2007 Legislative Session: Third Session, 38th Parliament

HANSARD

The following electronic version is for informational purposes

only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, OCTOBER 16, 2007

Morning Sitting

Volume 22, Number 6

CONTENTS

Routine Proceedings

Page

Second Reading of Bills

Adult Guardianship and Planning

Statutes Amendment Act, 2007 (Bill 29)

Hon. W. Oppal

L. Krog

Business Practices and Consumer

Protection (Payday Loans) Amendment Act, 2007 (Bill 27)

Hon. J. Les

Adult Guardianship and Planning

Statutes Amendment Act, 2007 (Bill 29) (continued)

Hon. W. Oppal

Business Practices and Consumer

Protection (Payday Loans) Amendment Act, 2007 (Bill 27) (continued)

R. Fleming

S. Simpson

L. Krog

M. Farnworth

Hon. J. Les

Securities Amendment Act, 2007 (Bill

28)

Hon. W. Oppal

L. Krog

B. Ralston

Hon. W. Oppal

[ Page 8525 ]

TUESDAY, OCTOBER 16, 2007

The House met at 10:03 a.m.

[Mr. Speaker in the chair.]

Prayers.

Orders of the Day

Second Reading of Bills

ADULT GUARDIANSHIP AND PLANNING

STATUTES AMENDMENT ACT, 2007

Hon. W. Oppal: I move that Bill 29 now be read a second

time.

Hon. Speaker, the Adult Guardianship and Planning Statutes

Amendment Act, 2007, will provide British Columbians who wish to plan for future

incapacity with the appropriate tools to do so. This bill will ensure that our

guardianship laws, with respect to individual autonomy and independence, protect

adults who become incapable of managing their own affairs and who wish to plan

for some future incapacity.

Bill 29 is a critical step to ensure an effective safety net as

the population ages and a protection for vulnerable adults becomes increasingly

important.

Part 1 of the bill will replace the unproclaimed

part 2 of the Adult

Guardianship Act. This will enable the repeal of the Patients Property Act, an

bill will bring adult guardianship law into the 21st century.

[1005]

The fundamental principles of modern adult guardianship — which

are autonomy, dignity and the least restrictive, least intrusive intervention —

are already enshrined in

section 2 of the Adult Guardianship Act. Bill 29 will

ensure that these principles apply in court-ordered and statutory guardianships.

First, the amendments will strengthen procedural fairness. Bill 29

will enable periodic reviews of court-ordered guardianship. It also enables

reassessments and reviews of incapability assessments in the case of statutory

guardianship. These fundamental rights will make it easier to terminate

guardianship when it is no longer needed.

As well, the bill provides for time-limited, power-limited and

temporary guardianship and for the transfer of public guardianship to a family

member or friend of the adult as needed. These provisions will provide for more

flexibility — guardianship which will be tailored to an individual adult's

circumstances.

Finally, the duties of guardians will be clearly established. It

will be set out to foster the adult's independence and to encourage the

involvement of the adult in decision-making.

Part 2 of the bill strengthens the three instruments for planning

incapacity, enduring power of attorney, representation agreements and advance

care directives. These amendments are intended to provide adults with simple,

cost-effective planning options that have effective safeguards against abuse.

Where feasible, the amendments provide consistency among

instruments, including similar execution requirements. Capable adults will have

the ability to provide their representative or attorneys with plenary

decision-making power or with specific authority to do so.

Bill 29 makes changes relating to each planning instrument and

establishes how they work together. First, amendments to the Health Care

(Consent) and Care Facility (Admission) Act will establish advance directives as

written instructions that direct the health care provider when an adult is

incapable of making health care decisions. The amendments create a framework of

advance directives, giving them greater legal certainty and providing safeguards

around their execution and their use.

As well, Bill 29 will amend the Representation Agreement Act to

make representation agreements more accessible. They will continue to be the

only instrument in British Columbia under which adults can appoint someone else

— that is, a representative — to make health care and personal care decisions on

their own behalf.

Representation agreements will be easier and less costly to make.

Unnecessary execution agreements, such as the need to consult with a lawyer,

will be eliminated. Bill 29 will make it possible for a capable adult who

chooses to do so to have both a representation agreement and an advance care

directive.

In addition, Bill 29 will make the enduring power of attorney the

primary instrument for incapacity planning in respect to financial matters. To

this end, the amendments will remove financial matters other than routine

management of an adult's financial affairs from the scope of these

representation agreements. Amendments to the Power of Attorney Act will clarify

the law respecting enduring powers of attorney.

Bill 29 will also provide safeguards to prevent financial abuse, a

growing concern amongst an aging population. The safeguards will include

specifying eligibility and execution requirements and specifying, in particular,

the powers and duties that an attorney will have during the enduring power of

attorney. These amendments act on recommendations made by Prof. A.J. McClean in

his review of representation agreements and enduring powers of attorney.

[1010]

Finally, the bill makes various amendments to strengthen the

scheme of adult protection found in

part 3 of the Adult Guardianship Act and the

Public Guardian and Trustee Act, including changes to confirm the identity of a

person who reports an allegation of adult abuse.

As well, the bill will place British Columbia at the forefront of

adult guardianship and incapacity law by strengthening the safety net of adult

guardianship and incapacity planning. Bill 29 serves vulnerable adults who are

unable to make decisions on their own behalf,

[ Page 8526 ]

those who must make decisions on their behalf, and all British Columbians.

L. Krog: The Attorney General might be somewhat surprised

that I rise to speak in support of this bill. I'm sure it will provide

assistance to small-town practitioners in the area of law.

I was very concerned, and I think many groups in the province

were, when this legislation was introduced initially in 2006 and then

reintroduced in 2007. There was a great deal of concern raised by the B.C.

Coalition of People with Disabilities and the B.C. Association for Community

Living.

I have had an opportunity to meet with those folks and their

representatives, and they are satisfied that although this is maybe not

everything they wished, this nevertheless represents a step forward in

protecting vulnerable adults in British Columbia.

I might say with some sense of sadness, though, that when the

changes are actually passed, and presumably they will be, I'll no longer have to

explain to people that committee is spelled committee but pronounced committay —

reviewing the Patients Property Act with them. It will eliminate another

significant piece of B.C. legal history.

Notwithstanding the humorous side of this, this is important

legislation. The fact is that we, as the Attorney General pointed out this

morning, have an aging population. The parents, I would suggest, of the average

age of the members of this House are the wealthiest that have ever lived. They

are becoming increasingly subject to abuse around financial matters.

Without doubt, the statute needed updating. The significant

increase in the proportion of the population who are seniors with all sorts of

health issues and mental health issues, the increase in Alzheimer's and

dementia, means that it is incumbent upon the law, if you will, to keep up with

the changing demographics of British Columbia society.

There was also great concern, and quite legitimately so, that

health authorities in the province were, in fact, getting people to sign

advanced care directives when there was no real statutory authority for them to

do so.

I have seen those documents, and bringing to the execution of a

document like that the benefit of my experience in the practice of law is one

thing. But when you are confronting a senior citizen fully reliant on others for

their care, I don't think that an advanced health care directive signed in the

presence of a hospital official, if you will, or a long-term care facility

administrator, was exactly the most appropriate process by which a senior would

determine what would be their care at the end of life. This represents a step

forward.

It is important to remember that none of us get to choose,

arguably, how long we're going to live or what state we will be in at the end of

our days. Many citizens have spoken to me on both a professional and a personal

level about their concerns about what happens to them when they're living to

advanced ages — how their affairs are going to be managed.

Most of them have expressed very clearly to me that they want no

extraordinary measures to prolong their lives. Notwithstanding the advances in

medical science, there is no question that many people now face some very

difficult deaths. The incidence of cancer has increased dramatically — all of

that reflecting again the changing demographic of our population.

[1015]

It will, therefore, give them some comfort to know that advanced

health care directives will have some legal force and protection. There is no

question that those who work in the health care field have expressed great

concern as to their statutory authority or ability to avoid legal repercussions

in making decisions about what happens to seniors in the end of their days.

One thing that became apparent, notwithstanding the good

intentions of the representation agreement, was that in the real world, most

people simply shied away from the complexity of that document and the attendant

expense related to it. The fact is that the average person simply preferred to

give directions to their family members, sign a power of attorney and get on

with it. They were not prepared to engage in the significant legal expense and

the process involved in the execution of a representation agreement.

The fact is that it is one of those situations where the road to

hell was paved with good intentions — that what was passed with the best of

intentions by this Legislature and supported by various community groups was, in

fact, not used in practice. It was arguably a Cadillac when a Chevy would have

sufficed, and most people preferred the Chevy over the Cadillac — or certainly

preferred to pay for a Chevy as opposed to paying for a Cadillac.

What those who are listening today need to understand is that an

advanced health care directive is simply the ability of an adult to express to

people what level and type of medical treatment they want if they are injured or

ill or unable to express their wishes. That's a positive thing.

