Media Release

DEMOCRACY WATCH CRITICIZES LACK OF ACCESS FOR CONSUMER GROUPS TO MINISTER RESPONSIBLE FOR BANK ACT CHANGES

February 17, 1997

OTTAWA - Today, in the wake of the release of proposed changes to the Bank Act and other financial institution legislation, Democracy Watch criticized the changes and the lack of access the member of the federal Cabinet responsible for the changes, the Hon. Doug Peters, Secretary of State for International Financial Institutions, gave to consumer groups during consultations on the legislative proposals.

Between April 1995 and July 1996, according to information given to Democracy Watch by Mr. Peters office, Mr. Peters held 45 meetings, all with industry representatives, and gave nine speeches, all to industry associations. During this consultation period, Mr. Peters did not meet with any consumer groups.

The federal government's proposed changes to the Bank Act and other laws reflect the bias in Mr. Peters consultation process. Despite the fact that the government's own research has shown that voluntary self-enforcement rarely works as well as regulation for solving consumer problems, the government has not required financial institutions to do very much at all to protect consumers, as follows:

• banks will not be required to protect the privacy of consumers (the legislation only says the government may require banks to put self-enforced measures in place);
• financial institutions will only be asked, not required, to adopt a policy and self-enforced complaint-handling system for tied selling, which will be reported on by the banking industry ombudsman, Michael Lauber, who is selected, paid and directed by the banks and cannot make binding rulings on any case;
• the government has accepted the banks' proposals for a self-enforced system concerning access to basic financial services for people with low-incomes; and
• the government has accepted the banks' proposals for a self-enforced system concerning information about banking charges.

"Doug Peters purposely heard only the industry side of the story on banking issues and problems when drafting the changes to the legislation" stated Duff Conacher, Coordinator of Democracy Watch, "while ignoring the well-documented problems of over 20 million financial consumers. As a result, the government is making a huge mistake by trusting banks to solve consumer problems themselves."