Thank you, Mr. Chair.
Good morning. My name is Judith Hamel. I'm the director general of the financial services division at the Department of Finance Canada.
I'm joined today by Nicolas Marion, senior director of payments policy, who is part of my team. We're also joined by our colleagues from the tax policy branch.
The role of the financial services division is to provide advice and analysis to the Minister of Finance on policies relating to payments and the protection of consumers of financial services and basic payments. Our work is closely aligned with that of the Financial Consumer Agency of Canada, which is responsible for monitoring federally regulated financial institutions' compliance with applicable market conduct obligations. The agency is also responsible for educating consumers of financial products, notably on their rights and responsibilities.
Before I hand it over to Nicolas to talk about our role in payments policy, I'd like to give you a brief overview of the market conduct obligations set out in the Bank Act respecting credit cards. These obligations fall into three categories: disclosure obligations, restrictions on business practices and maximum consumer liability.
Information and disclosure requirements seek to ensure that consumers are well informed, that they understand their credit card agreement and that they receive key ongoing information. For example, banks must provide certain upfront information to consumers when they apply for credit cards, including a summary box that prominently displays the key interest rates and fees associated with the credit card.
Business practice obligations are intended to protect consumers by promoting fair lending terms. For example, under the Bank Act, banks must give credit cardholders a minimum of 21 days to make a minimum payment on their outstanding balance. As another example, banks must obtain the consent of a consumer prior to any credit limit increase.
Liability requirements protect consumers when fraud has occurred. Should an unauthorized credit card transaction occur, the Bank Act sets a maximum customer liability of $50. However, in practice, Visa, Mastercard and American Express have committed to not impose any financial liability on consumers who fall victim to unauthorized credit card transactions.
Additionally, in 2022, enhanced principles were introduced in the Bank Act that set a higher standard for bank sales practices when it comes to all products and services, including credit cards. Under these rules, banks must now have policies and procedures in place to ensure the products they offer and sell are appropriate for the financial needs of the consumer.
I'll now give the floor to Nicolas Marion.