Certainly, as I said earlier, concern about how you come to sign

those and under what circumstances has always been an issue. But the fact that

that document will now be available must be seen as a progressive step and as an

acknowledgment of the realities of aging.

The power of attorney — which, the Attorney General pointed out,

is still the most commonly used instrument by British Columbians with respect to

management of financial affairs — is certainly an important document. It will

continue to be so.

But this statute, as the Attorney General explained, does in a

sense bring together the aspects of both health and financial management that

are necessary for British Columbians to make sensible decisions about the

management of their affairs and the management of their health care in difficult

circumstances.

One criticism, however, is that the statute itself doesn't appear

to introduce a standardized form for advanced care directives. It would seem

appropriate, as the Legislature does with other bills, whether it's the old

Short Form of Leases Act, the Power of Attorney

[ Page 8527 ]

Act…. All of those statutes have provided, in essence, a legitimately

recognized standard form document that the public can rely on.

I would suggest that that is a failing of the bill. I give advance

notice to the Attorney General here in this House that if the government wished

to introduce a quick amendment that would allow for a standardized form that

would meet the needs of the public, it would not meet with opposition from the

opposition, so to speak, as long as the document, in fact, made sense.

I acknowledge the support of the notaries of B.C., the B.C.

Hospice Palliative Care Association and the Catholic Health Association for this

legislation. All of those groups have to deal with the public in a regular way.

Certainly, my local hospice association spent some time with me discussing the

importance of this legislation and how they regarded it as very important that

the government receives support on these changes.

The replacement of the Patients Property Act is long overdue. I

think everyone has known that. This is arguably one of those pieces of

housekeeping legislation that government needs to get on with from time to time.

The public, I would suggest, was way ahead of the government and the Legislature

on this particular issue.

There is no question that even within families in British

Columbia, the recognition that your parents or your grandparents are slipping

into some form of dementia and are becoming incapable of managing their affairs,

is a difficult thing for most people.

[1020]

There is no question that particularly those seniors who don't

have family members who care for them, who are there to make those kinds of

observations, are probably the most obvious victims of unscrupulous persons who

would take advantage of that.

Certainly, in my own experience, I have come across numerous cases

where it would have been quite appropriate, if one had known earlier, to have

had the public guardian and trustee be able to step in and deal with a situation

before literal theft occurred or the kinds of situations arose where seniors

have been quite simply ripped off by unscrupulous individuals, whether it's

someone selling them something completely inappropriate to their needs, their

lifestyle and their income, or literally taking moneys from them on the claim of

being loans or something like that or some kind of gift.

The Attorney talked about Professor McClean. I think it's

important that the Legislature recognize today the contribution of Professor

McClean to legal scholarship in this province and, indeed, recognize his

international stature.

He was at law school when I was there many years ago. I don't know

if his time extends back to the Attorney General, but certainly he seemed to

have been there forever. Age has not withered him, much like the

Conflict-of-Interest Commissioner. Indeed, like fine wine, they've only grown

better with the passage of time. I think his contribution to this debate and to

this Legislature should be recognized here today.

Certainly, the opposition will spend some time in review and

committee stage of this bill around particular sections. I encourage the

Attorney General to consider the fact that there is no standardized form for

advanced care directives. We recognize standardized forms in other pieces of

legislation. I think it's an appropriate thing for the Legislature to consider

in these circumstances, and I look forward to committee stage of this debate.

Mr. Speaker: Seeing no further speakers, the Attorney

General closes debate.

Hon. W. Oppal: I move that the bill be referred to the

Committee of the Whole House to be considered at the next sitting of the House

after today.

Motion approved.

Hon. B. Penner: I call second reading of Bill 27, Business

Practices and Consumer Protection (Payday Loans) Amendment Act, 2007.

BUSINESS PRACTICES AND CONSUMER

PROTECTION (PAYDAY LOANS)

AMENDMENT ACT, 2007

Hon. J. Les: I move that Bill 27 be now read a second time.

I'm very pleased to be standing here today in this Legislature to

move Bill 27 a step closer to enactment. This bill creates new parts in the

Business Practices and Consumer Protection Act. The new parts introduce measures

to regulate the payday loan industry in the province of British Columbia and

also include measures to limit the fees that can be charged for cashing

government cheques.

British Columbia has seen the payday loan industry grow

significantly in the last number of years. With this growth, the province has

become increasingly concerned about the operation of this industry within our

province.

While we as government wanted to introduce effective protections

earlier than this, we discovered that the province could not do so alone. The

federal government needed to do its part to amend the Criminal Code to allow

provinces to properly regulate in this area. We also realized that we needed a

closer examination of this marketplace to learn more about how the payday loan

industry operates.

Payday loans are typically very small loans, on average about

$300. They are issued for a short term, usually 14 days or less. They are

negotiated one at a time, and they are usually repaid in full on the next

payday. In order to recover the costs of the transaction given these factors,

the fees charged by the payday loan industry exceed the limits set by the

federal Criminal Code.

The province is not only concerned about the initial cost of

borrowing, however. Too often lenders have used abusive practices that result in

a net debt to the consumer that far exceeds the original amount of money

advanced to the borrower. Payday lenders issue

[ Page 8528 ]

loans without doing credit reference checks, and if the borrower cannot repay

on the due date, the debt often spirals out of control through rollovers that

include excessive NSF charges, penalties and additional administrative fees.

[1025]

Most payday loans are paid off all at once on the borrower's next

payday, usually by means of a postdated cheque. The amount repaid, including the

principle and the total cost of borrowing, in many cases represents a

significant portion of the borrower's paycheque, leaving the borrower short for

the subsequent pay period.

Despite these concerns, early research and consultation told us

that we should not shut this industry down. Groups representing consumer

interests have said that consumers need to have access to legitimate lenders of

last resort but that these lenders should, in fact, be regulated.

Consequently, our major focus in regulating this industry is to

allow the industry to recover its upfront transaction costs while, at the same

time, establishing rules that would prevent lenders from engaging in practices

that cause significant harm, in particular to those consumers who are most

vulnerable.

This legislation creates a new part within the Business Practices

and Consumer Protection Act. The new measures establishing requirements or

limitations that speak to specific payday lending practices work together with

important, relevant provisions already contained in the act. This bill contains

provisions required by the federal amendment to the Criminal Code as contained

in Bill C-26 so that British Columbia will be able to opt into the regulatory

scheme for payday loans.

In order to get to this stage, ministries responsible for consumer

protection from across the country undertook research, consultation and analysis

to develop a cooperative federal-provincial-territorial legislative framework.

The first part of this framework is the federal amendment to the Criminal Code

that was recently passed by the federal parliament.

The federal bill establishes the key requirements that provinces

which choose to adopt the new mechanism created by the amendment must set for

payday lenders. Lenders must have a provincial licence in order to provide

payday loans and must not exceed the maximum cost of borrowing set by the

province.

Bill C-26 was passed by parliament earlier this spring. Prior to

passing, the Senate conducted public hearings during its committee stage debate.

In its follow-up committee report, the Senate urged provinces to adopt consumer

measures in their legislation to include minimum requirements.

The report identified several measures for which our bill has the

regulation-making power to address or which already form part of our consumer

protection services. Other measures identified by the Senate, such as limiting

rollovers, full disclosure of contract terms and a cancellation period, are

included in the bill before this Legislature.

Our Bill 27 goes on to make it abundantly clear that lenders may

not charge any fee, penalty or interest that is not expressly permitted or that

exceeds the limits to be set in the regulation. Any lender who requires,

requests, or accepts any amount in excess of the permitted charges will not be

entitled to collect any of the cost of the credit extended. In other words, the

borrower will be liable for repaying only the principal of the loan advanced.

Bill 27 also establishes a right of cancellation with no penalty

for consumers. It allows for immediate cancellation by close of business the

next day and an extended cancellation period if the lender fails to disclose

specific information, including the right of cancellation.

The disclosure requirements in this legislation comprise a

critical element of the proposed new law. The borrower's obligation in the form

of the principal amount owing and the actual cost of credit are to be clearly

set out in the loan document itself. The document must also contain a statement

that the payday loan is in fact a high-cost loan. Research shows that some

consumers do not always realize how the cost of a payday loan compares to the

cost of other forms of credit.

In this new

part lenders will be required to combine the interest

and transaction fees into an annual percentage rate. This rate will allow

consumers to compare the cost of a payday loan more easily to the cost of other

forms of credit.

The new payday loan also sets out a list of prohibited practices.

As I mentioned at the outset, one of the key problems with payday loans is that

they can sometimes be the start of a particularly vicious cycle of debt.

[1030]

Bill 27 prohibits rollovers and concurrent loans. It will enable

the province to limit the amounts that can be provided as loans or required as

payments at any one period of time. It also prohibits the use of transfer of

ownership documents as security for a payday loan — for example, the signing

over of the ownership of a vehicle.

