Industry Committee on Oct. 10th, 2024

[Krista McWhinnie]

Due to the reasons we lost, we decided not to appeal the decision.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Is the Competition Bureau currently investigating credit card rules or other practices in relation to the Competition Act?

[Krista McWhinnie]

I don't have anything I can share publicly on ongoing investigations. If the question is whether we have an ongoing enforcement investigation into these practices, that's not something I can share due to confidentiality provisions.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, MP Gaheer.

I now give the floor to Mr. Garon for six minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Mr. Chair.

I'd like to thank all our witnesses for being with us today.

I'll start with you, Mr. White.

I must admit I'm a bit tired of hearing the Liberals say, as Mr. Gaheer just did, that the government negotiated agreements with credit card companies to lower interchange fees, as if the Liberal government cared in any way about the interchange fees paid by Canadians.

Mr. White, I would like you to tell me if I fully grasp what happened with interchange fees.

As I understand it, the government has never negotiated for a single minute with the credit card companies. It has only threatened to regulate them. Also, I think it's a lie to characterize what happened between Mastercard, Visa and the government as agreements. I think it's more of an expectation on the part of the government. The government made a threat, and Visa and Mastercard made a temporary offer over five years. The government backed down, and we ended up with temporary agreements with no regulations and no real permanent progress for Canadians who are paying these hidden fees.

Am I correct in saying that the government has not negotiated, that the agreements are not permanent and that the problem has not been resolved in the long term?

[Geoff White]

Thank you for your question. I understood it.

I will answer in English, if that's all right.

We're not too involved in this issue of interchange fees. That is largely a commercial fight between merchants and credit card platforms. It is significant in the sense that if the merchants are paying high fees, they will naturally need to pass them on to consumers.

This is a legislative problem at this point, and our fellow panellists, the Competition Bureau and the Financial Consumer Agency, have their roles to play. However, while action needs to be taken at the federal level to do something about interchange fees, it's interest rates that are killing Canadians. It's interest rates that are putting Canadian households and families on the brink. That's the real issue.

[Jean-Denis Garon, Bloc, Mirabel, QC]

I understand what you're saying, Mr. White. I'll stop there, not because I'm not interested in the answer, but because I really want to focus on the nature of these agreements.

I will turn to the representatives of the Financial Consumer Agency of Canada.

Ms. Syal, the document you sent us states that your role is to supervise federally regulated financial institutions and improve Canadians' financial literacy.

As I understand it, there are no agreements between Ottawa and the credit card companies. Instead, the credit card companies proposed temporary reductions in interchange fees to their customers. This not a sustainable solution. Your agency is not responsible for enforcing these so-called agreements. Have I understood the situation correctly?

[Dr. Supriya Syal]

Thank you for the question. I'll let my colleague respond to it.

[Frank Lofranco, Deputy Commissioner, Supervision and Enforcement, Financial Consumer Agency of Canada]

Thank you for the question. I will answer in English, if I may.

To be clear, our mandate does not provide us with a role in the approval of interchange fees or rates—or interest rates, for that matter. Our role is to supervise compliance with legislation, regulations, codes of conduct and public commitments, the entirety of which—

[Jean-Denis Garon, Bloc, Mirabel, QC]

That's excellent. That answers my question.

We are told that there are agreements. However, since the Government of Canada has not negotiated with the credit card companies and there are no so-called agreements, despite the government's deceitful claims to the contrary, you have no role in enforcing them. I understand that.

I'm going to ask the representatives of the Competition Bureau Canada the following question.

Representatives of credit card companies came here this week and said that, if interchange were regulated, as the Competition Tribunal suggested, it would be a disaster for the banking system.

I checked what was being done in English-speaking countries that have credit cards similar to those in Canada. Here is what I found. Since 2003, the Australian government has had caps on interchange fees. Recently, in 2022, New Zealand introduced a regulatory and legislative cap on interchange fees. In the U.K., after Brexit, they kept the European rules, which cap credit card interchange fees as well as debit card fees. My Liberal colleagues alluded to the United States, where, in 2011, the Federal Reserve strongly suggested that these fees be capped.

Can you confirm that it would be possible for the federal government to impose regulations capping interchange fees without wreaking havoc on the Canadian banking system and that this could be a good solution to excessively high interchange fees?

[Bradley Callaghan]

Thank you for the question. If I may, I will answer in English.

We do not have a position, owing to our role as the enforcer of the Competition Act, as to the effectiveness of that kind of regime. It's not something we have studied in depth. That's not to say that we have not looked at issues in the financial sector, as my colleague has said. Where there has been a need for enforcement, we've brought up those cases and brought out our mandate in that way.

We have also continued to monitor these issues, and as developments have happened in the system—for example, with the code of conduct on credit cards—we have made submissions to Finance Canada on how competition can work to its fullest. However, that is where our role ends.

We have not done a deep study that evaluates the effectiveness of those different approaches across other jurisdictions. If we did, our role would be about competition and the effectiveness of competition in Canada.

[The Chair, Liberal, Joël Lightbound]

Thank you.

Thank you, Mr. Garon.

Mr. Masse, you have the floor.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

If you hear a little ping, I've had tech issues and I can't turn it off. Until I can get that rectified, I apologize.

One of the reasons I was interested in this subject matter is the interest rates of some of the borrowing options Canadians have. They would make Tony Soprano blush. I come from a place where we had rum-running, and the rates being offered to consumers on the open market seem similar to those of the underworld. It's become terrible for consumers getting out of debt.

