Debates of April 23rd, 2009

Opposition Motion--Finance

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Madam Speaker, I am pleased to have this opportunity to participate in the debate this afternoon on the opposition day motion from the New Democratic Party about consumer protection around credit card interest rates.

We know this is not a new problem in Canada. This problem has existed for many decades and we have seen it get worse with each passing year. Consumer debt has risen dramatically in Canada over the past decades, and it remains today at an all-time high.

The current economic crisis has compounded the difficulties that this high-level of consumer debt makes for ordinary Canadians. Many Canadians are facing a loss of income because of layoffs and unemployment and the lack of availability of employment insurance in their area. They often have to resort to credit cards to make what income they have stretch and to find immediate access to some money to pay their everyday household bills. They use them as a stopgap, which only serves to increase the pressure and the difficulties that these families face. We know it is a serious and stressful time for many families.

Yet we still see increases in credit card rates across the country from different providers. These credit card rates continue to increase at a time when the Bank of Canada rate is at an all-time low. There seems to be no willingness on the part of banks and credit card companies to pass on to consumers the benefits of that low Bank of Canada rate.

This is not something that has just needed to be done now. For many decades we have needed this kind of intervention to protect consumers. We are glad that we have this opportunity today to debate some very specific suggestions for addressing the problems that consumers are facing with regard to credit card interest rates.

One of the things our motion talks about is modelling a response in Canada on what is currently being debated in the United States. Right now I believe both the Senate and the House in the United States are looking at measures to protect consumers from credit card interest rate gouging in that country.

I have looked at one particular piece of legislation, the Credit Card Accountability Responsibility and Disclosure Act of 2009, which is currently before the U.S. Senate. This is the legislation that the motion we are talking about today refers to as a potential model for the government, a model that might enable it to get on with this task more quickly than it might otherwise do.

The government has talked about studying the issue. It has talked about a task force. Here is a legislative model currently being debated in the United States, put forward by the Obama administration, that merits the government's attention and might provide a quick start to getting something before the House.

The motion talks about a six-month deadline for legislation. We would love to see it faster than that. If the government could get it sooner, that would be great, and perhaps looking at what is being proposed in the American Senate would allow it to get on with that task.

I want to talk about what specifically is in the Credit Card Accountability Responsibility and Disclosure Act that is before the United States Senate right now.

Section 101 of that legislation would require prior notice of interest rate increases on credit cards. It would prohibit an increase without 45 days' notice. It would prohibit applying rate increases retroactively to existing balances, and it would require clear notice of the right to cancel the credit card when an interest rate is raised.

These are important initiatives in the United States. In a few of these cases, I should note, we have similar regulations already in Canada. In some cases we have a partial regulation similar to what is being considered in the bill before the United States Senate, but overall, the comprehensiveness of the legislation merits our attention here.

Section 102 of the U.S. bill talks about a freeze on interest rate terms and fees on cancelled cards. That would prevent the interest rate from being raised or repayment terms being cancelled if a cardholder cancels the card.

Section 103 talks about limits on fees and interest charges, and there are four provisions under this section. It would prohibit double-cycle billing. That prohibits credit card issuers from imposing interest charges on any portion of a balance that is paid by the due date.

It talks about over-limit fee restrictions, where cardholders must be given the option of having a fixed credit limit that cannot be exceeded, and card companies cannot charge over-limit fees on cardholders with fixed limits. Cardholders may elect to prohibit the creditor from completing over-limit transactions that will result in a fee or constitute a default under the credit agreement. Over-limit charges can only be charged when an extension of credit other than the fee or interest charge causes the credit limit to be exceeded. Over-limit charges can only be applied once during a billing cycle.

The American legislation would also prohibit charging interest on fees, such as credit card transaction fees, late fees and over-limit fees. It would also put limits on charging certain fees, for instance, to allow a cardholder to pay a credit card debt, whether the payment is by mail, telephone, electronic transfer or otherwise. It requires fees to be reasonably related to cost. Foreign currency exchange fees may only be imposed in an account transaction if the fee reasonably reflects cost incurred by the creditor and the creditor publicly discloses the method for calculating the fee.

Section 104 of the U.S. legislation talks about the consumer's right to reject a card before notice is provided of an open account. It gives cardholders who get pre-approved the right to reject a card up until they activate it, without having their credit adversely affected.

Section 105 clarifies the terms used, because often there is confusion between the terms “fixed rate” and “prime rate”. It would go to establishing a single definition.

Section 106 talks about the application of card payments. It prohibits card companies from setting early deadlines for credit card payments. It requires payments to be applied first to the credit card balance with the highest rate of interest, to minimize financial charges. It prohibits late fees if the card issuer delayed crediting the payment. It prohibits card companies from charging late fees when a cardholder presents proof of mailing a payment within seven days of the due date.

Section 107 talks about the length of the billing period, required to be 21 days before the bill is due.

Section 108 is an important section of the American legislation. It talks about a prohibition on universal default and unilateral changes to cardholder agreements. This is something we could use in Canada to prevent credit card issuers from increasing interest rates on a cardholder in good standing for reasons unrelated to the cardholder's behaviour with respect to that particular card. It prevents credit card issuers from changing the terms of a credit card contract for the length of the card agreement. It also requires issuers to lower after six months the penalty rates that have been imposed on a cardholder, if the cardholder commits no further violations. These are all things that go a considerable way to protecting consumers.

Section 109 talks about enhanced penalties.

Section 110 talks about enhanced oversight of credit card issuers through their primary regulator, something that is also very important.

The bill has other sections that are very important. There is a whole section dealing with the protection of young consumers and the extension of credit to young people and to underage consumers, restrictions on affinity cards that are provided to young people, and protection of young consumers from pre-screened offers of credit. There would have to be permission given to allow for that pre-screening.

In Canada, we have seen occasions where young people have been particularly targeted, like seniors, by credit card companies and often provided with credit cards that were not requested. This has often contributed to the debt problems that those groups face in our society.

The American legislation also talks about interchange fees. While it does not go to providing specific remedies for the problems faced there, it does call for a study and report on interchange fees.

While the motion we are talking about today does not talk about interchange fees, those fees that are charged to retailers and merchants for using a credit card service and ultimately have to be passed on to consumers, this is something that is very important.

We have heard from many retailers. I have heard from them in my riding. One retailer pointed out that $4.5 billion was taken in, in those kinds of fees, last year. In his business, the rate he had to pay the credit card company for using credit card services was raised eight times before October of last year. This is unacceptable. This is another hidden cost that gets passed on to consumers. It is also unfair to merchants.

We need comprehensive credit card legislation in Canada to prevent gouging of our consumers, of people who rely on these devices. We also need comprehensive legislation to protect retailers who also need these credit cards as a requirement of doing business here in Canada.

[Paul Szabo, Liberal, Mississauga South, ON]

Madam Speaker, I thank the member for the information. He has parroted the sentiment of all of the members who have participated at least from the opposition parties. It is unfortunate that the Conservative member for Burlington indicated that the motion makes no sense to him or any of the Conservative members and they will not support it. It seems to me that when there is a problem, one of the first productive steps one can do is to admit there is a problem.

The fees charged to merchants for services raises another issue that concerns me. The first thing some of the consultants who deal with people in debt crisis do is cut up the credit cards. It means those people have to deal in cash. Even people who deal in cash have to pay those hidden fees, because they are passed on by the retailer.