These are the new measures being introduced to regulate payday

lenders in British Columbia. They are in addition to measures that already form

part of the Business Practices and Consumer Protection Act, such as the

licensing process and compliance enforcement tools.

Turning our minds to cheque cashing, Bill 27 will also allow the

province to set maximum charges for businesses cashing third-party cheques

government body. Government-issued cheques do not carry the same financial risk

to the casher as cheques issued by private businesses and individuals.

Consequently, fees do not have to cover that type of risk.

Prior to bringing these provisions on payday loans and

cheque-cashing fees into force, the province will be consulting with consumer

representatives and businesses to determine maximum charges that are reasonable

for consumers and sufficient to cover industry's costs of providing

cheque-cashing and payday loan services.

In conclusion, with these two main changes — regulating payday

lenders and limiting fees for cashing

[ Page 8529 ]

government cheques — government will promote fairness in the marketplace and

prevent excessive charges to consumers, often those with urgent financial needs

and limited resources.

Hon. B. Penner: Mr. Speaker, before proceeding with

additional debate on Bill 27, I would ask the House for leave to revisit second

reading of Bill 29. I believe there was a procedural step that was overlooked.

ADULT GUARDIANSHIP AND PLANNING

STATUTES AMENDMENT ACT, 2007

(continued)

Hon. W. Oppal: I understand there wasn't a vote taken.

Mr. Speaker: Hon. Members, the vote is second reading on

Bill 29.

Motion approved.

Hon. W. Oppal: This time maybe I'll get it right, hon.

Speaker.

I move that the bill be referred to a Committee of the Whole House

to be considered at the next sitting of the House after today.

Bill 29, Adult Guardianship and Planning Statutes Amendment Act,

2007, read a second time and referred to a Committee of the Whole House for

consideration at the next sitting of the House after today.

BUSINESS PRACTICES AND CONSUMER

PROTECTION (PAYDAY LOANS)

AMENDMENT ACT, 2007

(continued)

R. Fleming: It is a pleasure to be debating this particular

piece of legislation this morning. I thank the Solicitor General for honouring

previous commitments to bring forward such legislation, which were made at least

a year ago.

[H. Bloy in the chair.]

I know that when the NDP first proposed legislation to regulate

the payday lending industry and make British Columbia join the majority of

provinces that already have this legislation, we were called out or criticized

by the government for acting prematurely.

We disputed that. We didn't feel we needed to wait for the federal

government to protect consumers, to protect vulnerable British Columbians from

some of the excesses and some of the bad operators in this industry. There were

indeed many protections available that could have been in force at least 18

months ago in the province, had legislation that was previously proposed in this

House received the support of both parties.

I say with all sincerity to the Solicitor General that that's

water under the bridge. I think for the opposition, in reviewing this bill, most

of the key tests for us in terms of the standards we want to see in place that

will protect British Columbians from all kinds of practices that we've seen in

the payday lending industry…. Practices that have frankly ripped off a number of

British Columbians and have been the subject of litigation, of Supreme Court

rulings now and of reviews by the city of Vancouver, other municipalities and

police departments in British Columbia….

Most of those concerns that have been echoed and voiced for

several years now, which did fall on deaf ears with this government for those

years, are being addressed substantially in this legislation today. That is why

I am very pleased to be standing here and supporting this bill.

[1035]

I think the Solicitor General may appreciate a couple of

suggestions we might have when we get into the clause-by-clause debate on this

bill to improve it. But when it comes to addressing the state of affairs in the

province, which has been completely unsatisfactory and completely unfair to

those British Columbians who simply happen to have bad credit bureaus, this

legislation will end that situation.

It will also allow British Columbia and Canada to sort out and

rectify the situation where there were laws, things like

section 347 of the

Criminal Code of Canada, being violated on a daily basis as part of the standard

business practice. So that situation is going to be addressed as well.

There are five provinces that already have this legislation. For

the benefit of members of this House, they can be assured that in those

provinces that have already adopted legislation like this, the situation

actually is working very well. It has sorted out things for the province to play

a meaningful role in regulating the industry, and it has sorted out

responsibilities between all the different levels of government to make sure

that the industry is treating people in a fair manner.

I think that going forward, there is enough experience in other

jurisdictions in this country that for anyone who may have questions about how

this legislation would in fact work or for anyone on that side of the House who

still believes that regulation of any kind is a bad thing — that it is all about

red tape and anti-business — they can be assured that in the majority of

provinces in Canada that have this legislation already, it has been appreciated

not just by consumers and those that are vulnerable to this industry and have

had bad experiences with it. It is appreciated by the industry itself.

In terms of government following where the public was at, I think

it is important to actually say that some years ago the payday lending industry

itself came together — or at least that responsible

section of the industry came

together — formed its own voluntary association and urged legislation like this

today.

In fact, in British Columbia the industry itself was quite far

ahead of government in that regard. In terms of the external support out there

in the community and across this province, it's a nice situation when you have

both those advocacy organizations that work

[ Page 8530 ]

with low-income people and advocate for people who are experiencing credit

problems and the industry itself supporting basically the same course of

regulation. That's a very good situation when it comes down to the legislation

becoming law, enforcing compliance and having a situation that works very well.

[S. Hawkins in the chair.]

The industry should be praised for seeing the problems with

self-regulation and voluntary associations. First of all, they could never get

everyone to agree in the industry. One-third of it remained outside of the

Canadian Payday Loan Association.

Even within the association, when the voluntary code of conduct

that most members subscribed to around supportable collection practices or good

standards of customer service, prohibitions in their voluntary code around

excessive fees or improper access to the customer's bank account….

The industry itself recognized that in a self-regulating model,

there really wasn't much they could do in the way of compliance. All they could

do was deprive that particular lender of membership in their voluntary

association, and that really didn't send out much of a message to change

practices.

Under this legislation and legislation like it in other provinces,

there are penalties. There are provisions to take action against payday lenders,

and it's important that we have this.

In the past, government, police departments and consumers knew

that laws were in fact being broken, that their rights were being violated. They

suggested that the situation was so chaotic, because it lacked a provincial role

directly to regulate and give oversight to this industry, that nothing could

really be done.

[1040]

It was a very unsatisfactory state of affairs that left

individuals to pursue court actions themselves. Frankly, if you're using a

payday lender, you're probably not able to afford the legal solutions in the

courts that were available. Many judgments actually accrued in the courts that

were in favour of plaintiffs, which still did not lead to government taking

action. But that has occurred under this legislation.

I think, though, we have to be careful in our support of this bill

in one regard, because the proof of the legislation's worth is going to be in

the quality of the regulations that are enacted. Everything that is outlined in

this legislation — which this side of the House has been asking for, which

consumer groups and the industry have been interested in — is going to be

directly dealt with in regulation, not in the bill itself. Maybe we will change

that here and there when we get through the debate.

It's important to recognize that the limits we wish to establish

on service charges, the limits that should be placed on interest rates or the

maximum amounts borrowed by borrowers…. In essence, everything related to the

actual loan itself, the total cost of credit, is not going to be contained in

the legislation itself. That will be dealt with by the Solicitor General through

regulations at a later time.

You know, that's kind of critical public policy. I wish, in a

sense, that we were having that debate here in the Legislature around where we

might land on an amount. I suppose there are discussions and studies — actuarial

and otherwise — that need to be done to arrive at an amount, although much of

that work has been done over the previous years by other provincial

jurisdictions.

I think it's important that the Solicitor General try and involve

the industry, the interested parties, the consumers and the opposition in

establishing that once this legislation is adopted. It's important that that be

done in a transparent manner as this legislation is enacted.

There are some important things. I mentioned some of the tests for

the opposition that had to be met in order for us to support this bill. I'm very

pleased that the Solicitor General has supported prohibiting the practice of

granting rollover loans.

When one looks at some of the more tragic situations that

individuals have gotten themselves into in B.C. with huge debts that they're

simply unable to pay, it is the rollover loans that have put that person into a

debt spiral or a debt trap that they're unable to control.

This legislation would sort of cut off that person from taking on

more credit than they can reasonably and responsibly be expected to manage in

their own lives, and I think that is critical. The intent of the bill is, I

believe, very responsible in another way. It is seeking to bring balance and

fairness to an industry that is in demand.

Let's face it. There is a need out there for a short-term credit

product like a payday loan that is a two-week-or-less loan for people living in

between paycheques or who may not have sources for other…. They may not have an

overdraft, for example, on their bank account.

That demand is not going to go away. We want it to be legal, we

want it to be open, and we want it to operate fairly. But we don't want it to

continue to do what it has done to far too many people, which is put them into a

cycle of debt and to unfortunately lose control of a major portion of their

lives which they then have to rebuild very painstakingly over a course of many

years.