You have retail options of 30% to 40% in Canada, with practices to get people to walk in the door and buy furniture or make other purchases, seducing them with 0% on the surface. They all seem to have similar numbers with regard to what's being offered. Then, if you don't pay that back within a year, you're stuck with all of the interest compounded on top.

I represent constituents who, while making those purchases, were upsold by a store's strategic decisions to get people to borrow at that time. Then they've had their employment change or have lost their job. Some have had their spouses or family members get cancer or something else, and they no longer have the income they had when they signed on to those loans.

I think our current system is antiquated. It's predatory towards working class people in particular.

I asked a question of the CEOs who were here about people carrying personal credit card debt. They didn't answer fully, in my opinion, and that's fine, because I'm not going to press for personal information if they don't want to offer it, but I submit that most of the people paying month by month are the most poor and vulnerable in our society.

With that, I want to start with a question for the Competition Bureau. If you go on the website of the Competition Tribunal and read who's on there, it reminds me of a modern day Knights Templar. It is basically professors, corporate CEOs and consulting firms. It's one of the reasons I have reservations, as I think other members of the committee do, at least on the opposition side, about creating a tribunal for the Privacy Commissioner. We're seeing once again this head rear itself.

If you believe, as I believe, in more independence at the Competition Bureau—and this is not about a particular case—do we need to look at legislative changes for the Competition Tribunal to allow that? You referenced one study that took place, but I want to know whether we can, through regulatory reform, empower the Competition Bureau more or whether we need full legislative changes.

It's not a political question. It's just a practical one about where I stand and who I represent, as I believe in a system that's different from the one we have in place right now.

[Krista McWhinnie]

I want to start by being very clear that the Competition Bureau is independent from the Competition Tribunal. We take our independence extremely seriously, so I echo what you said in your question about the importance of independence.

I can't comment on—

[Jean-Denis Garon, Bloc, Mirabel, QC]

Mr. Chair, I have a point of order.

There's a problem with the French interpretation.

[The Chair, Liberal, Joël Lightbound]

Okay.

I'll speak in English. Mr. Garon, let me know if the issue is resolved.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Mr. Chair, your comments have just been interpreted brilliantly.

[The Chair, Liberal, Joël Lightbound]

That's wonderful. Thank you, Mr. Garon.

Mr. Masse, you may continue.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

[Krista McWhinnie]

As I was saying, I can't comment on the makeup of the tribunal.

On the question of whether we need additional legislative change, as this committee knows, we have just undergone significant amendments to the Competition Act, which we view as a very positive and meaningful change to better allow us to do our jobs to protect competition and Canadians. We are not aware of other consultations under way for further changes, but if we were asked to provide advice, we would. Our role is not to provide suggestions on amendments but to enforce the Competition Act as it stands now.

[Brian Masse, NDP, Windsor West, ON]

Thank you for that. We will probably seek advice from our researchers and analysts later on because it's something I'm interested in.

I want to go to the FCAC. I've been on your website, and I understand there are some working tools there. My concern, quite frankly, is that the constituents I represent—and I used to be an employment specialist for persons with disabilities—may be unlike the target market of people you are trying to get information for. This may not be appropriate for them.

I don't know of any time that I've received in my mailbox or through outreach in the community anything from your organization. Am I not seeing it? Is it not on the ground? Are you not mandated to do things up front? I think you should be in shopping malls. You should be on the streets. You should be in schools. You should do all those things, so am I missing any of this?

A website and electronic communication do not target the market we need to deal with. We're dealing with seniors, persons with disabilities and people with English as a second language. Those are the areas where we find gaps in financial literacy and protection for consumers. Please share with us what you are doing on any of those things and what could be done better.

[Dr. Supriya Syal]

I'll answer in two parts. Vis-à-vis our website, we do receive 650,000 visits annually, and the feedback we receive from stakeholders is that the content provided there is quite useful. There has been a significant uptick in the last year on the use of credit card tools, for instance. At the same time, your point is well taken in that we are one organization and, candidly, will not be able to reach the 30 million people in Canada.

[Brian Masse, NDP, Windsor West, ON]

I'm sorry to cut you off. I'm shocked that there are only 650,000 inquiries on your website. That's a poor number when you consider the number of people who have credit cards, the amount of time they use them, the amount of advice they need and the volume of products. That tells me it's a failing system. Quite frankly, that's what I feel. That's not a lot of people for an object in their wallet or on their iPhone that they use on a regular basis and for the number of products that are out there.

Is it that you're not funded to get out in front of the public, or has it always been the tradition to be available online? If someone doesn't have a computer or doesn't have access to any of those things, you're useless with regard to those people because they can't get to you. Especially with the cost of Internet, rising prices and so forth, you're diminishing your capabilities. What needs to be done for you to be out in the public among the people you need to get to?

[Dr. Supriya Syal]

Our national financial literacy strategy lays out an approach that is very much about collective responsibility. It speaks to how the financial ecosystem is composed of regulators and governments, but also of financial service providers, community partners, community stakeholder organizations, researchers and academics. They all have a role to play in helping financial consumers achieve positive financial outcomes and build financial resilience.

To answer your question, we are working under the aegis of the strategy, with over 30 partner organizations currently, on specific pieces associated with it, and they're driving outcomes, including managing debt.

[Brian Masse, NDP, Windsor West, ON]

I'm sorry to cut you off. I need to go quickly.

I don't mean to be disrespectful. You're doing what you can within the confines of what you're doing, but I don't need researchers or academics anymore. I need people on the ground floor helping people with their debt problems in places where they can be reached. Academics and researchers are part of the tribunal; they're part of all the decision-making for everything. They're the last people I need to help on this.

Do I have any more time, Mr. Chair?