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Motion to authorize second reading of Bill S-241, An Act to amend the Office of the Superintendent of Financial Institutions Act (credit and debit cards).

Hon. Pierrette Ringuette moved second reading of Bill S-241, An Act to amend the Office of the Superintendent of Financial Institutions Act (credit and debit cards).

She said: Honourable senators, first, I will pay special tribute to the Chair of the Standing Senate Committee on Banking, Trade and Commerce, Senator Meighen. Last spring, when we reviewed the issues of credit and debit cards we had vigorous, and sometimes loud, discussions. However, with Senator Meighen's able guidance, he managed to obtain unanimous support for the recommendations tabled at the end of June, which were then unanimously supported by honourable senators last week when the committee report was adopted.

I believe this support is one way of showing the country how the Senate can work together, when need be, for the cause of Canadian citizens.

Honourable senators, Bill S-241 arose from a study that the Standing Senate Committee on Banking, Trade and Commerce carried out this spring regarding credit and debit cards in Canada.

My colleagues and I heard from representatives of the banking and commerce industry, and, of course, from consumers. After the study, and over the whole summer, I heard from Canadians across this country, and back home in northern New Brunswick, whether they stopped me in coffee shops and sent me emails.

I heard heartbreaking stories from seniors on fixed incomes who pay for their medications with credit cards. I met with Canadians who have been hit hard by the economic crisis and are using their credit cards to buy groceries and other essentials.

None of the people who wrote to me or spoke with me were looking for handouts. No one was asking for a free ride. All they asked for was fairness.

During the committee study last spring, my colleagues and I had difficult questions for Visa, MasterCard and the Canadian banking industry. Unfortunately, one difficulty that we faced as a public committee was a general unwillingness, on the part of the banking community, to provide us with the bottom line. Understandably, no bank wanted their own proprietary information regarding profit margins and costs associated with debit and credit cards to be put on the public record.

Following our study, senators from both sides of this chamber came together to produce a unanimous report that called for increased transparency in Canada's credit and debit card system. In fact, just to be clear, I would like to read Recommendation 1 from the report:

The federal government appoint an "oversight board", within an existing federal organization, that would consult with participants from Canada's credit card and debit card payment systems as well as relevant federal stakeholders.

The proposed oversight board's mandate should be to:

  • make recommendations, by 31 December 2009, on any regulatory or legislative measures that it considers to be required to ensure fairness for participants in the credit card and debit card payment systems;
  • monitor and publish annually information on trends in interchange, switch, merchant and other associated payment systems fees; and
  • establish a code of conduct for payment systems participants and practices for setting fees and rates, in respect of which it should ensure compliance.

Honourable senators, Bill S-241, which we are debating here today, exists to put that recommendation into practice. Fortunately there already exists a federal institution — the Office of the Superintendent of Financial Institutions — that has access to and has built a working trust with Canada's banking community. My bill proposes to expand the mandate of the superintendent to allow his office to monitor and, more importantly, to make recommendations regarding the fees and charges related to the use of debit and credit cards in Canada.

It should be noted that the Minister of Finance has already begun to take steps toward addressing some of the pressing issues regarding the use of credit cards in Canada and, to be clear, I wholeheartedly support his initiatives. However, the unfortunate reality is that he has not gone nearly far enough. It is also most unfortunate that, although the minister has received thousands of letters from the business community requesting government intervention on these increasing fees for credit and debit card use, Minister Flaherty remains silent to their requests. Until we, as parliamentarians, take action to ensure that there is some sort of oversight in this vital industry, Canadians will continue to feel as though they are the ones getting the short end of the stick.

To be clear, I would like to assure my honourable colleagues that this legislation is not the final chapter, nor is it a crusade against the banks. This bill makes absolutely no prejudging of the facts at hand, does not cap interest rates or fees and does nothing to hamstring the banks or the credit card companies. All this legislation seeks is to provide fairness for the Canadian consumers and merchants.

This bill calls on the Office of the Superintendent of Financial Institutions to provide an annual report to the Minister of Finance on the rates and fees being charged for the use of credit and debit cards in Canada. It calls on the superintendent to also make recommendations, again through the Minister of Finance, for any legislation or regulatory changes that he might deem necessary to improve fairness in the marketplace. In the end, the final decision remains with the government of the day regarding whether or not to proceed with any proposed recommendations. The Minister of Finance and, of course, Parliament has the final say in the matter.

I would also like to emphasize that this bill calls for no additional burden on the government's bottom line. Canadians do not want to see an expanded bureaucracy at a time when they are tightening their own belts. They want value for their tax dollars and, by expanding the mandate of an existing federal institution, that value will be achieved.

I understand there will be some opposition to this measure. I know that the banking community, as well as Visa and MasterCard, are hesitant about additional oversight in their own affairs. While I can understand their reluctance, I simply cannot support it and, from what I have been hearing, neither can Canadians.

Canadians do not understand why, when all other interest rates are at record lows, credit card interest rates remain high and are getting even higher. They do not understand why they can get an unsecured line of credit at 6 per cent while the interest rate on their credit card balances is 24 per cent.

Our small and medium businesses are having a hard time getting through the recession, especially with Visa, MasterCard and their technical partners imposing unjustifiable rate increases.

We are in a position to help Canadians. If we pass Bill S-241, we will set in motion a trend toward greater transparency, accountability and fairness — yes, fairness in the credit and debit card system.

I am looking forward to debating this issue, but I would like to remind honourable senators that as more and more Canadians lose their jobs, they cannot afford to wait a long time for us to help them. They need action now, and that is why I hope that you will all work with me to pass Bill S-241.