I wonder if the member has a comment on whether or not, in a period of responsible financial literacy and activity, consideration might be given to prohibiting the banks from not allowing retailers to give cash discounts when they make those purchases?

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Madam Speaker, the member for Mississauga South started by pointing out the response of the Conservative Party to the motion today. He said the Conservatives have been saying they do not understand the motion and they do not understand its importance.

We also saw during question period the Parliamentary Secretary to the Minister of Finance dismiss this whole issue very cavalierly, actually. He said that it was a small issue, that there were bigger issues, and that the minister was attending to bigger issues than this one. I would like the parliamentary secretary to say that to the families who are dealing with the debt crisis in their own families, who are dealing with the issues of paying the bills when they have been laid off and cannot collect EI, or when they are on EI and there is not a hope for a job in their community.

This is not a small issue when we talk to Canadians who have been paying through the nose for the availability of this kind of credit and this kind of service. It is not a side issue or something that can be ignored, but it has been ignored for far too long. It has been far too long since we have had a government that has been willing to take on the banks directly on this issue and tell them they have gone too far and they continue to go too far, to tell the major retailers that their credit card services are going too far and their interest rates are far too high.

We need a government with the courage of that conviction, the courage to stand up for ordinary Canadians and say that this gouging has to stop and it has to stop now and that we will not put it off any longer. We have not had that to date in this country.

When we raised the issue of ATM fees, where consumers have to pay to take their own money out of a bank, the Minister of Finance said he would write the banks a letter or talk to them. Nothing was ever really resolved about that issue.

These corporations and banks are raking in huge profits on the backs of Canadians. We are not saying there should not be a fee for services offered, but we are saying it needs to be reasonable. We are not saying that credit should not come with an interest rate, but we are saying that should be a reasonable rate and that it should be regulated and carefully monitored so that consumers have a modicum of protection when it comes to using this kind of service.

[Brent Rathgeber, Conservative, Edmonton—St. Albert, AB]

Madam Speaker, is the member not concerned that if the banks are restricted in the credit rates that they can charge, that might actually lead to less availability of credit? The banks would stop lending money to a certain class of consumers.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Madam Speaker, no, I am not really concerned about the banks. Banks are large institutions. They are extremely profitable and the entrepreneurial spirit is alive and well in those banks. I believe that banks will find ways to make money to keep themselves and their shareholders happy. I do not believe that these measures to reasonably protect Canadians would do damage to the banks in Canada.

I think it is time we had governments and parliamentarians who are willing to stand on the side of ordinary people against this kind of gouging, against these outrageous interest rates, and make sure that there is protection available to those consumers.

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Madam Speaker, I appreciate the opportunity to address the House on the motion put forward by the NDP with respect to credit cards, credit card rates and debit cards.

First of all, I think it is important to clarify, and I asked this question of a member of the NDP, as to where this idea is coming from in terms of the United States. The motion references the Credit Card Accountability Responsibility and Disclosure Act of 2009 and that this was introduced by the Obama administration in the United States, but this in fact is untrue. It was not introduced by the Obama administration. The act was introduced by a senator from Connecticut, Christopher Dodd, who some members will know ran against President Obama during the Democratic primary. He is the chair of the Senate banking committee in the United States, but he is not a member of the Obama administration. I would wonder why the members of the NDP would allow an error like that to be so prominent in their motion.

Second, another concern I have with the motion is it disregards hearings which members of three committees--two committees of the House of Commons and one committee in the Senate--actually voted to hold in their respective committees to investigate this issue, because it is a very complicated issue. The finance committee, the committee which I gladly chair, and the industry committee have passed motions to look at this issue. I suspect we will have hearings on this in May. The Senate committee is actually examining this issue at this time. It makes me wonder why the NDP would not wait another four weeks until the conclusion of those hearings and then pass judgment on what needs to be done in terms of a series of recommendations.

With respect to credit cards and debit cards, these issues, in fairness, have garnered considerable attention in recent weeks. They certainly have been raised with me by many constituents and by many organizations that are valuable in terms of representing their membership, such as the Retail Council of Canada, the Canadian Federation of Independent Business, and the Canadian Restaurant and Foodservices Association. They have raised these concerns on behalf of their members, which is why the three committees have voted to study the issue.

The finance committee, as I mentioned, will be studying it very shortly. I know, as the Conservative members voted to study this issue, the finance minister will be paying close attention and will obviously want to hear from all parliamentarians on this issue after they have studied it in depth.

I also want to point out that our Conservative government has already taken and is in the process of taking some very significant measures to protect credit card users which we have outlined in the budget, our economic action plan, which I would note that members of the NDP in fact voted against.

Our government has strongly advocated that consumers are best served when there is maximum disclosure, when there is competition and when there is choice. On the first point, our budget 2009 economic action plan seeks improvements in areas such as the provision of clear and simple summary information on credit contracts and credit card application forms. We also served notice that we intend to limit business practices that are not beneficial to consumers. For example, we will be seeking improvements in debt collection practices of federally regulated financial institutions and moving forward to require a minimum grace period on new purchases made with credit cards.

Early reaction to these measures has been very favourable. In fact at the finance committee we heard from groups, such as the Public Interest Advocacy Centre, which remarked, “Certainly our reaction to the fact that the government is moving in this direction is a positive one”. We have also heard encouraging words from the Retail Council of Canada, which supported some measures in budget 2009 saying, “These steps help to protect retailers and customers from the unfair practices of credit card companies and their issuing banks”.

Despite the NDP's opposition to these measures, with the support of the official opposition, the budget passed and now our government has the authority to draft regulations for the protection of Canadian consumers.

As the House of Commons well knows, the credit card market is a private sector market and credit card interest rates and features are made by the credit card issuers in a very competitive environment.

Currently in Canada, financial institutions offer consumers a wide variety of choice. There are more than 200 credit cards available in Canada with widely varying interest rates. This means there is a great deal of competition and there is currently plenty of choice.

As the Toronto Star has noted, there is an array of cards on the market, including some 60 low-rate ones. Consumers have the freedom to and should shop around for the best option and rate for their individual needs. While having so many choices ensures competition and varying interest rates, decisions about which card is best can be tricky and difficult without the necessary knowledge.

Indeed, all consumers can benefit by increasing their understanding of interest rates and the effects of compound interest, a lesson I learned very painfully as a young man. In that respect, the federal government has a role to play by helping ensure Canadians are fully informed of their options. This raises the important issue of financial literacy, something that our government is addressing. I must compliment the Parliamentary Secretary to the Minister of Finance for raising it in committee and asking us to look into it, which we are doing within our current study. As well, the finance minister was in the United States this week addressing an international forum on this issue.

Through our support for the Financial Consumer Agency of Canada, our government has helped consumers make informed credit card choices. I would note that our Conservative government has increased funding for this agency in both budget 2007 and budget 2008 to help Canadians make informed financial decisions on products like credit cards as part of our efforts to improve financial literacy.

I would encourage all members of the House to check the information put out by the Financial Consumer Agency of Canada. Representatives appeared before the committee and they are very willing to work with members of Parliament and Canadians across the country in terms of making Canadians more informed and financially literate.

While the agency's mandate is primarily to ensure federally regulated financial institutions provide the required disclosure to consumers, it also provides consumers with very useful information, such as comparison tables outlining the rates and features of the many credit cards offered today in Canada.