One of the things I would also offer to the Solicitor General that

I'm very pleased with is that included in this legislation, he did take the

opportunity to limit fees on cashing of government cheques. He's quite right to

make the remarks he just did about the security of that product and how

inappropriate it has been upon his review and things brought to his attention

about the exorbitant amount of fees, relative to the size of cheques that the

government issues to individuals who are entitled to them, being charged at some

of these outlets.

[1045]

It's not just payday lending that is under scrutiny here and up

for discussion about how we might fix it.

[ Page 8531 ]

It is those other aspects of business that are hurting British Columbians. I

think the fee cashing business, quite frankly, has also been just as guilty of

taking advantage of people, just because of their vulnerable economic situation,

as some of the payday lenders have in B.C.

There will be some questions we have in committee stage around how

the Business Practices and Consumer Protection Act and the other sections there

will apply to payday lenders in terms of a licensing regime and some of the, I

guess, power that that would give government to get compliance where there is

proof of the operator not living up to this legislation. I think enforcement is

critical. We see that in other areas around consumer protection. Where there

isn't adequate enforcement, there really isn't adequate compliance with the law

itself.

Those are questions that we have for the Solicitor General. We're

seeking assurances there from the government that, in fact, the legislation will

act as it's intended to because it does have an adequate enforcement regime

behind it.

Also included in the legislation are penalties. I think the

interest around penalties is in relation to contraventions. The main suggestion

in this legislation is that where it has been proven that a lender has

contravened the rights of the borrower, the award given under this legislation

is that the borrower is only liable for the principal amount of the loan itself.

All the other fees tacked on that were in contravention of the law are waived,

and the person is simply responsible for that principal amount.

I think that's fine, but let's be clear. It's not a perfect world.

There will be many people who are unaware of their rights. Even with the

sections of this bill that oblige the payday lender to advise the borrower of

their rights — both on the documented agreement itself and, I think, in the

location of business — in plain language, the fact is that for many people that

will still not be adequate for their purposes.

I think the danger is that we will see payday lenders that will

take the risk — in other words, of only being able to recoup the principal

amount — by violating the rights of the borrower. So if those that wish to carry

on in a sort of business-as-usual fashion, that are currently breaking the laws

and will be breaking the new legislation here…. If these penalties aren't enough

to deter them, I would want to see, where it becomes proven that it's

systematic, that there is an escalation of penalties that become much more

severe so that we can deal with some of those elements in the industry.

But let me just recap again and say to this House that I am very

pleased that this bill is coming forward this morning. It has been a long time

coming. It has been urged by all sectors of British Columbia society that have

an interest in this legislation and those who are just interested more generally

in fairness in the dealings between government and who wanted to see a situation

where vulnerable British Columbians were finally protected and laws work. So it

is a very important step this morning for consumer protection and the interests

of consumers in B.C.

We will have some suggestions that I hope the Solicitor General

will find useful in the committee stage of the debate. I just wish to say for

this side of the House that we're pleased to be working in a manner…. Our system

doesn't always encourage, like other systems of government, bipartisan

sponsorship of bills, but were it to have done so, I think it's fair to say in

this case that both parties…. I would have been very pleased to work at a

different stage with the Solicitor General in jointly sponsoring a bill like

this. That's not the Westminster system that we have, but it's as close as we

can come to imitating the system we see in the south.

[1050]

I can assure him that we are, in a sense, thankful — even though

it has been a long time coming, and unnecessarily so — that today we are going

to arrive at a place where British Columbians aren't, just because they may be

economically vulnerable, not given the same protections and guarantees that

other British Columbians have.

S. Simpson: I'm pleased to have the opportunity to stand

and make a few comments in regard to this bill. I'm pleased that the Solicitor

General has brought this forward, and as my colleague has said, we're happy to

have the opportunity to support this legislation now that it is on the floor.

I want to acknowledge that we're always particularly happy when

the government takes some of the initiatives from this side of the House and

evolves those into legislation. That's clearly, I think, what's happened here.

I want to acknowledge my colleague, the member for

Victoria-Hillside, who in an earlier session brought forward a private member's

bill around this matter, which I'm sure provided some of the motivation for the

Solicitor General's action. I'm really pleased that the government has come

forward with this, especially since the government's come with a pretty

substantive bill. It is a bill that is certainly worthy of our support.

One of the reasons that I rise to speak on this particular piece

of legislation is that in my constituency, in Vancouver-Hastings, I know we have

a number of people who have economic vulnerabilities, people who do face tough

economic times. I know there was a point back a year or so ago when it seemed

like just about every other business that was opening up on East Hastings in my

neighbourhood was some kind of payday loan operation.

I know it caused concerns for people in my community that that was

the case, and I certainly know from people that I spoke to that it caused

concerns for people who were obliged to take advantage of those services and who

in some cases were dealt with in manners that were somewhat unscrupulous.

Of course, what we know is that, as with any other business, there

certainly are operators in this business who, while I think their interest rates

are steep, operate

[ Page 8532 ]

in a reasonable fashion. There are other operators who are much less

responsible, and they need to be dealt with. There needs to be a way to protect

the interests of people who are going through their doors, and I do think that

this piece of legislation takes us a long way in doing that.

As I think my colleague has said, there is a role for the payday

lending businesses. There is a role for that short-term lending where people

don't have other options to be able to get a hold of cash when they need that

cash. Somebody has to fill that gap. Clearly, the payday lenders have some

capacity and ability to do that.

That's important, and it's an important function that they play.

But as has been pointed out, we need to be very conscious and careful that the

oversight is being done and that the regulations and the rules are in place to

ensure that those businesses are in fact operating with a code of conduct that's

acceptable and that ensures fairness for people who are coming through their

doors.

I think that this bill, as I said before, goes a ways to putting

some limits there. I'm glad, and I'm looking forward to the discussion in

committee on the thinking around how we go about accomplishing limits on

interest rates and service charges. As the member for Victoria-Hillside said

previously, that will be a matter of regulation. I think we're going to want to

have some discussion about how those limits will be deemed and about what the

thinking of the minister is in terms of how he's going to arrive at some

limitations.

We also know here that in the legislation it talks about people

being able to exit from those loans within a 24-hour period. It is a good thing

that there's some grace provided there for people to get out if they have the

opportunity, and we're pleased to see that.

[1055]

We also know that the bill does prevent a range of practices that

put an individual, potentially, in a more desperate situation than they may

already have been in when they had to come through the door of a payday lender

looking for some short-term cash to bridge the gap between paycheques.

Usually when a person gets into that situation, for the vast

majority of people, the situation often is a little bit desperate for them. They

need to have protections in the inclination to take the money that's offered,

even though there may be conditions or strings attached to that money that, in

fact, are not fair. People need the money, they take the money, and they deal

with the consequences later.

I'm pleased that this legislation will deal with a number of those

measures like the rollover aspects and other aspects that I think do put people

who are in a difficult situation to start with potentially into an even more

difficult situation. I'm sure nobody in this House wants that to occur, and I

think this legislation does go a ways to being able to deal with and plug some

of those gaps and those holes. That's a good thing.

I am pleased also that some of the penalties and the protections

that are there when we do run into cases of unscrupulous lenders provide for the

borrower just to have to pay back principal, and not interest or other charges.

I think that that's a good place to start.

But I do think the case is well made that if you look at a lender

or an operator who has some chronic examples — or there's evidence of some

chronic examples — of acting in a less-than-responsible manner or taking

advantage of people, those penalties have to be able to escalate over a period

of time as they demonstrate that maybe this isn't, in fact, going far enough —

simply removing their interest and their service fees. If they continue to act

in a way that isn't responsible, there certainly needs to be a way to elevate

those penalties so that the consequences become greater if people continue to

act in a way that we would deem inappropriate in this place.

Now, while the legislation certainly is positive, I think that

there are questions that get raised by it. There is an issue about whether this

is going to encourage other forms of unlicensed lending — loansharking, whatever

you call it. I don't know whether that's the case, but I'll be interested to

know whether the government has thought about whether it will encourage that by

putting limits in place, and if it does do that, how we might best get at that

through policing or other matters to remove those people who are the most

unscrupulous, the people who aren't licensed at all, who are in the loansharking

business — wanting to make sure that they're not in the game at all.

One of the other things that this doesn't do at this point, and I

think that there needs to be some consideration of it, is that — and I know it

differs from loan to loan — if I borrow some money, and I have a loan, and I pay

that loan back early, I pay the interest for the period of time that I borrowed

money. I don't necessarily have to pay interest for the full term if I can

negotiate that.

In the instances here where people, particularly these people, are

challenged, they're going to pay a premium interest rate to start with. If they

pay that money back in a shorter period of time than the term of the loan, I

think there may be a case to be made here that they should only pay interest for

the period of time that they actually have the money on loan.

If it's a six-week period that they have, and they can pay it back

in three weeks, then maybe they shouldn't be paying that last three weeks of

interest on something where they've been able to pay the loan back early. I'll

be interested to know what the thinking of the minister is about putting those

kinds of limits in place, to have people pay for the time they actually have a

loan outstanding.

