Bill Morneau’s office made ‘angry’ calls over bank bill, insurance group says

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An insurance lobby group says it was the subject of two “angry” phone calls from Finance Minister Bill Morneau’s office aimed at blocking it from raising privacy concerns over new measures in the budget bill related to how banks use customer data.

In an interview with The Globe and Mail, Normand Lafrenière, president of the Canadian Association of Mutual Insurance Companies, said the first call came on April 12 from the Finance Minister’s senior policy adviser, Ian Foucher.

“I was asked not to meet with MPs and senators,” said Mr. Lafrenière, who has led the organization for 25 years after a public-service career that included senior positions at the Finance Department.

The 556-page omnibus budget bill would add new language to the Bank Act’s financial technology section that would allow banks to engage in “collecting, manipulating and transmitting information … selling and otherwise dealing with technology if those activities relate to … the provision of financial services by another entity.”

Mr. Lafrenière's organization says the provision would allow banks to sell customers’ data to unregulated companies. Those firms could then target potential customers, including those of regulated insurance companies, in unprecedented ways. The government disagrees, but some senators still have concerns. The association was scheduled to meet with the Senate banking committee on May 3 about the changes.

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Mr. Lafrenière and Steve Masnyk, principal of SkyBridge Strategies, a consultant for the insurance group, rejected the staffer’s advice, met privately with some MPs and senators, and decided to go ahead with the May 3 appearance. Mr. Masnyk said he received a 30-minute call from Mr. Foucher the evening before.

“He was repeating the same thing … over and over and over. He said: ‘Are you going to play ball with us or not? You better not appear in front of committees, and stop talking to senators and stop talking to MPs. Everything will be taken care of through regulations that will be published down the road.’”

Mr. Lafrenière and Mr. Masnyk said in interviews that they had never before received such calls during their many years of government relations on Parliament Hill.

“He was angry,” Mr. Masnyk said of the ministerial staffer.

The minister’s office denies the version of events described by Mr. Lafrenière and Mr. Masnyk, but acknowledges “frank and direct” calls took place. The minister’s office said Mr. Foucher disagreed with the group’s interpretation of the bill but “did not discourage Mr. Lafrenière or Skybridge from engaging with committee members or Parliamentarians.”

There is considerable debate over what the amendments would mean in practice.

The Canadian Bankers Association and Finance Department officials have played down privacy concerns, but some senators are unconvinced. The banking committee has asked privacy commissioner Daniel Therrien to provide his thoughts on the issue.

Government officials told senators the provisions are aimed at updating language to reflect current technology and to allow banks to invest in financial-technology companies, even when those firms may have non-financial business lines.

Financial-technology companies – or fintechs – are in a broad category that includes payment processing services such as Shopify Inc. and Square Inc. as well as online lenders such as Mogo Finance Technology Inc. Government officials told senators that large technology firms such as Amazon and Google are entering the field.

The committee is considering whether to invite officials from the Bank of Canada. The bank’s chief operating officer, Filipe Dinis, recently told a conference that the proliferation of unregulated fintech companies supplying cloud computing and other data services is a potential weak link in Canada’s financial system.

“Right now, as for the information I have, I’m not comfortable at all with all this,” said independent Senator Pierrette Ringuette, who is a member of the banking committee. Ms. Ringuette said Parliament must use the language in the bill, not the words of officials, to assess what the amendments might mean.

“Canadian financial institutions should require the signed authority from their customers if they want to send to an entity their financial information,” she said. “We have to try to mitigate the potential for cyberattacks and for Canadians’ private financial information being acquired by these unknown entities. We have to make sure that the framework that is put in place provides protection for Canadian consumers.”

Royal Bank of Canada chief executive Dave Mckay told reporters last month that further regulation may be required to set “boundaries” for how banks and other large companies use customer data.