Measures in our economic action plan will bring about improvements, such as the provision of clear and simple summary information on credit contracts and credit card application forms. That was raised in the debate this afternoon. It is a valid point, but we are in fact addressing that through the economic action plan.

Increasing consumer protection in this manner, along with the kind of information available on the FCAC website, will help those who use credit cards or who are considering applying for one.

FCAC also publishes a semi-annual report, “Credit Cards and You”, which provides comparison tables outlining the rates and features of numerous credit cards offered in Canada by a variety of issuers. I would encourage all Canadians interested in obtaining this report or others to call 1-866-461-3222 or visit www.fcac-acfc.gc.ca. There is nothing that could do as much in terms of improving or addressing the situation as making sure consumers are as literate as possible on financial issues. I would encourage all members of Parliament to do so as well. All of FCAC's publications are available at no charge.

Young Canadians especially will benefit from these actions that we are taking and the information available as they decide for the first time what credit cards and other financial products are best for them. That is why our Conservative government is very serious about protecting consumers and their dealings with financial institutions.

Financial literacy has been a priority for us. It is an area where we have made significant progress since coming to office in 2006. We understand that one's own level of financial literacy very often influences one's choices, whether one is selecting credit cards, buying a house or deciding on a career. That is why, as we announced in budget 2009, we have pledged within the coming months to establish an independent task force that will make recommendations to the Minister of Finance on a cohesive national strategy on financial literacy. The task force will include representatives of the business and education sectors, volunteer organizations and academics, and will be supported by a federal secretariat.

What is more, we will work with the provinces, the private sector and community organizations to improve the financial literacy of all Canadians. I would note that this announcement has been tremendously well received. The investor education fund applauds this particular development. The Canadian Foundation for Economic Education, which also appeared before our committee on this issue, proclaimed that it commends the government for this very specific task force.

However, there are other concrete examples of our government taking steps to help inform consumers.

Building on measures announced in the summer of 2008, we are moving forward to make mortgage insurance more transparent, understandable and affordable. This will include enhanced disclosures to consumers about the characteristics of mortgage insurance. While lenders are already required to itemize the cost of mortgage insurance as part of their disclosure to borrowers, the new measure will set out additional mandated disclosures to help consumers better understand the mortgage insurance transaction.

Our government will also propose new measures to ensure that Canadian consumers are charged no more for mortgage insurance and the true cost of obtaining that insurance. That is why columnists such as The Globe and Mail financial columnist, Boyd Erman, has claimed that the finance minister “can rightly roll out a new slogan - friend of the Canadian home buyer”. The minister can say it loud. He is a friend of the Canadian homebuyer.

Despite the fact that our efforts have been opposed on these measures at almost every turn by the NDP, our Conservative government will continue to ensure that our financial system stays competitive and that consumers are in fact protected. Based on our prior actions, it is clear that we are serious about protecting consumers in their dealings with financial institutions and will continue to remain vigilant in ensuring that our financial system stays competitive and that consumers receive the highest possible standard of service.

What we must also do here is recognize that our financial institutions are the strongest in the world for many reasons. I do not think it behooves any of us to take shots at them from the sidelines for unnecessary reasons. We investigate where there is an investigation, but we should recognize that they are recognized by many as the strongest in the world and we should celebrate that fact.

We owe it to Canadians in fact to keep our model financial system strong. Canada's financial system is stable. It is well capitalized and it is underpinned by one of the most effective regulatory frameworks in the world.

A recent edition of the U.S. magazine Newsweek answered the following question:

Guess which country, alone in the industrialized world, has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. Yup, it's Canada. In 2008, the World Economic Forum ranked Canada's banking system the healthiest in the world.

Further to that, a recent article in Ireland's largest daily paper, The Independent, recently heralded that the Canadian system has won praise worldwide. The World Economic Forum has also declared Canadian banks the soundest in the world. The Canadian system is undoubtedly an excellent model.

We could also listen to a recent commentary on the global recession by the BBC's well respected economics editor, Stephanie Flanders of the U.K.:

Nowhere is immune, but by most key measures, the Canadians are coming out of this crisis in a league of their own. Take the banking system. Canada's banks have not just had fewer bailouts than other countries. They've had none. Zero. Not a dime.

I know it may be hard for a Conservative to convince NDP members, but they seem to be accepting everything that President Obama says, so let us quote President Obama on this issue:

--one of the things that I think has been striking about Canada is that in the midst of this enormous economic crisis, I think Canada has shown itself to be a pretty good manager of the financial system in the economy in ways that we haven't always been here in the United States. And I think that's important for us to take note of--

Other countries are looking at the model of Canada's banking system, not the other way around, which is why one of our Finance Canada officials in fact co-chaired, with someone from India, ways of looking at improving the financial regulatory system for the G20.

We have in fact not seen any bank failures in Canada and we have not had to inject equity or otherwise bail out any banks. The measures we have taken, such as on the mortgage purchase program, have all been done at commercially exchanged rates. That in fact will prove to be a benefit to the Government of Canada in terms of revenues, but it does help the banking system in terms of allowing it more liquidity, which obviously helps Canadian consumers and businesses across the country.

Over a year and a half into the global liquidity crisis, Canada's banks and other financial institutions remain sound, well capitalized and less leveraged than their international peers, all of which reflect a rigorous regulatory regime. It is important to know that the regime we have currently in place in Canada has been a very effective one.

However, a made in Canada approach explains this, one where capital requirements for regulated financial institutions are above minimum international standards and higher than other jurisdictions. However, we cannot and will not rest on our laurels, considerable as they may be.

In terms of regulation, that is why we on this side of the House are proposing a common securities regulator, which we certainly hope the official opposition will support. We know that the Bloc is unfortunately opposing this and it seem as though the NDP is opposing this. My understanding was that in years past they did support this, but they have now apparently changed their position and will not be supporting this.

This is an additional measure to ensure that proper actions are taken. We will have an effective enforcement mechanism in place, but we will also be able to allow companies to raise capital across Canada without dealing with a whole stable of securities regulation that is different in different provinces. We will be able to raise capital across this country in a much more uniform way.

That is why our economic action plan enhanced the government's flexibility and responsiveness to support financial institutions and the financial system in the event of extraordinary circumstances, measures consistent with our G7 and G20 commitments. Our government knows that Canadians are very concerned about access to credit in general, whether it be through credit cards, mortgages or other credit products.

As part of the government's economic action plan, we are taking further action to strengthen the capacity of Canadian financial institutions to expand credit and to respond to gaps in credit markets. Through the economic action plan, we are providing up to $200 billion in existing and new measures to support the extension of financing to Canadians and Canadian businesses during the current extraordinary period.

I see my colleague here from the finance committee. I would note that the finance committee has been looking at this. I want to commend members of all parties for their work on that issue. We have been looking at the access to credit issue at the finance committee for a number of weeks now. We are currently focusing on the whole pension issue, but we are also looking at the issue of financial literacy within the access to credit, which obviously affects the debate here today. The government and Parliament, through its committee structure, are looking at these very serious issues.

In conclusion, our Conservative government has acted to protect consumers and we will continue to act. We have introduced tough new regulations with respect to credit card practices. We have acted to support and improve financial literacy. We have acted in terms of access to credit in the last budget.