I think also where the regulation is and where the oversight and

the authority for this industry rests is an issue. There certainly have been

suggestions made that the Financial Institutions Commission may be a place to

rest the oversight for this. They certainly deal with credit unions and realtors

and insurers and others. They have a good, long experience there, and that may

be a place to rest this industry as well. They have the capacity, and they

understand how to do this. It may

[ Page 8533 ]

be a good place to put it totally at arm's length from government.

[1100]

One of the other areas that I think deserves some consideration….

I'm pleased that the minister put in the 24-hour grace period to get out of

these arrangements. I might argue that the minister consider extending that to

48 hours, to two days. I understand that the period can't be very long that and

shouldn't be very long, but sometimes it would take people more than a day to

figure out that what they've got themselves into maybe isn't the situation they

really should be in.

Maybe there are other options. I would encourage the minister to

think about doubling up that time and looking at a 48-hour period rather than

simply 24 as a period. I think that might be a worthwhile thing to do.

I'm looking forward to committee stage on this. I think it's a

good piece of legislation. There may be some small areas where we will have some

suggestions to make, and I hope the minister will take them in the spirit that

they're intended, which is ways that we may be able to make some improvements to

what is a good piece of work in this legislation. I'm hopeful that he will take

suggestions from this side of the House during committee stage in the spirit

that they're meant, which is to strengthen this and look at some of the areas.

As I've said before, this is a bill that was, I believe, initiated

back a ways ago on this side of the House and was certainly brought forward by

the government, and we're pleased by that. It's a bill that will benefit all

British Columbians who find themselves in need of a lender of last resort. It's

a bill that will make sure that their interests are protected. It's still a

bill, as well, that allows that industry to move ahead and make reasonable

returns on their business and make reasonable profits without being usurious in

how they do that.

I look forward to committee stage and the discussion that we'll

have around that. I look forward, ultimately, to the adoption of this bill and

putting in place the regulatory regime that will come out of the bill so that

British Columbians, like many of the people in my constituency in

Vancouver-Hastings, will in fact have the protections they deserve when they go

and look for the kind of short-term assistance that a payday lender can provide

when they're a bit short of cash. I look forward to this, and I thank you for

the opportunity to speak.

L. Krog: To put in parliamentary language an old saying,

success has many parents, and failure is an orphan. I suspect that the

government is happy to take credit for this, this morning. But to follow with

what my friend who just spoke earlier said, the fact is that credit for this

legislation should go to the efforts of the member for Victoria-Hillside and the

opposition for leading the charge on this issue in British Columbia.

It is somewhat disconcerting to know that British Columbia is in

fact one of the last provinces in Canada to act on this particular problem. Yet

it has the largest density of payday lenders in the country, which leads one to

inquire: why is it that in this province, with an economy that is supposed to be

so hot, with prosperity not around the corner but actually in our living rooms

supposedly, it is necessary for businesses of this type, which rely, in essence,

on people who are in somewhat desperate circumstances in order to make a

profit…?

The fact is that it speaks volumes about the nature of prosperity

in British Columbia, the distribution of wealth and the hidden economy of

British Columbia, in which so many labour and struggle day in and day out —

whether at minimum wage or unpaid, under-the-table work or in desperate

circumstances often beyond their control.

You know, I suspect that most members in this chamber have alcohol

on occasion. There are thousands of hard-working British Columbians who work in

the industry, whether it's making beer or wine or producing whiskey or gin, or

marketing it, selling it, boxing it, shipping it or whatever. It's a legal

substance with restrictions, and we accept that. We acknowledge as a society

that those who overindulge or become addicted to it require assistance and help.

[1105]

What I'm trying to say to those who work in this industry, and

there are lots of hard-working British Columbians who do…. The fact that the

state, if you will, the province of British Columbia, has stepped into this

arena and said that you have to conduct business now in accordance with certain

regulations is no criticism of those hard-working British Columbians, those

people who require a paycheque to support themselves and their families, who

have to meet the mortgage payment month in and month out, who have to pay for

the telephone bill and the hydro bill. It's not a criticism of them.

The simple reality is that this industry exists because people are

poor. This industry exists because people find themselves in desperate

circumstances. This industry exists because many British Columbians make it

paycheque to paycheque. If some unexpected expense arises — the old car they

drive requires repair in order for them to get to work; there's an extraordinary

expense that isn't covered by some system, particularly for those who work in

workplaces where there isn't any kind of benefit program — then there are

thousands and thousands of British Columbians who will have to resort to this

industry.

On one hand, you can say that as members of the public, we should

generally be grateful that it exists and that there is someone you can go to in

a desperate circumstance to get this kind of short-term loan when you really

require something or you are in very difficult circumstances. This industry

fills a need in our society. It fills a need. The 24-hour gas station fills a

need in our society if you're having to travel late at night. It fills a

legitimate need. If people require money to meet extraordinary obligations, then

this industry exists to fulfil that.

I come back to my remarks about alcohol in this province. People

like to have a drink with dinner. You

[ Page 8534 ]

could argue that it fills a need. But the issue for us as legislators is

whether this industry should be able to function by charging rates which we know

— from numbers and information that has been provided — were extraordinary and

were, with all the fees and charges, usurious and which most Canadians and

British Columbians would think were in fact in breach of the Criminal Code of

Canada, but arguably were incapable of being prosecuted.

What we are doing today — and this comes from a government that

champions the reduction of regulation — is regulating. We are looking at

society, at a particular aspect of the marketplace, and saying that it isn't

fair and it isn't reasonable that this gets to function without regulation. We

are saying through this legislation that we're going to establish limits on what

is acceptable business practice in this industry.

I use the term "industry" deliberately, because it is an industry.

There are thousands of people employed in this industry. There are thousands and

thousands of consumers and British Columbians, day in and day out, who are

participating, if you will, in the marketplace, in this industry — who are using

the services, who are in desperate circumstances, who need the money, who have

obligations to meet.

But let us not forget for a moment what we are doing. From the

government that wants to cut regulation in so many areas, and has — and, I would

argue, to the detriment of British Columbians…. We are saying that we're going

to step in here with a whole brand-new scheme of regulation, and I would like to

hear the minister and the government acknowledge that fact. I'd like to hear

them acknowledge the fact that they have recognized at long last, as other

governments across the country have, that it is necessary to regulate this

industry.

Then I'd like them to go one step further. I'd like the government

to ask themselves: why does this industry have such a concentration in British

Columbia? Why does this industry have so many outlets? Why do so many British

Columbians have to rely on this industry? Why is it that it prospers in this

province? It prospers because, I would argue, we have not met the needs of

British Columbians.

[1110]

We don't have a reasonable minimum wage that reflects the cost of

living in this province. We don't have a social safety net that begins to

address the incredible poverty that many British Columbians find themselves in.

We talk about the fact that we have this incredible rate of child

poverty in British Columbia, which is really a misnomer. Children don't have

incomes; their parents do. Their parents are in poverty, and the children are in

poverty as a consequence. They are the most likely users of this service.

So my question to the government is: what does this bill do to

address the underlying cause, the underlying reason, for the very existence of

this industry? What is the government doing with that incredible surplus that

we're now enjoying to address what it is that motivates a person to go into an

establishment that will be regulated under this bill and fork over the kind of

money necessary in order to get some ready cash to meet their needs? That's the

bigger question.

I'm not suggesting for a moment that we should just throw up our

hands and step away and say not to regulate. After all, we on this side of the

House are supposed to be people who love to regulate everything to death,

according to the right-wing mantra. But this is a government bill.

The fact is there will always be a small percentage of people in

our society who will require this kind of service, who will find — no matter how

hard they manage their finances or how good their health is — they are going to

run up against a circumstance where they're going to have to go in and use the

services of this industry.

I don't expect to prevent, as I've said in this House before,

every sparrow from falling and hitting the forest floor. But the reason we are

doing this in British Columbia today, the reason this bill is before this House,

is because we recognized as a society that this was a significant problem and

that there were an enormous number of our fellow citizens availing themselves of

this service. There were an extraordinary number of British Columbians having to

take advantage of this service.

We recognize by this legislation that what was happening — the

rates of interest being charged, the fees being charged — was simply

unacceptable, absolutely unacceptable not just on a legal basis but on a moral

basis. We recognize through this legislation that when people are in desperate

circumstances, there is a limit that even the most wild, rambunctious, free

enterprise society will say is simply not acceptable.

Finally, today this government recognizes that there is a limit on

what we will tolerate when it comes to the abuse of people in desperate

circumstances in our province. The government has finally woken up to the fact

that paying the kind of interest rates being charged is not morally, and now not

legally, acceptable in B.C. any longer.

I would have hoped, however, that the government would have moved

on this so much sooner. This problem didn't pop up yesterday or last week or

this spring or last year. This has been a recognized problem in British Columbia

for years, and this government has had six and a half years to deal with this

issue.

