&larch 20, 1997
James C. Baillie, Chairman Task Force on the Future of the CanadianFinancialServicesSector L'Esplanade Laurier,12th Floor East Tower 140 O'ConnorStreet Ottawa,Ontario KlA 0G5 Dear Mr. Baillie: It is my understanding that your task force is seekinginput on bank reform and the futureof the CanadianFinancial ServicesSector. I am writingabout my concernsvis-a-visthe banks now-andthe changesI feel are necessary. The banks have been affordedgreat protection the gove by mment in the past effectively eliminating opposition. Yes, they are Canadianand they are stable,but we have paid a price by lessening competition.The price is less and less value for servicesrenderedand higher and higherprofitsfor our banks. So what can we do?
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Basically, the cost for banks to servicecustomers are decreasing yet servicefees keep going up; costs decreaseas more and more custcmers use the technology (telephone banking,instabanks, etc.),but fees increase. Banks should eliminate the numerousservicefee packages offeredwhich only serve to "muddythe waters" (thatservicefees are or going up) and go back to the basics:one fee for all transactions so much per transaction (basedon costs). Servicefees MUST reflectactual costs to deliverthe serviceand this has not been the case over the by past few years. Point of fact, fees have increased a much larger profit for the percentage than costs. And the argumentof maximizing would not be shareholders NOT a legitimate is one - those shareholders enjoyingthe profitsif banks had not been protectedfrcnn competition in the first place. That is, taxpayers have alreadyfooted the bill by havingbanks protectedand not lettingthe market dictatewho would or would not surviveso it is inappropriate now to introduce market and free enterprise ideas (maximization profit)as the reason for fees of increasing substantially fasterthan costs.
In fact, with the huge wd unprecedented record breaking profits our banks are enjoying, employees of the bank should be afforded more The phenomenon of increasingly protection on the safety of their jobs. profitable corqmnies laying off workers in the “good times” is a new one and one which must be seriously looked at by this task force and by Ccmpanies who lay off workers when sales and government in general. profits are increasing should have to pay a larger percentage of their profits or be directly penalized/taxed by bearing the brunt of the employment insurance and retraining costs. These costs should not have to be borne by the general taxpayer! Big business, and that certainly includes the financial sector, must realize they have responsibilities They must to the c mrmnity as a whole and not just to the shareholders. start to realize that their employees are also their custcuners and the trickle down effect of these massive layoffs on the economy. They must use their social conscience as a guide in making these business decisions. . ../2
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March 20, 1997 Mr. Baillie,Chair Page 2
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Relatedto servicefees, the maximuminterestrate spread allowed/permissable creditcardsMUST be legislated. There used to on be a five point spreadbetweencreditcard rates and a bank's prime points. lendingrate. Now this spread is twelveto fifteenpercentage with credit (fraudelent use, bankruptcies, etc.) why? Costs associated have not tripledin the past few years so why has the spread almost tripled? The facts do not supportthe claimsof the banks. In the past, this used to be calledusury. Now we call it just a part of doing have the abilityto use a low-ratecard business. Banks claim customers (a 9.0% charge for outstanding balanceas opposedto 18.5%). Unfortunately, not all banks offer this card (CIBC for example)and other banks may not have advisedclientsas well as they should. I am aware that Paul Zed was concerned about this issue,but it would seem that the influential financial serviceslobbygroup have prevented and those with money need to realizethat furtheraction. Politicians people are using creditcardsmore than they ever have before and runningbalancesbecausethey have to and not becausethey have a to choice. Either the rate comes down voluntarily reflectcosts or it is legislated. We shouldallow more foreignbanks in - they would force banks to competefor our businessand this should resultin a betterprice for money (loans, mortgages,creditcard interestrates,savingsaccounts rates,etc.). We ask that people take more responsibility their retirement, for but then do not have the servicesin place to make this happen. We should encourage mutual fund companies not only open branch officeshere in to the Maritimeregionbut they shoulddo so and be able to offer full shouldbe given a levelplayingfield bankingservices. These carrpanies with the big banks. The financial sectorshouldhave to do more to identifyand introduce equityinvestors small businessownersas it is this sectorwhich is to the engineof our econcmy. Banks are more and more globallyfocusedand shouldbe requiredto take a more active role in their own backyard,the Maritim region'seconcmy.
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I thank you for the opportunity providemy input and look forwardto to cxrrnlendations by your task force. The made receiving the ret reccsrmendations/report shouldbe forwarded the addressnoted below. to
joann E. Lloyd 30 Carrington Lane Fredericton, NB E3A 5R5