Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 14 - Evidence - November 24, 2010
OTTAWA, Wednesday, November 24, 2010
The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill S-201, An Act to amend the Office of the Superintendent of Financial Institutions Act (credit and debit cards), met this day at 4:15 p.m. to give consideration to the bill.
[English]
Line Gravel, Clerk of the Committee: Honourable senators, the chair and the deputy chair are unable to be here today. I ask honourable senators to proceed with the election of the acting chair.
Senator Kochhar: I move that Senator Oliver be acting chair.
Ms. Gravel: Are honourable senators agreed?
Hon. Senators: Agreed.
Ms. Gravel: I invite Senator Oliver to take the chair.
Senator Donald H. Oliver (Acting Chair) in the chair.
The Acting Chair: Bill S-201 was last considered by the committee on June 16 when the Honourable Pierrette Ringuette, a long-standing member of this committee and sponsor of the bill, made a presentation.
Honourable senators, we have before us today from the Department of Finance, Ms. Diane Lafleur, General Director, Financial Sector Policy Branch; from the Office of the Superintendant of Financial Institutions, Ms. Patty Evanoff, Senior Director, Legislation and Approvals Division; and from the Financial Consumer Agency of Canada, Mr. John Rossi, Director, Compliance and Enforcement Branch.
We will hear presentations by the witnesses, after which I will open the floor to honourable senators for questions. Ms. Lafleur, please proceed.
[Translation]
Diane Lafleur, General Director, Financial Sector Policy Branch, Department of Finance Canada: It is my pleasure to be here to discuss with you credit and debit card systems in Canada generally and Bill S-201 specifically.
[English]
As General Director of the Financial Sector Policy Branch at the Department of Finance, I am responsible for providing policy analysis and advice on Canada's financial sector, including payment system issues. We have therefore paid very close attention to the work that this committee has done on payment system issues and the forward looking recommendations that have been made as a result the work of this committee.
This committee's June 2009 report on Canada's credit and debit card systems included a number of recommendations relating to the credit and debit card network rules and fees. Since that report, the government has taken significant action to protect debit and credit card users. Specifically, the Minister of Finance released the Code of Conduct for the Credit and Debit Card Industry on May 18, 2010.
The code addresses several of the recommendations contained in the committee's report, in particular, that merchants are allowed to offer discounts for lower cost payment methods, and the practice of linking credit and debit card acceptance from the same network is prohibited. The code of conduct offers many additional benefits for merchants, including providing merchants with clear information regarding fees and rates, giving merchants advance notice of any new fees and fee increases, and allowing merchants to cancel contracts without penalty should fees rise or new fees be introduced.
The code has been adopted by all major networks, card issuers and payment processers, and has received positive recognition from merchants. As this committee wisely noted in its 2009 report, the government should be monitoring the conduct of the credit card and debit card industry on an ongoing basis. Although the credit card networks and debit card networks and acquirers and issuers have all publicly supported the code, it is still necessary to ensure that participants are in fact complying with the code of conduct.
[Translation]
The Financial Consumer Agency of Canada (FCAC), which is responsible for overseeing banks' compliance with the consumer provisions set out in federal financial egislation; monitoring financial institutions' compliance with voluntary codes of conduct, as well as their own public commitments; and informing consumers about their rights and responsibilities when dealing with financial institutions, is responsible for implementing, monitoring and interpreting the Code of conduct. Their existing responsibilities and mandate have equipped them well to do this. My colleague, Mr. Rossi, will expand on this further in his remarks.
[English]
The Minister of Finance also made it clear that the code of conduct is voluntary, but, and I quote:
. . . if we are unsuccessful with the voluntary code, we can create an involuntary code, . . .
To this end, the Payment Card Network Act received Royal Assent in July 2010. The PCNA gives the minister the power to regulate the market conduct of the credit and debit card industry in the future if necessary. In such a case, the Financial Consumer Agency of Canada has been given a mandate and the authority to supervise such regulations. In its annual report, the FCAC also reports publicly on the compliance with voluntary Codes.
I would also note that in June the government set up an independent task force to help guide the evolution of payment systems in Canada. The task force is mandated to provide recommendations to the Minister of Finance by the end of 2011. While this is a broad review of payment systems in Canada, the task force may choose to examine the credit and debit card industry more closely.