This government has had lots of opportunity to step up to the

plate and say: "We are going to do what other provinces have done. We are going

to do the right thing. We are going to regulate this industry, this service. We

are going to ensure that people will not be taken unfair advantage of by

unscrupulous lenders."

[1115]

I think it's important to point out that even Mr. Keyes, president

of the Canadian Payday Loan Association, applauded the government for tabling

the bill. He said: "I believe there are too many payday lenders who are taking

advantage of people, placing onerous charges

[ Page 8535 ]

and fees on people. So the consumer will be protected with this kind of

legislation."

That leads me to the next concern. It is one thing to regulate, to

pass law, to state in this House what we find to be the appropriate standards by

which any service, any industry, any venture is conducted in British Columbia,

but it is entirely another thing to enforce. As one very wise police officer

said to my law 11 class back in high school a long time ago, a law that can't be

enforced is a bad law.

So my concern is — and I trust this bill is going to pass; there's

no question about that: is the government in fact going to put the resources

necessary into enforcement to ensure that this measure is acted upon and that it

actually affects the lives of the British Columbians that it is designed to

protect? Will it achieve something better than what we have? Will it in fact

protect the vulnerable, the poor and the desperate?

Will the government step up to the plate with the resources? If

the government doesn't, then we will have engaged collectively in this House in

another act of hypocrisy, which has often in my view become the hallmark of

modern parliaments and legislatures and congresses.

We all get together, we thump our chests, we pass the legislation,

we declare victory on the problem, and then we go home. On the ground we have

not committed the resources necessary to ensure that the change that we talked

about, which we will brag about, in fact occurs — that the amelioration of the

social problem or whatever issue it may be will occur. Will we be a better

province the day after than we were the day before? That's the issue.

I want to say to the Solicitor General, notwithstanding what I've

said this morning, that I give him my compliments for bringing this in. I

applaud the government for doing this, but I wish to assure the government that

the opposition will watch carefully and will demand of this government that it

put the resources in place, that it ensures that this legislation's good intent

is carried out and that those poor British Columbians — the poor, the ignorant

and the desperate, who so often have to avail themselves of this service — will

in fact be protected in the way that this Legislature intends them to be

protected. If we don't, if the government doesn't, then what we have done here

and what we are doing here will be nothing but empty rhetoric.

British Columbians elected us to this place to do something, to

make their lives better, to ensure that we conduct ourselves in society with

some moral basis behind our behaviour. I am hopeful that this legislation will

lead to that improvement, and I look forward to committee stage of this bill to

ensure that what the government has placed before this House will achieve those

good ends that this bill is designed to do.

M. Farnworth: Hon. Speaker, it's nice to see you in the

chair, and it's nice to be back here in this session to talk about an important

piece of legislation. I thank my colleague the member for Nanaimo for his

remarks, especially because I know he will be doing double duty and will be

talking in a few minutes on another important piece of legislation in this

House. And I know the Attorney General will. We have a lot of work that we're

doing this morning, to get done before noon.

[1120]

I want to take this opportunity to make some comments around Bill

27, the payday loan act as it is more commonly known, and to let the government

know — the Solicitor General across the way — that we will be supporting this as

an important piece of legislation. I want to congratulate the government for

bringing forward this piece of legislation.

But more importantly, I want to congratulate my colleague the

member for Victoria-Hillside for spearheading this particular piece of

legislation through a private member's bill. [Applause.]

I notice applause from both sides of the House. That's good,

because what this shows…. Many people think that the only way you get things

done is by being a member on the government side. That's not true.

There are lots of opportunities for members to make contributions

in this House through debate and all those things but also through a mechanism

known as a private member's bill, bringing forward an idea on how they'd like to

see legislative change made and presenting it to this House for the House to

consider and for the government to perhaps call the bill.

Not that often — regardless of whichever government is in power —

does that happen. But what often does happen is that government recognizes the

merits in that particular piece of legislation, that private member's bill, and

they bring it forth as legislation.

While government likes to take credit for that, we should also

give credit to the private member for bringing forward that piece of

legislation. That's why I'm really pleased that we're dealing with this

particular issue and this particular piece of legislation.

The payday lending industry really has been something of a

phenomenon over the years. It has grown and mushroomed dramatically, and it has

done so in a way that has been unregulated and has left many people — many

vulnerable people, many low-income people, many young people and many students —

vulnerable to high user fees and high usurious interest charges that are

presented in a way that entices people.

One only has to look at the way the industry has been advertising

itself. They know regulation has been coming, so they have been doing their best

to try and polish their image and shine their image for the public. You see

commercials and advertisements on television of hip, young 20-somethings going

to a payday loan place rather than to a bank or a credit union where they're not

getting, as a credit union might like to say, dinged by excessive fees. But

they're going to a payday loan where many of them charge excessive fees, and

what happens is that they fall into a debt trap.

They fall into a cycle. They see the ads — "Oh, if you're short of

cash and you've got your paycheque, we'll give you a payday loan" — and it

sounds really easy. It's marketed in a way that's friendly, that's happy. It's

like you're going out for a night on the

[ Page 8536 ]

town. You need some cash, and you haven't got any, but hey, don't worry,

you've got your paycheque. "We'll advance you some money on the basis of your

paycheque."

That is great except for the fact that that money has got to be

paid back, and it's got to be paid back with fees. It's got to be paid back with

much higher rates of interest.

Then what happens is in the following few weeks, you get your

paycheque, and you're paying back the money that you borrowed plus the fees and

interest. The next thing, you're having to take out another payday loan to pay

the loan that you already took out.

[Mr. Speaker in the chair.]

That leads, for far too many people, to a vicious cycle which gets

very hard to get out of. You start the cycle, in essence, of robbing Peter to

pay Paul. That's not what should be happening.

I know in my own community there's a credit union in a mall. Right

next door to it a payday loan place has opened up. Why? There's huge money in

it. There are enormous profits in it. That's why this industry has exploded, and

yet banks and credit unions and other financial institutions are regulated in a

much more rigorous way than what we've seen the payday loan industry regulated

as.

[1125]

There needs to be some important and significant changes made.

This piece of legislation will do that, and I think it's important that we

recognize that, but it's also important that we recognize the comments made by

my colleague from Nanaimo that we need to ensure that when this piece of

legislation is in fact in place — and we'll explore this further through

committee stage, through the clause-by-clause debate on the particular piece of

legislation — we're going to ask the questions around the funding to implement

the regulations.

When are those regulations going to be implemented? How are they

going to be enforced? Are the budgets there to enforce them? All the things that

need to be done…. We need to ensure that if this legislation is to work, the

government is prepared to put forward the resources to ensure that when this

legislation is implemented, it's able to do the job that it is intended to do.

I also think the comments that my colleague from Nanaimo made

regarding underlying causes of why people are forced or feel it necessary to use

the institutions of the payday loan sector to the level that they are, are

issues such as a minimum wage — that we should have a $10 minimum wage in this

province, that we look at the underlying causes of poverty and why people have

such a difficult time making ends meet. All those are important issues, and they

do relate to this bill.

The payday loan lending act, Bill 27, is an important piece of

legislation. It's one that we on this side of the House will support. It

regulates an industry that needs to be regulated, where there's been an absence,

and hopefully will be able to stop some of the problems that we've had in the

industry.

I also think it shows what an individual member can do when

they're not part of a government. They can have a significant impact on

government policy, and it's a great way to bring forward public policy changes

that need to be made.

With that, I will finish my remarks because I know that we have

another piece of legislation to deal with. I take my seat, and I look forward to

committee stage on this particular piece of legislation and the upcoming bill

that I know the Attorney General will be speaking to.

Mr. Speaker: Seeing no further speakers, the Solicitor

General closes debate.

Hon. J. Les: I appreciate most of the remarks from the

members opposite this morning and am pleased to see that they will be supporting

the legislation. I too will look forward to committee stage.

As is sometimes the case, we've heard a little bit of NDP

revisionism in the House this morning. There was some significant praise for the

member for Victoria-Hillside for having brought forward a private member's bill

just a few months ago. We need to maybe set the record straight. I think it's

important to do that.

As I already alluded to in my earlier remarks, the reason we are

able to move forward with this legislation is that, by legislation, the federal

government has actually created a carve-out in the Criminal Code to allow

provinces to regulate at their option. That is what we are doing with this

legislation. However, that did not become available to us until late last spring

when the federal parliament actually passed that legislation.

The private member's bill that was tabled by the member for

Victoria-Hillside earlier this year was actually only a faint shadow of this

particular piece of legislation. It would have done a few things that would have

been perhaps cosmetic, but it would not have had the beef and the substance

contained in this legislation.

As a matter of fact, the member for Vancouver-Hastings earlier

today referred to this legislation as very substantive. What we have been able

to do, in light of the federal change in legislation, is bring forward a

substantive piece of legislation that will make a real difference in protecting

British Columbians against these abusive practices.

