Mr. Speaker, I am pleased to participate in this debate.
The NDP motion which we are discussing today calls on the Canadian government to establish comprehensive legislation similar to the Credit Card Accountability Responsibility and Disclosure Act of 2009 which was recently introduced by the Obama administration in the United States, although the parliamentary secretary claimed differently. He claimed that it was the Bush administration that introduced it. Only a Conservative would stand up and defend Mr. Bush, but that is his prerogative to do that. I just find that very interesting.
While I agree wholeheartedly with the need to protect Canadian consumers, particularly those who are most vulnerable in tough economic times, we must assess whether or not Canadians face the same threat that Americans do before determining whether or not to apply an American solution here in Canada. In other words, we cannot assume that what works south of the border will work here. While it would be foolish to object to protecting Canadian consumers from sudden interest rate increases and account changes, abusive fees and penalties and aggressive solicitation, it is yet unclear as to whether or not Canadians actually encounter exactly the same problems to the extent that American citizens do.
This is why we as Liberals have taken leadership on the issue by initiating three separate studies in order to make that determination. A study by the Senate committee on banking, trade and commerce is currently under way, and separate reviews by the finance and industry committees are set to begin in May. Each of these is designed to examine different elements of the credit card and debit card industries to determine what measures may be necessary in order to further protect Canadian consumers and merchants.
By taking a more broad-based approach, one that includes protecting merchants as well as consumers, the idea is that we as Canadian lawmakers would be much better suited to address the issues that currently face Canadians rather than simply applying a cookie cutter approach that worked in the United States. I might add that this legislation, although it looks very good, is unproven in the United States.
Here in Canada, for instance, consumer interest rates, late payment penalties and repayment terms are determined by banks and not the credit card companies themselves. As such, if we focus exclusively on the credit card companies and neglect the study of the banking institutions that actually establish the terms of the credit card account, then we would be doing a huge disservice to the Canadian public.
It is also worth noting that the proposals in the NDP motion which we are currently debating may not adequately address other concerns. For example, a recent poll commissioned by the Canadian Federation of Independent Business revealed that over the past 12 months, no fewer than 22% of Canadian credit cardholders have received additional cards from companies such as Visa and MasterCard with features such as travel points and extra insurance.
Getting all this and not really asking for it really is a problem. People are being given stuff which they sometimes take. They think it is a great idea and they run with it. They think that because they got it, they deserved it. It really does impose a burden on people who would not otherwise have applied for it, or have done their homework and thought that they really could not afford it but they took it anyway. That is really where one of the issues lies. It is one of the problems.
There is also mounting evidence that the so-called premium credit cards are now being directed toward low-income, elderly and otherwise vulnerable Canadians. For many consumers, they often do not know that they are being charged higher rates until they actually receive their bills.
The concerns in the United States may not be the same as the ones here. When we talk about our banking system, we do have a nice solid banking system that works. We were not plagued by the subprime problem, as was mentioned earlier. Those are issues that all have to be taken into consideration when we are looking at the legislation.
The legislation is appropriate and it may work, but it may have to be modified in order to adapt to Canadian realities. I mention this because while the motion we are currently debating stipulates consumers should be informed of the terms of their accounts, there is nothing in it that would prevent credit card companies from offering cards and upgrades to those people without being asked. I mentioned this earlier.
While there may be some people who feel that regulation in the electronic payment industry could be harmful to Canadians, and that is always something that is out there, I believe the only way to determine this for sure is to take a comprehensive approach to the issue, rather than trying to implement a one-size-fits-all solution.
The NDP motion proposes that the U.S. legislation be applied in Canada. Canada's financial system is much stronger, as I mentioned earlier, than the United States' financial system. It is important to recognize that the problems consumers face with credit cards in the U.S. do not necessarily apply to all Canadians.
One of the problems I also see here is that, before the Prime Minister was in politics, he was opposed to what we had done with the banks. He wanted them to be able to do as they pleased. Now he boasts that we have a banking system here that is far better than anywhere else in the world. This leads me to wonder whether one can have confidence in a prime minister who changes his mind according to his circumstances, especially when something so fundamental is at stake. Before he entered politics, he wanted to take away all regulation of the banking system, and now he is congratulating himself on this system.
So what are we to think of this Prime Minister? Is he serious? Does he say things just to get votes? These are questions Canadians need to ask themselves. Who will protect us from the credit companies or banks? Who will protect them as well? If they had gone in a certain direction, there would have been problems. We have to think of what this Prime Minister believes, and what the Minister of Finance believes.
My Liberal colleagues and I believe there are significant issues that need to be examined with respect to credit cards, such as interest rates, disclosure of information and fees for consumers and retailers.
While the Conservative Party's 2008 election platform pledged to protect consumers with stronger competition laws, it contained no mention of credit cards or their fees.
In the 2009 budget, the government pledged, without giving details, that it would move to limit “business practices that are not beneficial to consumers”, noting that one measure would be to require minimum grace interest-free periods on new purchases.
More recently, the finance minister announced the creation of an advisory committee on finance to “ensure the availability of financing to Canadian businesses and consumers to support the economy and encourage growth”. While the finance minister points to this work as an advisory board in response to questions about credit card rates and fees, it is unclear how the committee's mandate relates to specific issues like interest rates and interest rate increases, payment fees, account transparency and other issues listed in today's motion by the NDP.
My Liberal colleagues and I will continue to pursue the tough questions regarding credit card companies and financial institutions to ensure that Canadian consumers are well-informed and are being treated fairly.
I want to touch on one area that is very important, and that is the interchange fees that are charged to merchants. Fees can vary from one card to another. I think of a small merchant sitting there waiting for business. When there is a sales transaction and a card is used, he does not have the right to turn it down, yet those interchange fees are going to be charged to him. If one card charges 2% and another charges 6% or even more, it is very difficult for that small merchant to plan what his profits are going to be. I am not talking about just protecting the merchant here. That merchant provides jobs. Jobs are what we need in this economy. If we are not protecting that merchant from charges that he is not aware of, then we are killing jobs. This is something the government has to understand.
In order to ensure that consumers are protected, I strongly believe that more information is needed. Once these studies are completed, I think we can take a look at it and ensure that we have everything we need to help the average Canadian.
In the meantime, we will be supporting the NDP motion put forward by the hon. member for Sudbury, because we believe in protecting Canadians as much as possible. Each Canadian deserves to be protected when it comes to finance, safety or any other issue that we have rights to.