Unfortunately, we have had parties such as the NDP oppose us every step of the way, whether it is voting against the budget that its members have not read or introducing a motion like they have today without hearing from the three committees that will be investigating this very matter.

I look forward to those committees investigating this matter, reporting their recommendations to the House of Commons, working with the government to ensure that Canadian consumers and businesses, especially those small business across this country, have access to credit at a cost that is not too high for them so that they can stay in business over a long period of time.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Madam Speaker, I listened to my friend's excellent speech. He is a very well respected member of the House of Commons who always gives wonderful interventions in the House.

While I have him here as the chair of the finance committee, I am going to ask him a few questions that he knows and all of us know are very important for our citizens. The first one deals with a single securities regulator. Can the hon. member tell us what his views are and what his government is going to do to enable Canada to have a single securities regulator?

Second, he mentioned the very interesting issue of home building. I wanted to point out to him that the CREA, the Canadian Real Estate Association, has some excellent suggestions on tax rollover provisions that will enable us to get moneys flowing more easily through the system. This would provide a pool of private sector funds that could be used to build affordable housing across our country. I know the member has been very involved and interested in that.

Finally, on the issue of credit, we know that the absence of credit for our private sector is one of the major challenges that we have in this economic downturn. I think it is a good thing that the government has put money into EDC to enable it as a vehicle for this credit. I would strongly urge that these moneys not go to the banks. I personally have concerns that these moneys are going to go to improve the bottom line of the banks and not get to the people who need it.

I just want to ask the member if his government would consider putting more money into EDC for moneys that should go to businesses that actually have developments, that are halfway through, and therefore currently have equity in their projects? These moneys can be used to provide some bridging funding as a loan to these developments that would enable them to continue to move forward. The risk to the taxpayer would be very low because there is already equity in these projects and it would provide real money to put Canadians back to work for projects in their communities.

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Madam Speaker, I want to thank my good friend for his kind comments. He asked many very substantive questions so I will try to address them all in turn.

With respect to the single securities regulator, I share his view on that issue. It is absolutely a positive step forward for our country to do that and I certainly thank him for that support. In terms of raising money, in terms of having a uniform system across this country that investors, both domestic and foreign, can invest their money and apply under the same sort of guidelines and have the same force on mechanisms, that would certainly be a good thing for this country.

I know the Bloc and the member on the finance committee from the NDP have raised concerns that Quebec has a very good system and it does not want to see that lost in terms of a national securities regulator, but the response to that is to say that the good things that happen within the Quebec system could be applied to the country as a whole.

So if the securities regulation works well in Quebec, that is something we should apply to the entire country. I would also say that to people in my own province because there are people in Alberta concerned about a common securities regulator, so on that point I would certainly support that.

In terms of home building, as the member knows, there are many initiatives in terms of housing, the home renovation tax credit. The hon. member for Newton—North Delta, I believe, brought forward a private member's bill in the last Parliament with respect to people being able to access more money out of their RRSPs. I commend the member, a fellow British Columbian of the hon. member opposite, for bringing that forward.

In terms of the rollover issue, I have certainly heard that idea. It is an idea worthy of discussion and merit. It has not been acted upon thus far, but it is certainly something we could consider as we go forward in the next pre-budget hearings in the fall.

With respect to the member's third area of credit, he is absolutely right. The biggest challenge facing businesses, small and large, across this country and consumers is access to credit. I am very glad that he is supportive of the measures with respect to providing more funds through BDC, EDC and CMHC. We had all these organizations before the committee on the access to credit issue. They are very welcome in terms of getting the money to them, but we have also expanded their role.

In terms of current projects being eligible, obviously as a parliamentarian I would hesitate to say whether one project or another could be eligible, but in terms of EDC, it will have more money available to lend to credit worthy businesses, but it will also have an expanded role especially domestically here in Canada, in terms of what it can and cannot do. As the member would recognize, EDC is widely recognized as an excellent institution and I look forward to its even greater role both internationally and domestically here in Canada.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Madam Speaker, in speeches this afternoon we have heard often that many retailers and merchants in Canada are having difficulties because of the interchange fees charged for use of the credit card system and that they have seen huge profits for the credit card companies which provide the service. The rates that are charged to retailers for the use of that system are increased frequently. One of my constituents pointed out that his fees went up eight times in 2008. Up to about October 2008 alone it went up four times in that period.

When my constituent and I wrote to the Minister of Finance about that issue, the regulation of interchange fees and what the government might be prepared to do to both protect retailers and consumers from those high fees, the response we received from the minister completely ignored that issue. He did not comment on the issue of interchange fees at all. This was in the pre-budget period when Conservatives were looking for ideas about how to support Canadians, retailers and consumers.

I wonder if the member might speculate about why the Minister of Finance ignored that issue completely. Is it something that the government is absolutely unprepared to make any changes on?

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Madam Speaker, the member raised a serious issue with respect to the interchange fee.

However, I would caution the member. Since this issue has been raised with me by the CFIB, the retail council and the restaurant and food association, I have looked into what is known as a four-party credit card model. This is a very technical model in Canada and also around the world in terms of how credit cards and their markets work. We have the merchant, a payment processor, the acquirer, the card issuer, the cardholder and the credit card company.

I also point out, though, that the interchange rate is part of the merchant discount rate. Merchants and retailers are concerned about the interchange rate, but they are probably more concerned about the merchant discount rate. In many cases we do not know the merchant discount rate because we need to have the consent of retailers to get that. I asked the retail council today whether we could get more information on that and it said it would gladly provide it.

With respect to the interchange rate, my understanding is that it is about 1.5%, so about 98.5% stays with the retailer and 1.5% is with the interchange. Whether that ends up with the credit company, or with the financial institution or the processor is one of the issues at which the committee will have to look. The interchange rate plus the other costs make up the merchant discount rate.

The member raised the issue of premium cards. It is, in fact, true that for premium cards a higher rate is applied. American Express is the highest premium card. It charges such a high rate that in many cases many retailers do not even carry the card. We should look at this issue.

In terms of Canadians receiving these cards without their consent or without full information, a committee could legitimately look at and perhaps some action could be taken.

As the minister has explained in the House, the economic action plan we have passed enables him to regulate in many of these areas with respect to better informing consumers about the products they are buying.

My final response to the member would be that this model and the system that is in place is of a complicated nature such that it makes sense for members of the House of Commons committee and the Senate committee to look at this over the next month and report back to the House with some recommendations or actions that the government could take, in addition to the measures we have already taken.

[The Acting Speaker, NDP, Denise Savoie]

It is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Vancouver Quadra, The Economy; the hon. member for Nanaimo—Cowichan, Aboriginal Affairs; the hon. member for Laval, Status of Women.

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Madam Speaker, I will be sharing my time with my colleague from Nanaimo—Cowichan.

In these tough economic times, it is crucial that consumers are protected from companies whose priorities lie with shareholders and in making as much profit as possible as opposed to the public interest.

The motion before us today, and I am very proud that New Democrats have sponsored it, is in the public interest. New Democrats are calling for immediate action to protect consumers from credit card interest rates and fees that are increasing by leaps and bounds. We want to put an end to unfair penalties and gouging.

Usury has been illegal for centuries, but consumers are at the mercy of credit card companies and have been at this “untender” mercy for far too long. The latest increases in credit card rates and fees, combined with the economic recession, has resulted in families being unable to pay their mortgages, businesses shutting down and unbearable debt loads.