I'm very proud that we're now at this stage. You will recall that

I tabled this legislation late in the spring session. When we get through

committee stage and get around to passing the bill later in this fall session,

we will be well on the road in British Columbia to again leading the country in

consumer protection.

I should point out, as well, that our staff in the Ministry of

Public Safety and Solicitor General have been very much involved at the national

level in leading this discussion over the last four to five years, which is

another indication, I guess, of how long it sometimes takes to get federal

legislation to change to enable us at

[ Page 8537 ]

the provincial level to move forward with these improvements in consumer

protection.

Nonetheless, as a result of those efforts on behalf of my staff,

we're now at the point today where we can move forward.

[1130]

Again, I'm pleased with the support of the members opposite in

terms of the principles of this bill. I look forward to committee stage.

I move second reading of Bill 27.

Motion approved.

Hon. J. Les: I move that Bill 27 be referred to a Committee

of the Whole House to be considered at the next sitting of the House after

today.

Bill 27, Business Practices and Consumer Protection (Payday Loans)

Amendment Act, 2007, read a second time and referred to a Committee of the Whole

House for consideration at the next sitting of the House after today.

Hon. B. Penner: I call second reading of Bill 28,

Securities Amendment Act, 2007.

SECURITIES AMENDMENT ACT, 2007

Hon. W. Oppal: I move that Bill 28, Securities Amendment

Act, 2007, now be read a second time.

I'm pleased to address the principles behind the proposed

amendments to the B.C. Securities Act. The government of British Columbia and

the British Columbia Securities Commission are strongly committed to better

protecting investors and reducing regulatory burden for market participants

through ongoing securities law reform and the provincial-territorial memorandum

of understanding regarding securities regulations.

These changes would improve securities law in three ways: (1) by

harmonizing and streamlining securities laws across the country; (2) by

strengthening compliance enforcement powers; and (3) by protecting investors.

The amendments complement the central goals of increasing investor

protection and reducing regulatory burden on the securities industry. The

government's decision to defer implementation of the 2004 Securities Act has

allowed us to meet our harmonization and passport commitments under the

memorandum of understanding. At the same time, we are supporting our commitment

to investors in British Columbia by including in this bill some of the

innovative investor protection measures from the unproclaimed act as well as

remedies currently available in other jurisdictions.

For example, the amendments will allow the commission to order the

disgorgement of illegal profits and provide a process for victims to make claims

under the disgorged money. As well, the amendments will provide statutory

remedies for secondary market investors who have suffered damage from misleading

statements, whether written or oral, made by a public company or authorized

representatives of the public company.

Ongoing development of harmonized, streamlined and simplified

securities laws offer opportunities for enhancing regulation of capital markets.

The government of British Columbia, the B.C. Securities Commission and the

council of ministers responsible for securities regulation remain committed to

working together to continue to improve securities regulation and investor

protection in Canada.

These proposed changes to the Securities Act are another step

forward in the longer process of securities law reform and the shift to a

harmonized regulatory environment across the country for the securities

industry.

L. Krog: I'm delighted to hear the Attorney General's

closing remarks around the concept of moving towards a harmonized regulatory

system. I don't think there's any sensible legislator in the country that

doesn't recognize that every province, and indeed the country, would be far

better off with a fully harmonized regulatory system. But, of course, we face,

as always, the jurisdictional issues and the difficulty in protecting turf,

concerns around dropping to the lowest common denominator instead of moving to

the highest, and that is an ongoing issue. But insofar as this moves us towards

that harmonized regulatory regime, I compliment the government for doing this.

This is a positive step forward.

[1135]

However, interestingly, on Thursday in my office I received a

mailer from the local chamber of commerce advising of a seminar to be held

today, actually, in Victoria called "Watching Out for B.C. Investors." It

features Brenda Leong, executive director of the B.C. Securities Commission. The

statement to recommend attendance and to encourage those to attend at that

particular event says: "New research shows that B.C. investors are much more

likely than other Canadians to be repeat victims of fraud."

I want to repeat that: "New research shows that B.C. investors are

much more likely than other Canadians to be repeat victims of fraud."

Now, I'm going to assume that there are a proportionately equal

number of suckers in every province. I don't believe for one moment that the

British Columbia investors and the people of British Columbia are stupid and

that that explains the fact that we're more likely to be repeat victims of fraud

than other Canadians.

Interjection.

L. Krog: Well, I appreciate — perhaps it won't make it into

Hansard — that the Minister of Environment suggested that someone look at

his portfolio. I'm sure he's had the opportunity to discuss that with the

conflict commissioner, and I'm sorry if things aren't working out well. The

public's probably not sympathetic. We did get a raise this year, and I can

certainly offer the services of many members of my chamber of commerce who are

excellent advisers around investments.

But that's not the issue. I don't think we're stupid here, but I

do think we might be stupid in terms of the level of enforcement around

securities and investments

[ Page 8538 ]

in this province. What other plausible reason could there be to explain why

it is we are much more likely than other Canadians to be repeat victims of

fraud?

I don't think we've got any greater proportion of shysters and

crooks than other places, although some would suggest that, historically, that

was certainly the case in British Columbia. What I would submit is this, in

fact: the securities exchange commission is not functioning the way it should.

Either it doesn't have the legislative tools to do its job properly, or if it

does, it doesn't have the ability or support in order to do its job properly, or

some combination thereof.

The simple fact is that in British Columbia we have issues around

the securities exchange commission — the record of enforcement. Vancouver's

reputation over time is not what it should be, and we need it to be better.

We need it to be better because, if we are going to enjoy

prosperity in this province, we need investment. The only way we're going to

secure investment is if people have comfort in investing in British Columbia

companies. That's only going to occur if they are satisfied that there is a

regime of enforcement that is effective and protects them, inasmuch as anyone

can be protected when they invest in speculative ventures and enterprises. That

is what is crucial.

Frankly, it is time to give, if you will, the Securities

Commission some direction around enforcement. It's time to make the dog angry.

It is time to ensure that British Columbia enjoys a reputation as a safe and

secure place to invest, and that is only going to be a consequence of the

securities exchange commission beefing up what it does and how it does it.

I would be remiss if I didn't point out that we certainly pay

salaries in the securities exchange commission that are quite extraordinary. I'm

sure the Attorney General might argue that, in fact, they're commensurate with

what is paid in the province of Alberta, for instance. But this is British

Columbia, and British Columbia judges by British Columbia standards. By British

Columbia standards, we're spending an awful lot of money on some very

high-priced people.

The sense on this side of the House and, I think, in the

investment community is that we aren't getting the bang for the buck. This

legislation, hopefully, moves us further down the road and will enhance British

Columbia's reputation as a place to do business. It's a good step forward.

[1140]

There are other aspects of this legislation which trouble me

greatly. The bill creates a statutory right for investors in the secondary

market to sue companies for providing misleading information in documents or

public statements or for failure to make timely disclosures. You know what? You

can say on one level that's great. You're now going to have a clear statutory

right to sue. On one hand, that is a wonderful thing. That will give you a sense

of confidence as an investor. It will give you, if you will, some protection.

On the other hand, the Chief Justice of the Supreme Court of

Canada has expressed publicly — as have heads of the bar associations of the

provinces, as have the presidents of the law societies, as have many in the

legal community and the business community — deep concern about the fact that

the possibility of hiring a lawyer to take on a case is becoming, even more than

it has been historically, a privilege for a smaller and smaller percentage of

our population. It is like giving someone the right to hunt and telling them

they can't have a firearm or a weapon to go hunting with. That is the reality.

When the legislation gives you a right to sue…. I would suggest

that although the remedy itself may not be an empty remedy if you can employ it,

the fact is that the ability to use the remedy will be far beyond the reach of

average British Columbians. It will be far beyond the reach of middle class

British Columbians. Indeed, it will be a remedy available only to those with a

great deal of money.

I would suggest, hon. Speaker, that the fact is: the people who

are getting ripped off in the marketplace are not the wealthy. They are not the

people who can afford the high-priced counsel from Vancouver and the national

law firms. They are sophisticated investors. They don't get involved in the kind

of schemes where you need a right to sue.

They've already had more advice than most of us could ever hope to

have in a lifetime. They have access to tax accountants and to high-priced

counsel, to the best minds available. They've already got access, if you will,

to justice. They can afford that access to justice.

The problem is the rest of us. The problem is those innocent

British Columbians who have rosy glasses on, who listen to the line, who take

their meagre savings and put them into an investment that turns out to be really

nothing more or less than a scheme to ensure that the money goes from their

investment into somebody else's pocket with probably no likelihood of it ever

being returned.

When you say to that investor, "We're giving you a right to sue,"

chances are that the retainer they would have had to hire counsel to employ the

remedy that this statute will provide is gone. It was invested. It's beyond

their reach. They won't have an opportunity. They simply won't be able to do it.

That is the problem.

