Mr. Speaker, I am happy to take this opportunity to inform Parliament about the important new proposed regulations that the Minister of Finance announced last week to limit business practices not beneficial to consumers, and provide clear and timely information to Canadians about credit cards.
This announcement follows through on our commitment in budget 2009 to ensure Canadian consumers using credit cards are treated fairly.
Unfortunately, the NDP members voted against the commitment in our economic action plan along with every single initiative we have introduced to protect consumers of financial products, but that is their record.
The NDP members voted against protecting credit card users, against improving financial literacy and against protecting consumers of stocks and other investments with a Canadian securities regulator. The list goes on and on.
The proposed regulations announced last week will first of all mandate an effective minimum 21 day interest free grace period on all new credit card purchases when a customer pays the outstanding balance in full.
The regulations will lower interest rate costs by mandating allocations of payments in favour of the consumer. They will also allow consumers to keep better track of their personal finances by requiring express consent for credit limit increases, as well as limit debt collection practices that financial institutions use in contacting a consumer to collect on a debt.
The regulations will also prohibit over the limit fees solely arising from holds placed by merchants. They will ensure clear information on credit contracts and application forms through a summary box that will set out key features such as interest rates and fees. They will assist consumers to manage their credit card obligations by providing information on the time it would take to fully repay the balance if only the minimum payment is made very month.
The regulations will mandate advance disclosure of interest rate increases prior to their taking effect, even if this information had been included in the credit contract. The proposed regulations would apply to credit cards issued by federally regulated institutions. Some provisions in the regulations would have a broader application to other financial products, such as fixed and variable rate loans as well as lines of credit.
I note that our announcement was warmly received by numerous public interest groups. For example, Casey Cosgrove, Director of Financial Literacy Initiatives, Social and Enterprise Development Innovations, applauded it as it would “contribute to financial literacy by bringing clearer and more transparent information to consumers”.
Mel Fruitman, Vice President of Consumers' Association of Canada, on CTV Newsnet, heralded the announcement claiming it would “solve some of the most egregious practices of the credit card companies...it's a big step in the right direction towards helping us control the amounts we pay on our credit cards...it will greatly improve the situation”.
Even the Toronto Star cheered our Conservative government's action, noting that “welcome regulatory changes that will both introduce more transparency to the system and save consumers more money”.