Research from the Library of Parliament shows us that in the last 20 years real income for families in the middle and lower-income brackets has declined significantly. People at the top have done very well, thanks very much, but for people in the lower and middle-income levels, it is becoming tougher and tougher. What they have to spend for their families is less and less incrementally and families are noticing that.

Twenty years ago, 80% of disposable income was taken up with debt. Now it is 125% of disposable income. Therefore, many families live from paycheque to paycheque. They would rather not use their credit cards for family necessities, but they have no choice.

Currently, consumers pay interest not on the current account balance, but on the previous month's balance. How frustrating it is to pay off one's credit card and see interest charges on the next month's balance.

The personal debt of Canadians is of great concern. In 2008, 84% of Canadians reported having some kind of debt and 40% of those people feared they would be unable to make payments if an unexpected event occurred, such as an illness, accident or unexpected car or home repairs. Twenty-eight per cent of those with debt feared for their retirement.

There is also the 25% who do not save at all, not even for retirement. These are people raising kids, trying to survive on part-time jobs and trying to save for their children's post-secondary education. As we all know, the cost of post-secondary education has increased exponentially and the amount the federal government gives to post-secondary education is nil. In fact, the debt load has been downloaded from the federal and provincial governments to students, who are the least able to manage.

To add to increasing fees and interest rates, many Canadians are in danger and worry about being unable to pay their bills. One in five households could not handle an unforeseen expenditure of as little as $5,000. Sadly, a great number of people, 20%, are being forced to tap into their RRSPs just to make ends meet. That means they will have a pretty bleak and barren retirement.

Credit card companies often target those who can least afford the card, which maximizes company profits, with little care for financial ruin or the realities of the users.

Seniors are often targeted and preyed upon by credit card companies. Results from a national public opinion poll reveal more than one-fifth of Canadians with credit cards have reported receiving those cards without ever asking for them. These are the new premium cards, about which we have heard, issued in the past year by companies such as MasterCard and Visa. The poll shows that among the group who receives these cards unsolicited were many elderly people, students too. People already burdened by huge debt, as I indicated, are seeing their interest rates creep higher and higher, pushing them further and further into debt.

These young people sometimes find that this becomes a hurdle to the completion of their education and they always find that it inhibits their ability to repay their loan after graduation. Cuts to the post-secondary education of our students, as I indicated, has created these unbearable debts.

Families already struggling to make ends meet are taking on bigger and bigger debt loads, including using their credit cards for essentials like groceries, hydro bills.

With the influx of the new premium cards, without knowing it, consumers are reducing the already small margins made by local businesses, and we have heard about this too. With charges of up to 4% on the total price of a sale instead of a flat transaction cost, businesses are on the brink of shutting down.

I thought the government was a friend of small business. That is what it says.

However, the Canadian Federation of Independent Business sent a letter to my office on behalf of 105,000 small and medium-sized businesses, asking for help with the staggering increases in costs. Eighteen business in my riding alone, including clothing stores, courier companies, drugstores, flower shops and automotive shops, just to name a few, sent a letter pleading for transparency and accountability.

Both consumers and businesses are hurting and things need to change.

According to the Canadian Federation of Independent Business, 82% of Canadians with credit cards support tighter rules on the industry. Owners of small businesses are very much in step with that general public opinion in wanting greater oversight on this industry.

In Canada there are about 50.4 million credit cards in circulation, which totals more than two credit cards per adult. About 22.2 million of those cards carry a balance. In contrast, in 1983 there were only 12.1 million cards, or less than one card per adult. In 1984 Canadians paid $6 billion in interest on credit cards, loans and lines of credit. Now, Canadians pay more than $22 billion. No wonder bank profits are ballooning.

This very much highlights the pervasiveness of credit cards in Canada and the potential danger that many families face. We know that the current economic climate and the fact that our economy is struggling is directly related to bad debt, and credit card companies are only making things worse by increasing the debt load of Canadians.

The Canadian Community Reinvestment Coalition has also spoken out about this issue and has stated:

The Conservatives claim that to help the economy they have to cut taxes to put money in our pockets, but they are doing nothing to stop the big banks from gouging money out of our pockets, and they are giving the banks hundreds of billions of dollars of our money and not requiring anything in return...

The CCR Coalition goes on to argue:

Any government that wants to help Canadians and job-creating businesses who are in a cash crunch, and help the Canadian economy overall, will regulate Canada’s big banks to ensure they serve everyone well at fair prices, and don't gouge or withdraw service from creditworthy customers...

Every dollar of excessive profit for the banks, and every person and business the banks unjustifiably cut off from credit, costs the Canadian economy because it means that the banks are overcharging for their essential services and loans, and choking off spending and job creation...

Sadly, many Canadians are stuck in a hole and they cannot dig themselves out. Credit card companies are making it harder and harder for people to climb out of that debt. It is more profitable for them to maintain people in debt and prohibit them or stop them from paying off their cards.

It is clear that credit card companies cannot be trusted to regulate themselves; they must be monitored and their powers limited. Canadians deserve better. It is time for the government to respond. I would suggest that time is now.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, one of the most outrageous features of the credit card business is the example of people who try to paydown their credit card every month. Sometimes if they owe a $1,000 balance on the card and make a payment of $980, leaving a balance of $20, they think that somehow the interest they owe will be based on that $20 balance, as it should be. However, in fact, when they get their statement, they find they have to pay interest on the entire $1,000, and that is absolutely outrageous.

What ways we can we go about changing that very unfair provision in credit card practices?

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Madam Speaker, it is very clear that people pay their balances in good faith and that they have to work very hard to do that. There are a lot of families who make great sacrifices in order to do that. The fact that interest rates stretch back into the previous month and ignore the fact that a payment has been made is usurious. We have to change that absolutely. The interest must be on the current balance and it must not be backdated.

If the banks were asked to backdate their payments to their clients and to their employees, I am sure they would refuse to do that.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, I would like to ask a follow-up question.

The member is no doubt aware that small businesses in Canada have been very alarmed in recent months, and I include travel agencies in that, by changes that the credit card companies are making on the charges to small businesses, which in fact get passed on to the end consumer. I am really surprised that the government is not taking a more active interest in that whole area. The government should be supporting this resolution if for no other reason than its friends in the business community are putting a lot of pressure on the government on this very issue.

I would like to ask the member why she thinks that the government is sitting on its hands on this resolution and not supporting it.

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Madam Speaker, in response to the first part of my colleague's question, this is double jeopardy. The banks are making money from the customers who make the purchases and up to 4% on the charges to the businesses that provide the service. The banks should be very gratified that merchants are prepared to provide this service. It is gouging of the worst kind.

In terms of the government's motives, I am at a loss. I guess big banks and those who have access to the ear of power have more clout than those hard-working small business people. The irony is that it is the small businesses that are the heart of our communities. They create the jobs. They keep our communities strong. To ignore them is unconscionable. In fact it is even worse than ignoring them; it is giving the back of its hand to these people.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Madam Speaker, I want to thank the member for London—Fanshawe for sharing her time with me. I would especially like to thank the member for Sudbury for bringing forward this very important motion.

A number of other members today have talked about the various elements of the motion. I will not read the whole motion, but I do want to touch on a couple of points in the motion. It says, “That, in the opinion of the House, the government should take action to protect consumers who are particularly vulnerable in tough economic times”. It goes on to lay out a number of specific actions that we request the government to take, such as “protect consumers from 'any time, any reason' interest rate increases and account changes; prohibit unfair application of card payments; protect cardholders who pay on time; limit abusive fees and penalties”, and so on.