If in this House we have agreed that this remedy should be

available, that we wish to have some tool to punish the unscrupulous, to ensure

that they can't carry on with their unscrupulous activities, why are we stopping

— and I say "we" advisedly, because this is the government's legislation —

solely at the remedy of being able to sue?

Why aren't we putting teeth in the legislation that enables the

government to step up to the plate, that ensures the government, through the

securities exchange commission or some other body, will actually prosecute, will

ensure that the proceeds that have been wrongfully taken from innocent or

ignorant or unwise investors would be returned to them?

[1145]

People in society have come to expect, and perhaps unreasonably

so, that government will protect them, that the law will protect them, that the

justice system

[ Page 8539 ]

will protect them. When they're taken advantage of — whether it be by

unscrupulous investors or people who sell things door to door with no likelihood

of ever delivering the product, or unscrupulous roofers who promise the magic

solution on their roof…. It is one thing to say you can sue, but the average

British Columbian innocently thinks, I suspect, that the government, the police,

the state are somehow going to step up to the plate and protect them and to

punish the wrongdoer.

That's what's inscribed over the entrance to the Old Bailey, as I

recall. "Punish the wrongdoer, and defend the children of the poor." Well, this

isn't going to happen. This legislation is not going to do it. The fact is that

the poor are not going to be any better off, the middle class is not going to be

any better off, and those who have got lots of money already have the ability to

look after themselves.

What I said earlier this morning around Bill 27 applies here. The

fact is that if you're in a position where you need this remedy, you're not

going to be able to afford to pay for it. You're already the vulnerable. You're

already the underdog, if you will.

Although I don't expect miracles in this short session, having

heard my remarks this morning, I hope the Attorney General will consider my

remarks and the remarks of the opposition and will consider the kind of real

change that this act should have brought forward — not an empty remedy, not a

remedy that is available only to a small percentage of our population.

Actually step up to the plate and ensure that there are penalties

and enforcement so that, in addition to having the right to sue, we are

satisfied and ensured that companies that provide misleading information will be

punished and moneys returned, investors protected and the investment climate in

this province improved so that we will be able to say with certainty that things

are better because of the statute — not that they've stayed the same, not that

we've glossed over an issue, but that things are actually better. That's what's

important.

We're here to improve things in this Legislature. With great

respect, this legislation does not go far enough. I encourage the government to

go back to the drawing board and step up to the plate once again. Let's see if

we can really do something that will benefit British Columbians.

B. Ralston: This legislation has to be looked at in the

national context of the ongoing concern about securities regulation in this

country. The Minister of Finance federally is engaged in a campaign to create a

national securities regulator. Obviously, this is an ongoing discussion that the

authorities — the Attorney General of this province and others — have

participated in across the country.

I would describe it as a campaign or public policy initiative by

the federal Minister of Finance. He has recently commissioned as part of that a

report from Professor Coffey, who is a U.S. securities law expert. He speaks of

— and this is spoken of in other academic studies and policy studies that have

looked at the Canadian securities market — what is called the Canadian discount.

The enforcement problem concerning securities fraud within

provincial jurisdictions and across the country has resulted in what's referred

to as the Canadian discount. In other words, the cost of raising capital here is

increased because people are more reluctant to raise capital in Canada because

they don't have full confidence in the enforcement mechanisms that are in place

across the country.

[1150]

Of course, the federal Minister of Finance's solution is a single

national regulator, and Professor Coffey was enlisted to provide some academic

support for that position. He does say some very interesting things, though. In

his report, he compares the cost of the combined Canadian securities regulators

and the American securities regulators. They have roughly comparable budgets and

staff after adjusting for the relative size of the capital markets in each.

The U.S. federal watchdog is far tougher on enforcement. The U.S.

Securities and Exchange Commission imposed 384 times the financial sanctions

levied by the Canadian authorities between 2002 and 2004.

The professor is quoted. He says:

"If they want to address the cost of capital discount, they

need a more efficient system than they have today. You're essentially relying on

the enforcement efforts of two provinces: Ontario and, to a lesser extent,

British Columbia.

"That kind of system is never going to be very

efficient. You are never going to get the same investment because you are asking

one province, in effect, to pay the cost for the entire country. So it's going

to be underfunded.

"I'm not going to say that because you have a

single regulator, you will get effective enforcement. You aren't going to get

effective enforcement without a single regulator. It'd be a necessary first

step."

He also looks at Australia, which is a federal system

often compared to the federal system here in Canada, where they did move to a

federal regulator from a provincial system. That took place nearly two decades

ago, and they've had a much more activist securities regulation regime.

The federal police, the RCMP, have recognized the problems in

securities regulation, creating an integrated market enforcement team.

Regrettably, perhaps due to the difficulty in gathering evidence or other

unforeseen problems, they have yet to conclude an investigation that's resulted

in a successful prosecution — or, indeed, a prosecution, as I understand it.

There is an ongoing concern. The position of British Columbia,

despite the statements we've heard from the minister here this morning about

enhancing regulation of capital markets and harmonizing regulation and giving

the commission powers to order disgorgement…. The record of securities

enforcement, I think faithfully chronicled by the indefatigable David Baines of

the Vancouver Sun , is simply a litany of failures of enforcement at the

provincial level.

No doubt, this legislation is a step, an attempt to enlist some of

the litigation remedies that are widely

[ Page 8540 ]

available in the States and that are regarded as having brought some

discipline at the civil level to unscrupulous corporate executives. They've been

very successful. I once attended a lecture by a noted securities lawyer, Bill

Lerach, who was involved in that kind of litigation — very, very effective and

aggressive litigation.

I predict that this legislation, although it reads very well, will

never be used in British Columbia — that we will never see a single case

initiated under the provisions of this legislation. Why? Even the Securities

Commission, when they make these kinds of orders….

Again, the Attorney General referred to the powers of the

commission to order disgorgement. Typically, these are what are called empty

remedies, in the sense that the order is made, sometimes fines are levied

against unscrupulous people in the securities market and trading bans imposed,

but rarely is the fine that's levied ever collected. It simply stands on the

books after very lengthy and protracted hearings before the Securities

Commission.

Similarly, in giving the commission the power to order

disgorgement…. Although it's a paper remedy, I would submit that it will not

result in any real disgorgement of real financial profits by unscrupulous people

engaging in the securities business.

The effort of the government here to bring this legislation

forward, to give the opportunity to create a statutory remedy, while it looks

good on paper, I would submit will never amount to anything very much, given the

state of the securities enforcement regime here in the province. The Canadian

discount, regrettably, will continue.

[1155]

If we look to business opportunities that people not only in the

private sector but in government always talk about, one of those concerns is the

security of the capital you invest and your ability to raise capital efficiently

with the understanding that if unscrupulous activity takes place, you will be

able to seek some remedies that will be enforceable and will result in some

justice and that indeed will deter people from acting in that fashion. These

aren't going to result from this particular piece of legislation.

I look at this legislation with somewhat of a jaundiced eye. I

encourage the minister to take up the discussions with the federal Minister of

Finance on a single national securities regulator with some renewed vigour. The

passport system, which is spoken of and considered to be a compromise, is a

halfway house through which I would hope the government would pass on its way to

a single national securities regulator.

A single national securities regulator has much to recommend it,

although the capital market conditions here in Canada are obviously different

from those in the States, being a much smaller market and being more

geographically disparate and concentrated in a very few cities throughout the

country. Nonetheless, it has much to recommend it, and most of the academic

study and industry study, aside from perhaps some local interest here, seems to

be evolving in that direction.

With those comments at second reading, Mr. Speaker, I'll conclude

my remarks.

Mr. Speaker: Seeing no further speakers, the Attorney

General closes debate.

Hon. W. Oppal: In closing debate, I just want to state that

the concept or the principle of a national regulator is something that we've

been involved in on an ongoing basis with the federal government and with all

the other provinces. But a national regulator cannot be achieved without the

concurrence of all the provinces, and the provinces, with the exception of

Ontario, are committed at this stage to a passport and harmonization process.

We're not opposed to a national regulator, as has been suggested by the federal

Minister of Finance.

It's important to note that the national regulator is not the

panacea that many people say it is. In fact, the enforcement procedures can now

be achieved through the use of increased resources for the RCMP. The Criminal

Code can be used. It is rarely used. The market remedies in cases of wrongdoing

can be corrected by use of increased resources in policing under present

legislation by use of the Criminal Code.

Mr. Speaker, I move second reading of Bill 28.

Motion approved.

Hon. W. Oppal: I move that Bill 28 be referred to the

Committee of the Whole House to be considered at the next sitting after today.

Bill 28, Securities Amendment Act, 2007, read a second time and

referred to a Committee of the Whole House for consideration at the next sitting

of the House after today.

Hon. G. Abbott moved adjournment of the House.

Motion approved.

Mr. Speaker: This House stands adjourned until 1:30 p.m.

this afternoon.

The House adjourned at 11:59 a.m.

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