Industry Committee on Oct. 10th, 2024

[The Chair, Liberal, Joël Lightbound]

Thank you.

Mr. Masse, you have the floor.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I support the FCAC and what it's doing. In fact, your work screams why we need to do more work to reach consumers and people. It's not the fault of the FCAC; it's the fault of the legislation and the way we approach engaging consumers about this issue. I want that to be clear. Your tools, when someone goes on your website and looks at them, if they can get to them, are quite useful. They're important. The problem is that we're not doing our job, in my opinion.

I'll go to Mr. White and to anybody else who wants to chime in. When you look at gaming addiction, for example, if you're gaming, a percentage has to go to handling addiction. Should we look at credit cards and other financial institutions like that and put some money aside in a separate entity, one that's independent and deals with that? That's not even the greatest suggestion, but it's one of the things we have to consider in how we deal with some of these things.

The hard case, really, is a political decision about restricting the percentages and the capabilities of debt financing to certain behaviours that are or are not allowed by the government. That's basically a political decision at the end of the day. It's the same with the regulation of interchange fees. That can be done tomorrow. You can walk down to the Minister of Finance's office and she can make the changes right now in regulation. A lot of things can be done.

What do we need to do, as something different and out of the box, to break the mould, if you believe in breaking the mould? Should people be allowed to have 20% to 30% to 40% in their borrowing practices, especially when we have a predatory market of upselling people all the time?

[Geoff White]

Thank you for the study, Mr. Masse.

It's like gaming. It's a necessity, but it's an addictive necessity, and that's the problem. You can provide pages upon pages of information to consumers, but if they're desperate, they will still take on debt.

Something that happens in Quebec now as part of the disclosure is that consumers are educated about how long it will take them to pay off their minimum payment. It's often a surprising amount, but when they're desperate, consumers are going to take the debt on.

None of the lenders appear to have a full picture of what the total debt load of the consumer is, and that goes to the notion that each issuing entity ought to know its client and whether or not an individual or household can sustain an additional level of debt. It's an interesting, novel idea that this should be funded.

I'm going to pass it over to Ms. Alshahwany, but the hard work you're alluding to is really the interest rates. It is telecom-like. There is work to do to have more competition, but right now the competition is all going upward and abusing consumers.

[Aya Alshahwany]

As we mentioned before, it would be quite helpful to consumers to have a one-stop shop. It may not always be clear to lawmakers, but consumers often don't know who is responsible for helping them, depending on the credit product they have. If their credit product is federally regulated, they have access to federal protections, but if it's not and they only have access to provincial consumer protections, they are not necessarily credit card targeted or written with credit cards in mind.

Often, it's only when you have a problem that you realize you don't know where to go, or maybe you're being sent between different places. An out-of-the-box idea would be that if you have an issue with your credit card, there is one place to go to and one place that will answer your questions.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Masse.

We'll now go to Mr. Perkins for five minutes.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair.

My next round of questions will be for both the Financial Consumer Agency and the Public Interest Advocacy Centre.

You both mentioned that the increasing cost of living is driving people to finance day-to-day goods with credit cards, which is obviously a very worrying thing. If you have to buy food on a credit card, you're in a pretty stressful financial situation. The Parliamentary Budget Officer, just a moment ago, released an update to the cost of the carbon tax per household. He now says the average household across most income quintiles “will face a net cost when both fiscal and economic impacts of the federal fuel charge are considered.” He's taking into consideration, when you read the report, the fancy carbon rebate that is offered.

For example, in Newfoundland and Labrador, he's estimating that the net cost for an individual will be $713 more. In my province of Nova Scotia, per year, it will cost $313. In Alberta, it will be $725 more.

Can you comment on the impact this extra cost will have on food and the ability to heat homes? How is that driving people to use high-priced credit to pay their bills?

I'll start with the Public Interest Advocacy Centre.

[Aya Alshahwany]

The Public Interest Advocacy Centre doesn't look directly at the carbon tax, but we have seen that the rise in the cost of living—that includes groceries and rent—and the stagnant wages across Canada are affecting people's ability to finance their day-to-day life and take on more credit. We've seen reports and statistics, especially on gen Z and younger consumers, that show gen Z and other vulnerable groups are having trouble keeping up with their credit card bills and are therefore leaving a balance and taking on more interest.

We know that the rise in the cost of living is impacting Canadians, but the PIAC does not look specifically at the carbon tax.

[Dr. Supriya Syal]

Similar to the PIAC, we don't look specifically at the carbon tax. I will say we have a fair bit of data to support what you've noted, which is that fewer Canadians are keeping up with their financial commitments, more are borrowing for day-to-day expenses and many more are carrying an outstanding credit card balance. Fewer are paying down their credit cards in full. We also know from our data that Canadians who tend to carry a credit card balance also tend to carry other forms of debt, as our colleagues were alluding to.

