Hon. Pierrette Ringuette:

Honourable senators, Bill S-201 is legislation that follows its predecessor, Bill S-241 tabled in the Senate last October, which had followed an enlightening study that the Standing Senate Committee on Banking, Trade and Commerce conducted a year ago into debit and credit card issues in Canada. My colleagues and I heard from stakeholders in all aspects of the industry, from the banking community, the retail industry and, some might say, most important of all, Canadian consumers.

Following our study and throughout 2009, I continued to hear from Canadians across the country, from both small- and medium-sized businesses and consumers alike. I heard heartbreaking stories of seniors on fixed incomes who have to resort to credit cards to pay for medication. I heard stories of Canadians who have fallen on hard times in this difficult economy who are using credit cards for groceries and other essentials. I have met with retailers who are frustrated by their incapacity to negotiate with the credit card and debit card companies and their equipment providers and face costs that are continuously going up.

None of the people who wrote to me or spoke with me wanted a favour. No one was looking for a free ride. All they wanted was to be treated fairly.

During the committee's study last spring, my colleagues and I asked difficult questions of the representatives from Visa and MasterCard and from the Canadian banking sector. Unfortunately, since it was a public committee, the banking representatives were generally reluctant to provide their figures. It is understandable that a bank would not want its proprietary information regarding its profit margin and the costs associated with using debit and credit cards revealed to the public.

However, in the last few weeks our big Canadian banks have put out their reports on the last quarter, and here are the results: Royal Bank of Canada at $1.497 billion, up $397 million or 35 per cent from last year and 21 per cent from last quarter; Toronto Dominion, $5.037 billion, up $887 million from the same period last year and up $319 million from the last quarter; Canadian Imperial Bank Of Commerce, $652 million compared with net income of $147 million last year, which is 4.5 times last year's net income; the Bank of Montreal, $657 million, up $432 million from a year ago; and Banque Nationale, $215 million compared to a net income of $69 million in the first quarter of 2009.

How much will the $5 billion in corporate tax credit in the budget tabled last week increase the net income of those banks?

Now for the bonuses: bonuses at the country's six largest banks will reach a record $8.3 billion for fiscal year 2009. That is $8.3 billion in bonuses alone, an increase of 18 per cent from last year, and 4 per cent from 2007.

For my colleagues who were saying ``bravo'' a few minutes ago, these banks are the same financial institution that all Canadian taxpayers bailed out in the last 10 months in the following ways: $60 billion to buy back mortgages; $12 billion to buy back auto leasing; and $30 billion in liquidity from the Bank of Canada. Wow, aren't you just great; and this is equity for all Canadians.

There may be more ways. I know that taxpayers provided over $102 billion to those financial institutions that today are recording major profits and major bonuses.

As an aside, while the big banks' big bosses give themselves $8.3 billion in bonuses, the rank-and-file employees, who work hard to supply customer services in our local communities, have to initiate lawsuits against these banks to have their overtime paid.

I name BMO, Nesbitt Burns and Scotiabank. It is all in the public records.

How can we accept that taxpayers are still paying record rates of interest, between 18 and 30 per cent, on credit cards at the same time that the Bank of Canada's overnight rate is at .25 per cent and the average bank prime rate is at 5 per cent?

Following our study, senators from both sides worked together to produce a unanimous report, which called for Canada's credit and debit card system to be more transparent. To be clear, I would like to quote the first recommendation of this report, that:

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:

And I will quote what was recommended by the committee, under a serious time crunch:

• 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-201, which we are debating here today, aims 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 of Financial Institutions 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. 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 their increasing fees for credit and debit card use, Minister Flaherty is considering only a voluntary code of conduct.

Similar changes to those proposed in Minister Flaherty's code of conduct were legislated in the U.S. and enacted on February 22, 2010. The Wall Street Journal reported the following on February 20:

But card issuers are already deploying new tactics that could prove costly for even the most cautious cardholder. . . .

. . . So get ready for higher annual fees, higher balance-transfer charges, and growing charges for overseas transactions.

This article reinforces the need for Bill S-201, which will provide continuous oversight on fees and charges.

Honourable senators, I have serious doubts that all credit card issuers, banks, financial institutions, Visa, MasterCard and all the electronic equipment providers, who are the ones who sign contracts with the merchants, will accept the voluntary code of conduct when one is made public.

Furthermore, nothing in what has been proposed by Minister Flaherty to date deals with the central issue, which is fees and charges for consumers and businesses. Nothing prevents the increase of fees and charges as long as the institution provides notice. Until we, as parliamentarians, take action to ensure some sort of oversight for this vital industry, Canadians will continue to feel that they are the ones getting the short end of the stick.

To be clear, I assure honourable senators that this legislation is not the final chapter, nor is it a crusade against the banks. This bill absolutely does not prejudge the facts at hand, does not cap interest rates or fees and does nothing to hamstring banks or credit card companies. All this legislation seeks to provide is fairness for Canadian consumers and merchants.

Bill S-201 calls on the Office of the Superintendent of Financial Institutions to provide an annual report to the Minister of Finance on rates and fees charged for the use of credit and debit cards in Canada.

The bill also calls on the superintendent to make recommendations to the Minister of Finance for any legislative or regulatory changes that he might deem necessary to improve fairness in the marketplace. The final decision remains with the government of the day whether to proceed with any proposed recommendations. The Minister of Finance and, of course, Parliament have 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 simply cannot understand that while interest rates have dropped to an historic low across the board, credit card interest is as high as it is and continues to rise. Canadians cannot understand why they can find an unsecured line of credit at 6 per cent interest, but their credit card statement shows they are paying 24 per cent. I can understand their frustration.

Small- and medium-sized businesses are struggling to survive this recession while fees are being hiked without justification by Visa and MasterCard and their terminal operators.

We have an opportunity to help those Canadians. By adopting Bill S-201, we will take the first steps toward providing transparency, accountability and, yes, fairness in the credit and debit card systems in Canada.

I look forward to debating this issue, but I remind honourable senators that as more and more Canadians lose their jobs, income and businesses, they are running out of time for help. They need urgent action, not prorogation.

The Standing Senate Committee on Banking, Trade and Commerce has no legislation before it and should be ready to review this bill next week. I hope honourable senators will join me in passing Bill S-201 shortly.

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