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.