We have this data, but beyond that, we're not able to speak to the carbon tax piece.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Since this is having such a massive economic impact, particularly with lower-income individuals having to rely on credit, and since the carbon tax is driving up the cost of their daily ability to live and sustain themselves when they're having to use high-priced credit, do you think for there to be transparency and disclosure, banking or credit card statements should also include a statement about the impact of increased carbon taxes on their purchases given what they're buying?

[Dr. Supriya Syal]

I'm not able to comment specifically on whether putting the carbon tax on that documentation would be helpful to consumers. Broadly defined, informing consumers and providing that information to them in the correct way when they're making decisions can help them make better decisions.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

When the decision about the GST was made way back in the Mulroney years, a very specific public policy decision was made to make it visible so that consumers knew when they were paying it and when governments were jacking it up or dropping it. It was visible, so it would be difficult for a government to jack up the GST without consumers knowing about it.

The carbon tax is a hidden, buried and nefarious tax that consumers can't see, but it affects them every day. Should we not require it to be public? As the carbon tax rises to $170 a tonne and goes to 61¢ a litre on gas, should we not require by law that it be publicly disclosed so consumers know what they're paying?

[Dr. Supriya Syal]

I hear you that consumers are facing a number of financial stresses, and I share the concern you're speaking about.

I'm unable to speak about whether the carbon tax is the—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Mr. White.

[Geoff White]

There are two real things that I think the industry committee should be focused on, and certainly disclosure of cost of living is important.

We talked a lot about telecom today. We do a lot of work in telecom. We've been doing it for decades, and there are similarities between telecom and banking. Both have high concentration and high prices compared to peer countries, with abusive sales practices and misleading sales practices. When you look at the tribunal that regulates them, you don't often see people who represent consumers or the individual—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

That's fair enough, Mr. White, but my question was about the transparency of the carbon tax—

[The Chair, Liberal, Joël Lightbound]

Mr. Perkins, you're out of time. At the same time, I can understand that the witnesses don't necessarily have much to say about the price on pollution, because this study is on credit cards. I appreciate your attempt, but it's not exactly the study we're dealing with.

I'll now turn it over to MP Arya.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Mr. Chair.

Before I ask my questions, I want to comment on the last meeting, where a number of times witnesses said, “I don't understand the question. Can you repeat it?” It appeared the witnesses were very well trained by their lobbyists—probably former elected officials—in how to run out the time when inconvenient or uncomfortable questions were asked.

I'll turn to this panel.

The government recently said they had an agreement that reduced the weighted average interchange rate for small businesses with $300,000 in sales. The weighted average interchange rate came down to 0.95%. However, these small businesses account, in my opinion, for just 20% to 30% of credit card sales in Canada.

To the Financial Consumer Agency of Canada, from your research on policies, do you agree when I say that for more than 70% of credit card sales in Canada, the weighted average interchange rate has been reduced from 1.4% to 1.35%, or maybe 1.4% to 1.3%? Is my analysis correct?

[Dr. Supriya Syal]

I'm not aware of the specific piece of information you're speaking about, so I can't comment on its accuracy.

[Chandra Arya, Liberal, Nepean, ON]

I'm sure you do research whenever the government changes policies or announces a proposal to make a change in policies.

Ms. McWhinnie, do you have any information on what I said? I can repeat it. For 90% of businesses whose credit card sales are less than $300,000, the interchange rate was reduced to 0.95%. However, these small businesses account for just 20% to 30% of total credit card sales, so for 70% to 75% of credit card sales, the interchange rate has barely moved down—maybe from 1.4% to 1.3%. Is my analysis correct?

[Krista McWhinnie]

We don't have expertise on the code—

[Chandra Arya, Liberal, Nepean, ON]

I'm sorry. I have limited time.

Dr. Syal, can you look into this and get back to us, if possible?

[Dr. Supriya Syal]

Yes, we're happy to look up this information. We have not specifically done research on the interchange fees, but we can.

[Chandra Arya, Liberal, Nepean, ON]

Okay. Thank you.

Ms. McWhinnie, you said that you deal with deceptive marketing practices. Since we started this study, we have been—at least I have been—flooded with emails from consumers saying how their rewards are being affected, asking for the fees to be reduced, etc. Canadians can obviously write to their MPs or to any MP with their views, but this is a form email. As I said, an email campaign has been launched by somebody.

While Canadians, or even Canadian businesses like banks and credit card companies, have every right to do their advocacy through an email campaign, in my view, the current email campaign is slightly misleading, but somebody is funding that. If somebody is funding a misleading email campaign, can that be considered a deceptive marketing practice or a deceptive advocacy practice?

[Bradley Callaghan]

Pardon me. I can speak to that one in terms of our deceptive marketing provisions. The provisions of the Competition Act on this topic really prohibit marketing and advertising that is false and misleading. As we've talked about—