Thank you, Mr. Chair.
Progress is never possible without effort, nor without risk. If progress is to be beneficial, we must be able to look ahead. The growth of electronic payments in Canada is an excellent example.
Mr. Chair, members of the committee, thank you, first of all, for inviting me to appear before you today.
I would like to use these too-short minutes to speak to some concerns I have about the impact of the changing landscape of payment systems on Canadian consumers. I will focus my attention on two aspects among many others, specifically risk sharing and the participation of all stakeholders in the decision-making process. These are all of the questions that I have been looking at since 1990, particularly in the context of research undertaken in collaboration with consumers associations.
I participated in the creation of the Canadian Payments Association Stakeholder Advisory Council, of which I am currently a member. I have also had the pleasure of acting as an advisor on consumers issues to the Task Force for the Payments System Review, which is chaired by Ms. Meredith. I currently teach consumer law at the Université du Québec à Montréal, and in my work, I often discuss questions concerning the control of consumer payments, including those made using emerging methods.
In their day-to-day lives, consumers have no chance. They are unable to navigate the clutter of rules concerning the payments that they make. If they are the victims of fraud, for example, their rights are different depending on whether or not they paid with a credit card or a debit card, whether they used a PIN or not when paying with a card, or whether the fraud was committed at the ABM of a bank or another financial institution.
In the case of a pre-authorized payment, different rules apply if the withdrawal is made from a bank account or from a credit card. And all this is regulated by laws and regulations from both the federal and provincial governments, by codes of practice, by rules set out by the Canadian Payments Association, by the wording of the contract with the financial institution, by the policies of networks such as MasterCard, Visa or Interac—the list is endless.
It is total confusion, and believe me, I have no trouble convincing my students of that every year. Unfortunately, I do not have enough time to give you examples here, but I encourage you to look at an excerpt from Policy Paper A, which was published by the task force as an appendix to their final report, and which has possibly been included as an appendix to the text of my speech. It illustrates the problems we are facing.
If all of these rules were coherent and generally favourable to consumers, we could let it be and move on, but that is not the case. Let us look at a simple example: a consumer's responsibility for a fraudulent withdrawal made with their credit card at a bank's automatic teller is potentially unlimited. There is no ceiling, apart from the bank's own policies. This despite the fact that there is often no responsibility for a debit card, and that in general there would be a ceiling of $50 if the fraudulent withdrawal had been made, for example, at a Desjardins automatic teller. But who amongst you knows that, or could explain to me why the system works the way it does?
It would, however, be possible to put in place a legal framework based on coherent principles that take technological evolution into consideration and that adequately protect consumers. Other jurisdictions have done this, such as the United States and the European Union. And they all now have more clarity and certainty at the legal level, both for existing consumers and providers, as well as other stakeholders and those who wish to innovate, because everyone is playing by the same clear and predictable rule book.
We must hope that the code of conduct for the financial sector, whose implementation was recently announced by the Minister of Finance, will be a step in the right direction, but for the moment that is just a hope. It seems to me that Canada should have a comprehensive legislative framework for payments, particularly electronic payments, one structured around principles such as those that the task force has suggested.
If the payments ecosystem is to see healthy growth in Canada, it is imperative that all stakeholders be able to actively participate in the decision-making process. To do otherwise is to ensure that certain people will not be happy and that they will not be quiet about it. We need the payment mechanisms that meet the needs of stakeholders and the economy, and they must be created in cooperation with all stakeholders.
The Canadian Payments Association's processes exemplify that, as illustrated by the challenges that we currently have in Canada bringing on line an extremely rapid payments system, while other jurisdictions have already done this or are getting ready to do it.
In closing, this is an immense area and there are many challenges. We must better manage risks in everyone's best interest, and it is imperative that dialogue between stakeholders be encouraged. To that end, I will be happy to answer any questions that you might have.