I am sure that people are wondering why this issue has come up at this particular time. We know that credit card companies in many cases have charged exorbitant rates over a number of years. They have gotten away with it. They are largely unregulated. Why are we raising this issue now? Let me tell people why we are raising it now.

In my community of Nanaimo—Cowichan and many communities across this country, workers are losing their jobs. Communities that have been used to good paying jobs, that have been used to some economic stability, are losing their viability. It seems that every time we think the worst of the news has surfaced, we hear another bad news story.

Yesterday, I had a call from a constituent who works at the Crofton mill. The mill has downsized to a mere fraction of the jobs that it has had in the community for a number of years. The mill in Crofton is particularly important because it contributes substantially to the North Cowichan municipal tax base. The worker was so concerned not only about his own livelihood, but about what was happening in his community that he took the time to call me. He asked me if I knew the latest thing that will impact on the forestry sector in British Columbia and the rest of Canada. I want to refer to a story which appeared in the April 16 issue of the Victoria Times Colonist. The headline reads, “U.S. federal handout threatens pulp sector; Tax credit to decrease fossil fuels in production has serious loophole”. The article states:

The Canadian pulp and paper industry says it is facing mill closures and the loss of its global markets over a massive United States green energy subsidy that could provide a $6-billion taxpayer handout to American kraft pulp producers.

The subsidy -- a tax credit for mixing alternative fuels with fossil fuel -- can cut as much as 60 per cent off the cost of chemical pulp in the United States. It has opened up a competitive gap no producer in the northern hemisphere can match.

Canadian industry leaders say the sheer size of the subsidy threatens to disrupt the already over-supplied global pulp and paper economy, pushing pulp producing countries like Canada out of business.

We are talking about the effect on Canada of something that has happened in the United States. The United States has already had a serious impact on jobs and businesses in Canada, and now we have the latest piece of bad news, the possibility that Canadian producers will be forced out of business because of a loophole in an American tax law.

It makes it even more important to talk about what I would call credit card abuse by the companies, the issuers of these credit cards. When families are reeling, wondering if they can pay their rent or mortgage and feed their children, we must take every measure possible to make sure that working and middle class Canadian families have every single protection that is possible from their government. It is the duty and the role of government to make sure that its citizens are not being taken advantage of by companies that simply have no conscience. They are prepared to do whatever it takes to make a profit, no matter what the impact is on families, on men, women and young people.

We are talking about young people who are receiving unsolicited credit cards, young people who are just starting out in life, young people who perhaps want to save money to buy a car or make a down payment on a house. They are receiving unsolicited credit cards. There are pages and pages of fine print attached to those credit cards covering all the rules and regulations. The young people use those credit cards and then find out that they are being whacked with an unsubstantiated interest rate.

Some reform is happening in the United States. Senator Dodd said:

Economic recovery will only come when we put an end to the abusive practices that continue to drive so many Americans deeper and deeper into debt. It is the right thing to do for our families, and the right thing to do for our economy.

If it is the right thing to do for the families and the economy in the United States, why is it not the right thing to do for our families and our economy in Canada? It only seems to make sense. Surely if the administration in the United States can find it in its powers to regulate an industry that is, as it says, conducting abusive practices, surely we can do that for our families here in Canada.

I want to highlight a couple of the items that the United States is talking about, and the same practices are followed here in Canada. This is from a document called “Confusing, Misleading and Predatory Credit Card Practices”. I probably do not need to say a whole lot more, but here are some of the items:

PROBLEM: CONFUSING TERMS AND CONDITIONS. Credit card disclosures used to be one page; now they are often 30 pages, and written in a way that most people can’t understand.

PROBLEM: EXORBITANT FEES AND INTEREST. Credit card companies gouge consumers with many unreasonable fees and interest. They can charge over-limit fees over and over again during one billing cycle. They can charge a fee to pay depending on the payment method. And they can even charge interest on fees and not just the outstanding balance.

PROBLEM: “ANY TIME, ANY REASON” RATE INCREASES.

We have had many examples of that in Canada. People think they are paying one rate and they get a notice that the rate is going up, if they have read the fine print.

PROBLEM: YOUTH MARKETING.

I have already touched on the youth marketing problem. There is an aggressive campaign on college campuses for young people to access these credit cards. That simply is not an ethical practice. If we want to talk about fairness in advertising, we need to make sure that people understand what it is they are getting into when they sign up for a particular credit card. They need to understand what they are getting into when credit card companies can arbitrarily change the rates.

The group Stop Sticking It To Us says to stand up to big credit card companies. In case people do not know some of the hidden credit card fees, its website has a section titled “Just the Facts”. I will not read the whole section, but there are a couple of things that people might be interested in:

At a time when the world's economy is so uncertain, Canadians want to know their elected representatives care about protecting their wallets.

New Democrats certainly do care about protecting their wallets, which is why we put this motion forward today.

Last year Big Credit Card companies raked in $4.5-billion in hidden credit card fees; fees Canadians all pay at the checkout to cover lavish incentive programs and expensive benefits for corporate and premium credit cards, even if they don't have one.

Every time one of our constituents uses a Visa or MasterCard to pay at a local shop, restaurant or gas station, they not only pay for the goods and services, they also pay a hidden interchange fee to the big credit card companies and to the banks that issue the cards. I am going to touch upon those interchange fees in a moment.

The fees retailers, restaurants, charities and others pay to the Big Credit Card companies are among the highest in the world averaging 2 per cent. In Australia they are 0.5 per cent. In the U.K. they're 0.79 per cent.

The interchange fees are the fees that Visa and MasterCard collect from merchants every time a credit card or debit card is used to pay for a purchase. The merchant often will not know what fee is attached to the particular card a customer uses in the merchant's shop.

Madam Speaker, I do not know about your community, but in my community, many of the small retailers are struggling. As jobs are lost in the forestry sector, as jobs are lost in manufacturing, as jobs are lost in shipbuilding, many people are struggling. For those retailers, literally every dollar and cent counts, and now they are faced with these credit card fees over which they have absolutely no control.

Canadians need to pay close attention to what is happening with the credit card giants. In a story in the CanWest news on April 22, the credit card companies now want to get in the debit card market. We know that is just another way for them to take advantage of retailers and consumers.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, the member made an excellent presentation of the facts on this motion. I am very concerned about the credit card companies' approach to young people, basically trying to hook young people into a life of debt that will take them years to get out of. They are actually making them comfortable with debt, something that we, when we grew up, did not need to deal with.

When people get into debt at any age, but particularly when they are young, it leads to all sorts of stresses in their life that they should not need to deal with. We do not need to have any more stress in our lives than we have right now. Something must be done to cause the credit card companies to stop this crazy idea of promoting to young people as soon as they turn 18 years of age to try to get them hooked on credit at a very early age.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Madam Speaker, I know the member for London—Fanshawe referenced this around the fact that our young people today are already facing an enormous debt burden that many of us did not face when we were in our late teens and early twenties. The member also talked about student loans. We know many students are coming out of post-secondary education institutions with thousands of dollars in debt.

