|Flaherty calls for reforms in
Canadian financial services sector
Monday, April 28, 2008
TORONTO - Finance Minister Jim Flaherty on Monday called for a series of
reforms to close gaps in Canada's financial services regulations that
were exposed by the non-bank asset-backed commercial paper crisis.
Speaking to reporters after a meeting with the country's top bankers in
Toronto, Flaherty said he wants a common securities regulator, better
financial disclosure by the banks and greater clarity for investors
about financial products.
"I want to make sure we regulate in the best interests of Canadians and
Canadian investors," Flaherty said. "There will be none of the gaps in
our regulations that leave us vulnerable to being sold products without
being informed what the product is. Regrettably there was some of that
The minister's regular meeting with bank chief executives had taken on
special significance because of the ongoing global financial crisis - "a
continuing struggle," according to Flaherty - as well as the specific
non-bank ABCP issue in Canada.
Flaherty said the Canadian banks are well capitalized and he also noted
that the Canadian financial services system has avoided the worst
pitfalls that have beset banks elsewhere especially in the U.S.
He said Canada's economic fundamentals remain strong but warned that the
country "cannot take these advantages for granted."
In particular, he has received a commitment from the Canadian banks to
implement new disclsosure rules within 100 days, and he has asked a
financial review panel to draft legislation toward a common securities
regulator for Canada.
His calls for some moderate reform appeared to have the backing of the
"We're working together," said Bank of Nova Scotia chief executive Rick
Waugh as he hurried out of the meeting. "That's what makes the strength
of the Canadian system."
The biggest challenge to the federal finance minister's proposed reforms
is likely to come from the provincial securities regulators. But
Flaherty, who has long been a proponent of a common securities
regulator, appears to be pursuing his agenda with extra vigour in light
of the global financial issues.
"At the end of the day, when Canadian investors are concerned about
securities, they come to Ottawa," he said. During the $32-billion ABCP
crisis, which appears to be headed for a protracted private sector
solution, investors were seeking advice from the finance ministry and
the federal bank regulator. But under the current system, the primary
responsibility for dealing with their concerns actually lay with the
provincial securities regulator, he said.
© Canwest News Service 2008
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