Related Document:
Backgrounder
The Honourable Jim Flaherty, Minister of Finance, today
tabled legislation to ensure Canada continues to be a world leader in
financial services.
"This legislation will help modernize our regulations,
cut red tape and advance the interests of consumers," said Minister
Flaherty.
The Government of Canada regularly reviews the statutes that
govern federally regulated financial institutions, including domestic and
foreign banks, trust companies, insurance companies and cooperative credit
associations. To give Parliament enough time to consider this legislation,
the sunset date for the financial institutions statutes was extended by six
months to April 24, 2007.
The proposed legislation is largely based on the June 14,
2006, policy paper entitled 2006 Financial Institutions Legislation
Review: Proposals for an Effective and Efficient Financial Services
Framework.
The proposed changes introduced today include:
Providing greater and more timely disclosure to consumers in areas
such as deposit-type investment products and complaint-handling
procedures.
Streamlining ministerial transaction approvals to make the process
more efficient.
Creating a framework for the introduction of electronic cheque imaging-a
new technology that would reduce the time consumers and small businesses
must wait for their cheques to clear.
Reducing the cost of mortgages for some borrowers by lowering the
mortgage down payment consumers are required to make before the law
requires the purchase of mortgage insurance.
Making it easier for credit unions to establish cooperative credit
associations as a means of expanding their business opportunities.
Additionally, as mentioned in the Government's new economic plan, Advantage
Canada: Building a Strong Economy for Canadians, the Government
proposes that Canadian financial institutions be allowed to add more
foreign experts to their boards as long as the majority of directors
remain Canadian residents.
Further information is contained in the attached
backgrounder. A copy of the June 14 policy paper can be viewed on the
Department of Finance website.
___________________________________
For further information, media may contact:
Eric Richer
Press Secretary
Office of the Minister of Finance
613-996-7861
David Gamble
Media Relations
Department of Finance
613-996-8080
If you would like to receive automatic e-mail notification of all news
releases, please visit the Department of Finance website at www.fin.gc.ca/scripts/register_e.asp
Backgrounder
Financial Institutions Legislation Review
Background
Canada's federally regulated financial institutions play a
pivotal role in the national economy and in Canadians' lives. The sector
employs about 700,000 Canadians and represents about 6 per cent of Canada's
gross domestic product.
The Government of Canada is responsible for ensuring that
the regulatory framework allows financial sector participants to operate as
efficiently and effectively as possible in serving consumers and businesses,
while maintaining the safety and soundness of the sector. The regular
five-year review of the financial sector framework is an important tool in
meeting these responsibilities.
The last legislative review was completed in 2001, when Bill
C-8 came into force. At that time, the sunset date for the financial
institutions statutes was set at October 24, 2006.
In Budget 2006, the Government extended the legislated
sunset date for the financial institutions statutes by six months, from
October 24, 2006 to April 24, 2007, to provide Parliament with sufficient
time to consider this important legislation.
Consultations
On June 14, 2006, the Government issued a policy paper
entitled 2006 Financial Institutions Legislation Review: Proposals for an
Effective and Efficient Financial Services Framework. In response, the
Government received comments from about 30 stakeholders-industry
associations, consumer groups, individual Canadians and other groups-on
the implementation of the proposed framework. The comments were generally
supportive of the proposals laid out in this white paper. The proposed bill
takes into account the submissions received.
Key Legislative Measures
The proposed legislation, which is largely based on the June
14 white paper, will enhance the interests of consumers, increase
legislative and regulatory efficiency, and adapt the framework to new
developments.
The legislation will enhance the interests of consumers by
including such measures as:
Improving the disclosure regime to ensure that consumers have the
relevant information to make the best decisions in light of the choices
available to them. For example, the legislation will include a new
disclosure regime for deposit-type investment products to ensure that
consumers receive appropriate information that is specific to the type
of products they are purchasing.
Facilitating the establishment of a limit on the time that banks can
hold a cheque.
The legislation will increase legislative and regulatory
efficiency by including such measures as:
Simplifying the foreign bank entry framework and reducing the burden,
especially for "near banks," (foreign entities that are not
regulated as banks in their home jurisdiction, but that provide
banking-type services).
Improving the regulatory approval regime to ensure that financial
institutions transactions are dealt with more expeditiously, thereby
enhancing the efficiency of the process. As such, the legislation will
clarify, simplify and streamline the approval requirements for certain
transactions.
Adding flexibility to the federal framework for the credit union
system by making it easier for credit unions to incorporate an
association, thereby allowing the system to improve its capacity to
adapt to new developments.
Reducing the cost of mortgages for some borrowers by raising to 80 per
cent the loan-to-value threshold above which mortgage insurance is
required by statute.
The legislation will adapt the framework to new developments
by including such measures as:
Providing an enabling framework for electronic cheque imaging that
will result in significant efficiency gains, saving time and resources
currently dedicated to the transport of cheques.
Improving the Bank Act special security regime by proceeding with
changes to the administration of the regime.
Adjusting the equity thresholds that determine the size of financial
institutions for the purposes of the ownership regime, to take into
account the growth of the sector since 2001. Large institutions required
to be widely held will be those over $8 billion in equity.
Medium-sized institutions generally required to float 35 per cent of
their voting shares will become those between $2 billion and $8
billion in equity.
In addition, as mentioned in the Government's economic
plan, Advantage Canada, the bill proposes changes allowing Canadian
financial institutions to add more foreign experts to their boards as long
as the majority of directors remain Canadian residents. The changes will
allow Canadian institutions to attract expertise, strengthen their networks
and enhance their capacity to pursue global business opportunities.
