TORONTO - Finance Minister Jim Flaherty says the government wants Canada's financial community to provide more disclosure about the products they offer so that investors have a better understanding of the risks they face.
The finance minister told reporters after meeting in Toronto with senior executives of several banks that the turmoil is "less pronounced'' in Canada than in the United States or Europe and the Canadian financial sector continues to be "solid.''
But Flaherty said all of them agreed that the Canadian financial sector can't be complacent.
He noted that the troubles surrounding $32 billion worth of frozen Canadian non-bank asset-backed commercial paper was a topic of discussion, in the context of a common securities regulator.
"We need to have a framework for regulation in Canada that includes the financial institutions, not just the banks,'' Flaherty said.
"This has a lot to do with appropriate disclosure, with making sure investors are informed with what people are attempting to sell them...''
Pensions hold the largest amounts of the money tied up in non-bank asset-backed commercial paper. But there are also about 2,000 individuals and numerous companies who also have the notes.
Some people have said their life savings are tied up in frozen ABCP and some companies have said they could face bankruptcy if they can't get access to the money that's tied up in the notes.
Many of individual investors have also complained they didn't understand the notes they were sold while companies have said they relied on the high ratings given to the paper.
"A lot of investors have been through an ordeal,'' Flaherty said.
"Most Canadians expect a degree of regulation that doesn't impede capital markets but provides adequate protection for investors. And not just investors directly, but investors who are invested in other mechanisms, through pension plans and so on.''
All sides of the debate weighed in on "what the right regulatory touch will be,'' said Nancy Hughs Anthony, president and CEO of the Canadian Bankers Association.
The group discussed the lessons learned from the ABCP debacle, increased disclosure on the investment products and future transparency and "stress testing,'' she said.
"I don't think there was any conclusion today about anything specific that had to be done,'' she added.
"It's very positive when the decision makers from Canada's financial community can actually get in a small boardroom like this and have a good dialogue.''
Flaherty said the Canadian banks will establish and adopt leading practices for disclosure within 100 days, and expects the Bank of Canada to play a leadership role in some areas.
The minister said he plans to meet with the banks again "before the summer'' to review the progress.