Now we compound that debt by having unethical practices by credit card companies that often go right onto campuses and target the young people on campus. Now we have a young person accumulating a student loan debt. We know that with the cost of education right many young people are struggling as it is to meet costs while in colleges and universities. When thee get this credit card they feel that it will be their salvation. Maybe they can actually afford to eat this month because they have a credit card. Maybe they can afford to buy their textbooks because they have a credit card.

What these young people often do not understand, because this is probably one of their very first experiences with the credit situation, is the huge price tag that is attached to that credit card. They do not know that they could be paying 18%, 19% or 20% in interest charges and that one-fifth of their monthly payment will go toward interest. One can think of what they could have bought with that extra 20%.

I would argue that if we want to protect young people for the future generation, we need to ensure they can be economically engaged in our society. We do not want them coming out of a college or university saddled with not only a huge student loan but also with a credit card debt that makes it impossible for them to engage in their economic world in a meaningful way.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, it seems to me that the horse is already out of the barn. We have had previous Liberal governments for many years and now the Conservative government for the last three years. As people were accumulating the debts, the previous Liberal government just sat by and let these companies do what they were doing and let people get into the debt they are in right now. I am very happy that the Liberals are supporting the motion today but one must wonder who was in power for the last 15 years while all this debt was being amassed.

Does the member have any comments about that and about the track record of previous governments in this whole area? As I said, the horse is out of the barn. People have huge amounts of debt to pay and they are having to pay it off at the worst of all possible times. With the job losses and the economy and the situation they are in right now, they should not need to deal with all these problems coming together at one time like this.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Madam Speaker, the track records of both the current government and the previous Liberal government are grim. New Democrats in the House have been raising issues around consumer protection for a number of years. I just need to reference the payday loans, which is another scandalous aspect of lack of regulation.

We need some solid consumer protection regulation put in place so that consumers can have some confidence that when they engage in a transaction, they are actually getting fair and reasonable interaction between themselves and the credit card companies.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Madam Speaker, first off, I would like to point out that I will be sharing my time with the member for Jeanne-Le Ber.

I am pleased to speak today to the motion by the New Democratic Party to introduce comprehensive legislation relating to the problem of credit cards.

Bearing in mind consumer vulnerability in the current crisis, the Bloc supports the motion. However, when the government introduces this legislation, it will have to make sure it respects the areas of jurisdiction of Quebec and the provinces. In Quebec, consumer protection legislation has been in force since 1971. It sets out strict requirements regarding contracts for credit cards of all sorts. It will be important therefore to respect Quebec's expertise and jurisdiction. Once again, the Quebec nation has taken the lead over the Canadian federation in protecting its merchants and its consumers. In addition, the organization known as Option consommateurs sees that the rules are followed.

In order to understand the development of credit cards, we have to understand the principle of habit, almost obligation, created by the major credit card companies.

And what of Quebeckers' and Canadians' financial situation? It is true that debt is a major problem in the country. According to a survey done by the Certified General Accountants Association of Canada in the spring of 2007, 84% of Canadians reported being in debt, 14% of all Canadians reported a significant increase in their debt and, most notably, 40% of Quebeckers and Canadians in debt believe that their debt hurts their chances of being financially secure in the event of unforeseen circumstances. In the spring of 2007, the current recession was just starting. The current government did not even realize that there was a recession. Let us not forget the remarks by the Prime Minister during the 2008 election campaign.

The level of Canadians' and Quebeckers' personal savings has decreased hugely since the 1980s, dropping from a high of 20.2% in 1982 to a low of 1.2% in 2005.

It is true that the spread between the Bank of Canada's key lending rate and credit card interest rates is growing. To help Canadians and Quebeckers, the Bank of Canada lowered its key lending rate several times to today's level of 0.25%, the lowest in Canadian history. Recession oblige, you might say.

In the case of the major credit card companies, a credit card should be a matter of choice for individual consumers, but is that really the case? Just try to book a hotel room without a credit card. This is just one example.

Because of cuts by the federal government to transfers to the provinces, Quebec has had to cut funding to home economics organizations, many providing information on credit.

However, business oblige, and the major credit card companies, MasterCard and Visa, not to mention any names, are working miracles to make access to supposedly easy credit all the easier, but in tandem with a rate of interest to consumers often over 20%. Consumers increasingly use credit cards as a method of payment. We should therefore expect credit card charges to drop.

Despite increased volumes of sales, reduced fraud, lower interest rates and improved technology, credit card rates continue to rise. It seems that the main problem involves information and awareness about the benefits and the risks of credit.

A survey by Nanos Research has revealed that 55% of Canadians have a poor understanding of the costs of credit cards—63% think that the charges increase without a corresponding increase in terms of value and 67% think that the credit card companies do not explain their charges clearly.

Another survey ordered by the Canadian Federation of Independent Business shows that 82% of Quebec card holders support having the credit card industry more strictly regulated.

And what about merchants? The credit card companies charge those who accept a credit card from customers doing business with them. Approximately 10¢ is currently charged merchants on average for each debit transaction, regardless of the amount of the purchase. Credit card transactions average $45 per transaction. The credit card companies are preparing to increase transaction fees charged retailers. The consumer does not see these fees. They currently represent about 2% regardless of the amount of the transaction. Applying a hypothetical charge of 1% would represent, then, 45¢, an increase of over 400%. Who, but the consumer, do you think, is going to pay this dizzying increase?

On top of that, Canadian retailers have higher hidden costs than do retailers in other industrialized countries. True, the major banks and financial institutions reap a significant profit from this. In 2007, alone, the fees amounted to $4.5 billion in Canada.

Most credit cards are issued by a limited number of companies. Visa and Mastercard control close to 85% of the credit card market, and this gives them total freedom to impose charges and conditions on retailers. One might therefore wonder whether the hikes in hidden fees might not be a sign of abuse of a dominant position. In order to ensure that there is no abuse by issuing companies, the Bloc Québécois contacted the Competition Bureau this past January in order to have the commissioner examine the issue. The Bureau's powers are limited, however.

This is why the Bloc Québécois introduced a bill to reinforce the Competition Act during the last parliament, Bill C-454. That bill would have given the Competition Bureau the power to carry out its own real investigations into the industry. At the present time it cannot, on its own, do more than general studies that have no clout. With its own investigations, it will be able to summon witnesses and protect them. If the companies conspire together on price-fixing, they will leave no proof of having done so.If witnesses cannot be summoned and protected, it is very likely that no anti-competitive practice will ever be proven. When businesses want to enter into agreements with their competition, they will have to prove that such agreements are in the public interest. At present, these agreements with competitors are allowed, unless it can be successfully proven that they are contrary to the public interest.

This is not all the Bloc Québécois has done. Following on representations by the Quebec coalition of merchants opposed to the increase in transaction fees on credit and debit cards, my colleague from Saint-Maurice—Champlain and I got the following motion passed by the Standing Committee on Finance.

That the Finance Committee conduct a study of the various debit and credit card transaction fees imposed on merchants as well as the standard and transactional practices that justify them and report its observations and recommendations to the House.

This study will be undertaken shortly, in the next few weeks. It will make it possible to hear from a number of witnesses as well as various stakeholders. This will enable the committee to formulate its recommendations to the government. These could then serve as the basis for the legislative measure called for in the motion presented today by the NDP.

