Canadian consumers poorly protected in the payments area

A joint statement by the Public Interest Advocacy Centre, Union des consommateurs, Option consommateurs

OTTAWA, Nov. 10, 2014 /CNW/ - The Public Interest Advocacy Centre, Union des consommateurs and Option consommateurs today united to denounce the current weakness of supervision of financial issues, banking and payments from the point of view of consumer protection. The consumer groups issued the following statement:

Despite recent announcements by the federal government, consumers remain poorly protected in the payments area. They will continue to pay too much, they will still incur undue risk if they are victims of error or fraud and they will still find it hard to be heard as the federal government proceeds with its reforms.

Canadian consumers now send or receive more than half of their payments in electronic form.[1] Depending on whether the transaction is a pre-authorized debit, a PIN-less transaction or a credit card payment, for instance, the rules purporting to protect consumers will differ, will be inadequate and, most of the time, will be unfamiliar to consumers, to merchants, and even to the financial institution staff. And this confusion is likely to hurt consumers most. Even though we have repeatedly called the federal government's attention to this situation, it has yet to announce any measure that would improve consumer protection.

Credit card-related fees in Canada remain amongst the highest in the world. However, the Minister of Finance's recent announcement that a voluntary mechanism would be implemented in order to reduce those fees [2] likely will not benefit consumers; credit card issuers' anti-competitive practices [3] will stay in place and consumers will neither benefit from perceptible price reductions or more equitable choices.

Government also tabled recently Bill C-43, part of which modifies the Canadian Payments Act, a statute which among other things governs the Canadian Payments Association (CPA). CPA has a key role to play in the Canadian payment systems and we are happy to see its structure modernized, despite the fact that it is done through Bill C-43; however, the federal government should have gone further by clarifying that CPA's core mission is not to serve financial institutions, but to meet the needs of all payment service users, insisting on the role it could play in consumer protection.

Its enthusiastic promises having raised great expectations, we were disappointed that the federal government made no announcement regarding the implementation of a payments regulatory framework which would ensure all users, consumers included, could be heard, even though the Task Force for the Payments System Review created by Minister Flaherty in 2010 recommended establishing such a mechanism in early 2012.[4]

Finally, Canadian consumers continue to wait for a comprehensive Financial Consumer Code to regulate federally-regulated financial institutions' banking and related relations with their customers – a promise made in the 2013 Budget.

We therefore invite the federal government to address as soon as possible the problems consumers experience regarding payments and to respond in a full, effective and coherent way – after consulting adequately with consumers- so that Canadian consumers may be "confident that they are protected by a high-quality regulatory framework that puts their interests first", as the Minister of Finance promised in the Economic Action Plan associated with his 2014 Budget.

[1] Canadian Payments Association. Examining Canadian Payment Methods and Trends. Ottawa, October 2012. 15 p. Document available online at: http://cdnpay.ca/imis15/pdf/pdfs_publications/examining_canadian_payment_report_2012.pdf
[2] See Department of Finance, "Minister of Finance issues statement on voluntary VISA and MasterCard proposals," November 4, 2014. Online: http://www.fin.gc.ca/n14/14-157-eng.asp
[3] See: The Commissioner of Competition v. Visa Canada Corporation and MasterCard International Incorporated, 2013 Comp. Trib. 10, at para. 389. Online: http://www.ct-tc.gc.ca/
[4] The Task Force's report and other documents supporting its recommendations can be found online at: http://paymentsystemreview.ca/index.php/papers/moving-canada-into-the-digital-age/index.html

SOURCE: Public Interest Advocacy Centre

John Lawford, Executive Director, Public Interest Advocacy Centre, ONE Nicholas Street, Suite 1204, Ottawa, Ontario, K1N 7B7, [phone]×25, [phone] (cell), [email protected]; Philippe Viel, Responsable des communications, Union des consommateurs, 514 521-6820 poste 257, 514 743-0419, [email protected]; Lisanne Blanchette, Avocate et conseillère budgétaire, 514 598-7288 poste 245, 514 777-6133, [email protected]