As my colleague from OSFI will explain shortly, the Office of the Superintendent of Financial Institutions is a prudential regulator of banks and other federally regulated institutions. OSFI is therefore responsible for ensuring the safety and soundness of the Canadian financial sector through regulation and supervision and plays an important role in contributing to the public confidence in the financial system. OSFI is not responsible for financial market regulation.
One of the main lessons from the global financial crisis has been that a strong supervisory framework must be complemented by effective regulation. A key element of that is clarity of mandates between regulatory agencies. The responsibilities of the Financial Consumer Agency of Canada and the Office of the Superintendent of Financial Institutions are specialized and clearly delineated. OSFI's focus is on safety and soundness of the sector, and the FCAC is focused on market conduct. This separation of mandates has proven efficient and effective and has avoided overlap, duplication and conflict between supervisors.
[Translation]
The initiatives that I have outlined target the main objectives of Bill S-201: strong supervision, transparency for merchants and a public report on the status of the Code of Conduct and the industry in general. Given the recent success of Canada's supervisory framework, clear supervisory roles, responsibilities and accountabilities should be maintained to help ensure that merchants and consumers continue to benefit from the protections set out in the code.
I would like to thank you for providing us an opportunity to address this committee, and we would be happy to respond to any questions you may have. I will turn over the floor to one of my colleagues.
[English]
Patty Evanoff, Senior Director, Legislation and Approvals Division, Office of the Superintendent of Financial Institutions Canada: I would like to briefly touch on what OSFI is, what it does and how we contribute to public confidence in the Canadian financial system.
OSFI is the primary regulator and supervisor for all federal financial institutions and pension plans. We are responsible for the prudential or solvency oversight of about 450 financial institutions and nearly 1,400 pension plans. OSFI has had a legislated mandate since 1996. Our mandate is clear on what we do and what we are accountable for. The primary objective is to supervise financial institutions to determine if they are in sound financial condition and are complying with the relevant legislation and regulations.
As my colleague mentioned, our mandate makes it clear that we are a prudential regulator, which means we focus on solvency issues and that we protect depositors' and policyholders' interests by contributing to a safe and sound financial system. We focus on the financial risks being taken by financial institutions and how those risks are being mitigated and managed. We advise boards of directors and management when deficiencies are identified and require that prompt corrective measures be taken to address them. Through our rules and our guidance, we also promote the adoption of policies and procedures to control and manage risk. In carrying out the statutory mandate, we strive to protect the interests of depositors, policyholders and other creditors of federal financial institutions.
OSFI does not have a consumer protection mandate, as has been noted. Similarly, we do not have a direct role in the design or oversight of the financial products and services offered by financial institutions. We have not been tasked by Parliament with monitoring the use of specific financial products, reviewing the fine print of consumer contracts or determining what is a reasonable profit margin or assessing business conduct.
This type of role would be a significant shift from what OSFI currently does and what has allowed us to gain the confidence of both the financial sector and the Canadian public. Indeed, recent events in global financial systems and markets have shown clearly what can happen in countries that do not have sound prudential regulatory systems with clear and unconflicted mandates.
Thank you for the opportunity to explain our mandate, and I am happy to respond to any questions.
The Acting Chair: Before I turn to Mr. Rossi, we are here today to study Bill S-201. Ms. Evanoff, you talked about the mandate of OSFI, but you said nothing about the Office of the Superintendent of Financial Institutions Act. Did you want to comment on the bill?
Ms. Evanoff: We believe we have been well served by having a focused and clear mandate that speaks to safety, soundness and solvency issues.
As I have noted, certainly as far as global financial systems are concerned, Canada has done very well by having a regulator with this specific mandate. In our view, it is not our decision as to whether our mandate would be or could be expanded. That would ultimately entail a discussion with the Minister of Finance and departmental officials. I would conclude by saying that we have done very well with what we have, which has one clear focus. We know when we come to the office in the morning exactly what we are there to do to promote confidence in the financial sector.
The Acting Chair: It does not help me with Bill S-201, but I will come back. Mr. Rossi, please proceed.
John Rossi, Director, Compliance and Enforcement Branch, Financial Consumer Agency of Canada: Good afternoon, Mr. Chair and senators. I would like to thank you for inviting me to speak to you today. I know that many of you are familiar with the FCAC and the work we do. I would like to take a few minutes to provide you with some information about the agency, in particular about how some of the changes mentioned by my colleague, Ms. