Industry Committee on Nov. 25th, 2024

[Frank Lofranco]

Thank you for the question. I want to make sure I understand it. Payment card network operators have signed the code of conduct. The commissioner identified them in our opening remarks.

When—

[Brian Masse, NDP, Windsor West, ON]

Who hasn't signed the code of conduct?

[Frank Lofranco]

I believe one entity has not signed the code of conduct, but their name escapes me. I apologize for that. Six have, including Interac.

[Brian Masse, NDP, Windsor West, ON]

Well, you can get back to us on that. You can submit that to us later, and we'll make sure we publicize it.

So, it's not a mandatory code of conduct. What have the repercussions been for that one entity that didn't sign the code of conduct? Is it mandatory? If it's not mandatory, are there any repercussions anyway?

[Frank Lofranco]

Codes of conduct are developed with industry. They secure the agreement of industry and signatories.

[Brian Masse, NDP, Windsor West, ON]

Yes, I know what they are, but they're either voluntary or mandatory.

[Frank Lofranco]

I would have to characterize them as generally voluntary, but with a lot of take-up across all the codes we have.

[Brian Masse, NDP, Windsor West, ON]

So, they're voluntary.

What's the penalty for not signing the code of conduct? We can't even name the one entity now, if there is just one. There might be others. How do you gauge who's...and what is the valuation of this voluntary code of conduct for all of the operators in it?

I'm very familiar with this, because I worked on a bill on the aftermarket with regard to the automotive sector. That was for a voluntary code of conduct.

Very clearly for the committee here, what happens when you have one, at least, that is outside, and then you have the rest? Are the rest participating equally, or are they participating in different forms?

[Shereen Benzvy Miller]

I think Jason would like to take this one.

[Jason Bouzanis, Assistant Commissioner, Public Affairs, Financial Consumer Agency of Canada]

Yes, perhaps, Mr. Chair, just as a point of clarification, I can confirm that all PCNOs have signed the code. There is one PCNO, however, that does not offer cards or have acquirers that has not signed the code. For all intents and purposes, the ones that are active within the payment system have signed the code.

All the PCNOs that have acquirers and issuers have signed on to the code. The Exchange is the—

[Brian Masse, NDP, Windsor West, ON]

Why would the one be invited to sign the code of conduct but then you're saying they really don't belong in the code of conduct? Is that really what you're saying?

[Jason Bouzanis]

The Exchange is an ATM network, which is the one that has not signed.

Perhaps my colleague, Mr. Lofranco, could comment on how we supervise those that have signed on the code.

[Brian Masse, NDP, Windsor West, ON]

What is that corporation that didn't sign the code of conduct?

[Jason Bouzanis]

It's The Exchange, which is an ATM network.

[Brian Masse, NDP, Windsor West, ON]

Thank you. I appreciate that.

How do we deal with this? What are the repercussions?

[Frank Lofranco]

The obligations under the code fall to all payment card network operators. I'd like to thank my colleague, Mr. Bouzanis, for the clarification.

With respect to the obligations under the code, the payment card network operators have the obligation to comply with the code and to make sure all participants within the network also comply with the code. Our role is to supervise that compliance. We do that in multiple ways. On the one hand, we review policies—

[Brian Masse, NDP, Windsor West, ON]

What's the penalty for them not signing the code?

[Frank Lofranco]

Just to be clear, by way of our role and our mandate, we supervise the compliance on the part of signatories to the code. That's where we focus our efforts, to ensure compliance on the part of the signatories.

[Brian Masse, NDP, Windsor West, ON]

What I'm asking is, what are the repercussions and what takes place? Is there an administrative monetary penalty against the operator? Is there a restriction to market access? Is there publicity? Is the decision sent up to the minister? I know that the minister might want to know at least if there's compliance or not.

We had the same problem on the right to repair legislation. There were good operators and there were operators that were not good. Because it was voluntary, they didn't have to do certain things.

What are the repercussions for this particular operator?

[Frank Lofranco]

I appreciate your question.

I think you're exploring what happens in situations of non-compliance. There is non-compliance that we do discover among payment card network operators. We discover that through reviews and assessments we do, as well as complaints we receive. In such cases, there is one of two or three options we can pursue. On the one hand, there is the opportunity to enforce compliance with the code by way of what we call a notice of non-compliance. When we issue a notice of non-compliance, it requires remediation on the part of the entity. If there's financial harm to consumers, or in this case merchants, there's an expectation that the financial harm is addressed and the consumer or the merchant is made whole.

Oftentimes, it may be accompanied by an action plan in which the prescriptive steps to undertake the corrective action are identified. We actively monitor action plans in that regard. We do have enforcement authorities in relation to non-compliance among payment card network operators who have signed on to the code.

[Brian Masse, NDP, Windsor West, ON]

That's helpful.

[Shereen Benzvy Miller]

If I could just add—

[Brian Masse, NDP, Windsor West, ON]

I don't expect you to have this now, but could you table the decision-making process on that?

I'm looking at your website right now, and it talks about how you can protect the consumer. My concern as a legislator is whether you even have the powers to protect the consumer. I would like to have a rundown of the last number of years as to when there wasn't compliance or there were issues from consumers: what the repercussions were, whether it's notice of compliance or reparations, in what cases they were done, or whether there was pressure just to redirect their behaviour. That's what I think is really important for us to get an idea of as to the opting in and opting out.

Just to complete this, though, this is, in the vast majority, a voluntary code. You mentioned the fines. You didn't say fines—you didn't go that far—but administrative monetary penalties are the normal fining system related to that. You don't have that capability, though. You don't have AMPs that you could do.

[Frank Lofranco]

In response to your question, I just want to ensure that there's clarity. If we're talking about financial institutions and non-compliance that we discover within financial institutions, there are enforcement authorities that we leverage, and they can be accompanied by financial penalties where warranted. They also have the feature of required remediation and redress to consumers to make them whole where there was financial harm. Many of those—

[Brian Masse, NDP, Windsor West, ON]

That's good. I'll just finish here with my time.

I don't expect you to have it here, but I'd like a rundown for our analysts to have on cases that happened where there was non-compliance and what the measures were against the financial corporations for that. I think that would be helpful for the public to know whether or not we have the proper mandate for the agency.

Thank you very much. I appreciate that.