As I said, the Bloc Québécois is therefore in favour of the motion, because consumers need legislation to ensure they are protected. The Bloc will, however, ensure that this legislative measure introduced by the government fully respects the jurisdiction of Quebec and the provinces.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I am pleased to speak today on this NDP opposition day regarding the motion presented by the member for Sudbury.

The Bloc Québécois supports, in principle, the motion that is before us today, that the government should take action to protect consumers who are particularly vulnerable in tough economic times.

However, when the government introduces legislation of this nature, as we sincerely hope it will, we will make sure that it is respectful of the jurisdiction of Quebec and the provinces in this area.

I would note that in Quebec we have had the Consumer Protection Act since 1971, and that this act governs contracts between credit card issuers and consumers. It will therefore be important for both Quebec’s jurisdiction and Quebec’s expertise in this regard, which is considerable, to be taken into account.

I would like to point out, and I will come back to this later if time permits, that in 2007 the Supreme Court denied a financial institution leave to appeal in a case involving one of the largest exemplary damage awards in the history of Quebec. That decision affirmed a decision of the Quebec Court of Appeal, and confirmed Quebec’s jurisdiction and its ability to protect consumers in their dealings with credit card issuers.

I will not read the motion before us in full, but we do agree that debt is a major problem in Canada and we find it surprising, to say the least, that the gap between the Bank of Canada’s key lending rate and credit card interest rates is continually growing, when we might have thought, given the rising numbers of all sorts of cards being widely used by consumers, that competition should be narrowing the gap. Surprisingly, the reverse is happening.

It is also true that the big banks and financial institutions are making large profits from that gap, and even though a few of the items in the NDP motion do not all come within the jurisdiction of the federal government, we believe it is worthwhile for the federal government to take action in relation to matters within its own jurisdiction in this regard.

On that point, item (a) in the motion before us talks about a measure that would “protect consumers from ‘any time, any reason’ interest rate increases and account changes”. That could provide a useful starting point that would, in this case, come under the jurisdiction of the federal government.

We have long said that the federal government could look into linking the credit interest rate to the Bank of Canada's key lending rate with reference to the criminal rate in section 347 of the criminal code, which would better synchronize the cost of credit and the usual rate of interest. In other words, rather than having the criminal rate in section 347 set in absolute terms, we think the government should look into making it relative, if you will, to the key lending rate of the Bank of Canada.

Since I referred to it earlier, I would like to elaborate on the matter of provincial jurisdiction. Everything that concerns local business and civil law comes under the jurisdiction of the provinces and Quebec. So the companies issuing credit cards are subject to the rules of consumer protection contracts in each jurisdiction.

The legislation on consumer protection sets out many strict requirements specifically governing credit cards of all kinds. Section 118, for example, defines variable credit and raises the issue of credit cards. Section 126 provides that a company issuing a credit card must send a statement of account to consumers setting out a number of points I will not mention here, but which are described quite explicitly in the legislation.

Section 128 provides that a company issuing credit cards may not increase the limit of the variable credit, called usually a line of credit or credit limit, except at the express request of the consumer. That is very important, and I will come back to that. For example, it is provided that notice of any change to the terms of a variable credit contract must be sent at least 30 days before it takes effect. So we can see that there are regulations in Quebec to protect consumers and that the Government of Quebec can, if it wishes, continue to legislate in this area. We believe, however, that the federal government could also do its part in its own areas of jurisdiction, as I mentioned earlier.

A number of examples of class actions are currently before the courts in Quebec against the practices of financial institutions contravening the Consumer Protection Act. I will come back to this later. I would, however, like to give a few examples of practices considered dubious. The typical example is that of over credit limit fees.

American journalist Bob Sullivan wrote a book on the hidden fees paid by American consumers. Practices in Canada are similar in many respects. Hidden fees include the famous over credit limit fees. The problem lies in the fact that the companies issuing credit cards now allow consumers to exceed the limit of the credit card rather than simply refusing the transaction. They subsequently charge the over credit limit fee. In the United States, the fees run between $10 and $35, which is similar to such fees in Canada. Within my own circle, someone mentioned this problem to me. I was stunned to learn that an institution could charge fees when, in a way, it was the negligent party since it had allowed the credit limit established under contract to be exceeded.

In 2004 and 2006, Option consommateurs launched a class action suit against certain financial institutions which issued credit cards. Their suit was against financial institutions which had made unilateral decisions to raise customers' credit limits and to allow people to exceed their limits by imposing over-limit charges, fortunately an offence under the Consumer Protection Act. I would emphasize that what was “fortunate” was that this practice is banned by the consumer legislation, and not the non-compliance with the law by certain companies. I am sure that was understood by everyone.

So, in November 2006 and October 2007, this class action was allowed by the Superior Court against the following financial institutions: Amex Canada and the Bank of Nova Scotia for over-limit charges to customers; Canadian Imperial Bank of Commerce, Citibank Canada, HSBC Canada, MBNA Canada, and the Bank of Montreal, for both raising credit limits without the cardholder's consent and for imposing over-limit fees. The National Bank of Canada was also included for increasing credit limits.

According to Option consommateurs, the purpose of this class action was to obtain the reimbursement of illegally charged fees and exemplary damages.

In closing, it might be worth pointing out that the consumer protection bureau states in its Internet site that:

The merchant or financial institution cannot raise the credit limit, if there is one, except at the express request of the cardholder. The mere fact that the consumer exceeds his or her original credit limit by making a purchase or purchases does not constitute an express request within the meaning of the act.

The class action is still underway and we wish good luck to all those involved .

I will not have time to discuss excess late payment charges. I will simply point out that it would be appropriate, in these difficult economic times, for the government to pass legislation on this. That is why we are supporting the NDP motion.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I thank the members on the Bloc side who have commented on today's motion. I am a little confused, to be honest, about why the Bloc is supporting this motion today. Even the last member, in his speech, talked about Quebec jurisdiction. Normally in this House when there is an issue that Bloc members think is only Quebec's jurisdiction, they vote against it. Then the next item, whether they think it is good for Quebec or not, they vote for it. They are either for Quebec or they are not; it just depends. They kind of float around, and we are not really sure on this side what they stand for.

The previous speaker from the Bloc talked about transfer payments. We have not cut transfer payments to Quebec. In fact, they have increased by 40% during our government. That is a tremendous amount of support for that province, as it deserves.

Transfer payments for health care went up 6%, transfer payments for social services went up 3%, and we have no intention of cutting those in the future. I know things are tough.

My question is this: Do they not find that is a conflict of their own belief system, that they are here to represent Quebec's interests and are voting for a motion that deals with a federal issue, or is it really a federal issue and they have finally come to realize that they are part of a united Canada?

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, my colleague had many questions. As for his questions about the speech by the previous Bloc member, I am surprised that he did not take the time to ask them after his speech. He would surely have had some very appropriate and appreciated answers.

With regard to jurisdictions, it is true that the Bloc Québécois defends tooth and nail the responsibilities and jurisdictions of the Quebec government. The motion before us does not say that the federal government must meddle in the jurisdictions of Quebec, but that we must examine the issue and that legislative measures should be introduced. When these legislative measures are presented, we will ensure that they do not interfere in the exclusive jurisdictions of Quebec and the provinces. That is what I said throughout my speech.

However, my colleague is quite right when he shows the limitations of Canadian federalism and the difficulties faced by Quebeckers in making their own decisions and their own choices because they do not control all the levers of power. He clearly demonstrated that sovereignty remains the best option for Quebec.