Industry Committee on Oct. 28th, 2024

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Chair.

Ms. Ferri, I know that you are not responsible for the choices made by credit card companies. That said, Visa and Mastercard say they agreed to temporarily reduce their interchange fees for some businesses. However, in order to benefit from these so-called agreements, merchants must have completed transactions of up to $175,000, in the case of Mastercard, and $300,000, in the case of Visa. In the end, no convenience store, grocery store or restaurant will benefit from this fee reduction.

Isn't that, in itself, proof that we need regulations and that the major credit card companies aren't taking the food price crisis seriously?

[Diane Ferri]

We adhere to all the regulations appropriate for our business.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

We could quickly go around the table to see if representatives of the other banks are making the same observation.

Do you think regulation is necessary?

[Ramesh Siromani]

Yes.

[D'Arcy McDonald]

Yes.

[Meg McKee]

Yes, that's correct.

[A voice]

Yes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

That's called unanimity.

We see that countries with the lowest interchange fees apply rigorous regulations. This is the case, for example, in the United Kingdom and New Zealand. That is also the norm among the countries of the European Union.

Where does Canada rank internationally when it comes to interchange fees? Does anyone have that information?

I'm very sad to see that no one has that information.

In that case, what would you think of a potential regulation requiring merchants to post on every invoice the fees that credit card companies charge them for each transaction?

The question is for all of you. Whomever wishes to answer it can put up their hand. This time, I'm not going to let the witnesses off the hook.

[The Chair, Liberal, Joël Lightbound]

I see that Mr. McDonald has unmuted himself.

Go ahead, Mr. McDonald.

[D'Arcy McDonald]

I think we'd be very supportive of enhanced transparency, period. I think you have to be thoughtful about how you display that on a receipt. It's a cost not borne by the customer, so it may create some confusion. However, I think we're all for creating transparency for the payments value chain, which is what I think we're talking about today.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Very well. Since you seem to be the only one willing to dip their toes into these issues, I'll ask you my next question.

Some credit card companies privately say that it is necessary to have high interest rates on unpaid balances, as well as high interchange fees, because this type of credit represents a significant risk for the lender.

How is it that banks are willing to provide credit cards to virtually anyone, including vulnerable people? Isn't that predatory behaviour?

[D'Arcy McDonald]

Certainly at Scotiabank we take extending credit very seriously. We work very closely with customers to make sure that they get the products and services that best meet their needs. There's certainly zero predatory lending, or lending to those who cannot afford to pay us back. That would be financially not prudent. We take lending credit very seriously and have good controls around how we do it.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Many people tell us that they often receive credit card offers, even though they're already deeply in debt. Already, this logic escapes us. Afterwards, however, no one insists on offering them a line of credit at the prime rate.

Could you explain that to me?

[D'Arcy McDonald]

I think we are experiencing a very competitive environment. I can't speak to those specific offers, but customers have lots of choice in Canada for sources of credit.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Savard‑Tremblay. I've already given you double the normal speaking time. As you can see, I wasn't lying when I said I was generous with your speaking time.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

I greatly appreciate that, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

You're welcome, Mr. Savard‑Tremblay.

Mr. Masse, you have the floor.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

From the perspective of your 20% interest rate credit card customers, I'll ask this of all the banks.

Is there a point in time, maybe after a couple months of witnessing one of your customers struggling to pay the balance of their credit card, when you would reach out to that individual to find out if there is a problem and offer them a lower percentage card proactively so you could get your customer into a better situation and out of debt?

I'll start with the Bank of Montreal.

[Jennifer Douglas]

We do take financial literacy very seriously, and we do have data models that would predict customers who may be having challenges. Even before they get to the point where they can't pay, we actually will reach out to them through various channels. We have various tools that we can work with. For anyone who's having challenges paying their bills, we will do our best to try to help them make their lives easier.

[Brian Masse, NDP, Windsor West, ON]

Would you call that customer and say, “Hey, do you know what? Your 20% card really doesn't work for you and you're not getting through your principal. Here's a 10% card.” Does that happen? That's really what I'm getting at.

[Jennifer Douglas]

We would ask them, first of all, what their situation is and try to understand. We do have a list of things we can do for them, and some of them are lower interest rates.

[Brian Masse, NDP, Windsor West, ON]

I'll put that to the Canadian Imperial Bank of Commerce next.

[Diane Ferri]

Yes, we also proactively call clients who we think may be starting to have challenges. We do proactively reach out and talk to them about their situation and potentially move them to a different solution that would best meet their needs.

[Brian Masse, NDP, Windsor West, ON]

What about the Royal Bank of Canada?

[Ramesh Siromani]

Similarly, we at RBC have different options available.