Activist: Governments lax on bank accountability

GREG YOUNGER-LEWIS

Nunavut needs to press the federal government to prevent financial institutions like the Bank of Montreal from leaving the territory despite years of profits, said a southern lobbyist who specializes in bank accountability.

Duff Conacher, a founding member of the Canadian Community Reinvestment Coalition, said Nunavut has some power over banks working in the eastern Arctic, but ultimately the buck stops with the federal finance minister.

Bank of Montreal clients were outraged recently when their local branch posted a notice that they will close their doors permanently in November. BMO officials said they will help clients transfer their accounts to Nunavut’s remaining two banks. Otherwise, Nunavut clients will have to do business with the BMO branch in Pembroke, Ontario – about 2,000 kilometres away.

Conacher said in an interview that the government of Nunavut can protect residents from future branch closings, by persuading Ottawa to change the laws affecting the chartered banks.

“Use the power that you have,” said Conacher, who helped start the national coalition to keep banks accountable to communities and lower income clients. “Whatever the community wants to do, the bank is supposed to do.”

Conacher said the federal government didn’t go far enough the last time it changed the laws on banking, especially regarding bank closures.

Banks have increasingly closed remote and rural branches over the past decade because they don’t meet the institution’s profit formula, Conacher said. He said banks have also been pulling out of low-income, visible minority neighbourhoods.

At the same time, banks are making increasingly large profits from investments elsewhere. The Bank of Montreal reported a 50 per cent increase in earnings in the last fiscal quarter, compared to last year.

Conacher said the extra earning power comes from federal government amendments to the Bank Act in 2001, when Canadian chartered banks were first allowed to buy up massively profitable investment banks.

Conacher said the banks should have to return the favour from the amendments, and promise to keep branches open in remote areas, such as Nunavut communities, even if they don’t meet the institutions’ profit targets.

Nunavut also has leverage of its own to guarantee banks stay in the territory.

Conacher’s coalition encourages all governments – municipal, territorial, and federal – to withhold their lucrative deposits and credit card contracts from banks that don’t promise to stay in their community.

Nunavut can take advantage of this tactic because of the abundance of government activity in the region, Conacher said.

“Use the power that you have,” he said. “It is essentially free cash that the governments give them as deposits.

“They’re just giving away the one thing they have that the banks want to leverage better service from the banks.”

Premier Paul Okalik and Finance Minister Leona Aglukkaq did not respond to requests for an interview on what the Government of Nunavut will do about bank closings in the territory.

To register a formal complaint about a bank’s services, clients can call the Financial Consumer Agency of Canada, the government watchdog which helps regulate banks. Their toll-free phone number is 1-866-461-3222.

Elizabeth Allen, a spokesperson for FCAC, said the federal government currently cannot stop bank closings, as they are “a business decision.”

The Bank of Montreal plans to hold community consultations in Iqaluit in September, before closing Nov. 5.