In the securities industry, for example, the total number of firms competing in Canada increased to more than 180 today from 108 after banks entered the industry in 1987. The average commission paid by investors has also dropped by 50 per cent. The auto loan business is another area where consumers have benefited from bank participation. Prior to banks gaining permission to offer auto loans in 1954, choices were limited and consumers could only obtain vehicle loans from unregulated sales finance or consumer loan companies at borrowing rates up to ten per cent over the prime rate. Since banks were allowed to compete in the auto loan market, spreads between prime and auto loan rates have been narrowing, with spreads in 1996 on bank loans arranged through dealers seldom exceeding three percentage points, according to research prepared for the MacKay Task Force.
Competition is good for Canadian consumers.