not the subject of a separate and specific fee; or

(c) where the enterprise is required by law to provide or sell the new service and is authorized to charge a fee to the client for that service.

Exception.

(4) Paragraph 2(a) does not apply where the client has provided to the enterprise, by any means of communication including electronic or digital means of communication, an express consent for the purchase or reception of the new service from the enterprise.

(Amendment agreed to on division)

(Clause 1 as amended agreed to)

The Chair: We're now moving to clause 2, page 8. Mr. Cannis.

Mr. John Cannis: Thank you, Madam Chair. I move to add clause 2.1—that Bill C-276 be amended by adding after line 26 on page 3 the following:

2.1 The portion of subsection 74.1(6) of the Act before paragraph (a) is replaced by the following:

Meaning of subsequent order.

(6) For the purposes of paragraph (1)(c), and order made against a person in respect of conduct that is reviewable under paragraph 74.01(1)(a), (b), or (c), subsection 74.01(2) or (3) or section 74.02, 74.04, 74.05, 74.051 or 74.06 is a subsequent order if

(Amendment agreed to on division)

(On clause 3—Annual report)

The Chair: Page 9, Mr. Cannis.

Mr. John Cannis: Thank you, Madam Chair. I move that Bill C-393 in clause 3 be amended by replacing lines 29 to 37 on page 3 with the following:

Annual report

127.(1) The Commissioner shall report annually to the Minister on

(a) the operation of the Acts referred to in subsequent 7(1); and

(b) the number of complaints received from the public relating to reviewable conduct described in section 74.051.

Mr. Dan McTeague: Madam Chair, I believe Bill C-393 is not applicable; we are doing C-276. The motion should perhaps have read C-276.

The Chair: Yes.

(Amendment agreed to)

(Clause 3 agreed to on division)

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(On clause 4)

The Chair: There is an amendment to clause 4, Mr. Cannis, on page 10, I believe.

Mr. John Cannis: I move that Bill C-276 in clause 4 be amended by replacing line 3 on page 4 with the following:

Regulations

128.(1) Subject to subsections (1.1) and (1.2), the

(Amendment agreed to on division)

The Chair: Is there another amendment on clause 4?

Mr. John Cannis: Yes, Madam Chairman. I move to amend clause 4 by replacing line 9 on page 4 with the following:

“service” in section 74.051 any service, other than a licensed broadcasting service, that, in the

(Amendment agreed to on division)

The Chair: Is there another amendment? It is on page 11. Okay, Mr. Cannis.

Mr. John Cannis: I move to amend clause 4 by adding after line 16 on page 4 the following:

Regulations

(1.2) The Governor in Council may, by regulation, on the recommendation of the Minister of Canadian Heritage, exempt from the definition of “service” in section 74.051 any licensed broadcasting service, that, in the opinion of the Governor in Council, should be exempted in order to achieve the objectives set out in subsection 3(1) of the Broadcasting Act.

Consultation with CRTC

(1.3) The Minister of Canadian Heritage shall consult with the Canadian Radio-television and Telecommunications Commission before recommending a regulation to the Governor in Council under subsection (1.2).

(Amendment agreed to on division)

The Chair: There is another amendment on page 12.

Mr. John Cannis: I move to amend clause 4 by replacing line 19 on page 4 with the following:

poses to make under subsection (1), (1.1) or (1.2)

I also move to amend clause 4 by replacing, in the English version, lines 23 and 24 on page 4 with the following:

shall be given for interested persons to make representations with respect thereto.

(Amendment agreed to on division)

(Clause 4 agreed to on division)

The Chair: We seem to have some confusion here, and I need to have a point clarified by the officials. We need to know, if I understand this correctly, whether we still need to defeat clauses 5 to 8.

I see a nod. Does that mean I need to go back and defeat clause 2 as well?

Mr. Don Mercer: Yes.

The Chair: We have a problem here now.

Mr. Penson.

Mr. Charlie Penson: I'd just like to get from the department a thumbnail sketch of why we need to do that.

The Chair: I'll turn it over to the department.

Ms. Micheline Langlois (Senior Counsel, Competition Law Division, Department of Industry Canada): Clause 2 gave the jurisdiction to the Federal Court, and this is not needed, given the amendments to clause 1. It's consequential as per the clause 1 that changed it from the criminal track to the civil track.

The Chair: So we added a new clause 2.1 but we never defeated clause 2.

Mr. Don Mercer: That's right.

The Chair: Then we should have defeated clause 2.

Mr. McTeague.

Mr. Dan McTeague: The note here suggests that if the motion on clause 1 is passed and clause 2 is defeated, there must be a motion to that effect, as opposed to it happening automatically. Is that correct?

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The Chair: Right.

We should have defeated clause 2 before we adopted clause 2.1. So I need the unanimous consent of the committee to return to the original clause 2.

Some hon. members: Agreed.

The Chair: Is everyone in agreement on defeating the original clause 2?

(Clause 2 negatived on division)

The Chair: We're going to keep the clause 2.1 that we've now amended and adopted.

Now perhaps we could have an explanation on why we need to remove clauses 5 to 8.

Ms. Micheline Langlois: It's the same thing. It's because of the change from the criminal to the civil track, and those provisions originally dealt with the criminal track.

(Clauses 5 to 8 inclusive negatived on division)

(On clause 9—Coming into force)

The Chair: We have one more amendment, to clause 9. Mr. Cannis.

Mr. John Cannis: I move that Bill C-276 in clause 9 be amended by replacing lines 27 to 29 on page 6 with the following:

Coming into force

This Act comes into force three months after the day on which it is assented to.

(Amendment agreed to on division)

(Clause 9 as amended agreed to on division)

[Translation]

Mr. Antoine Dubé: Still on division.

[English]

The Chair: It's all on division. Don't worry, Monsieur Dubé, we have yours.

Have we missed anything?

A voice: The title.

The Chair: Now we are going to go to the title. Who's amending the title?

Mr. Cannis, it's on the very first page.

Mr. John Cannis: I move to amend the long title of Bill C-276 by replacing the first line on page 1 with the following:

An Act to amend the Competition Act.

(Amendment agreed to on division)

The Chair: Shall the title carry as amended?

Some hon. members: Agreed.

An hon. member: On division.

The Chair: Shall the bill carry as amended?

Some hon. members: Agreed.

An hon. member: On division.

The Chair: Shall I report Bill C-276 to the House as amended?

Some hon. members: Agreed.

The Chair: On division?

[Translation]

Mr. Antoine Dubé: I want my dissent to be heard by the House.

[English]

The Chair: Okay, you're in agreement with that. We can report it back to the House.

Shall the committee order a reprint of Bill C-276?

Some hon. members: Agreed.

The Chair: Is there anything else?

This has been a very interesting morning. I want to thank all the members for their cooperation and their participation this morning. I also want to thank the officials for being here.

The meeting is adjourned.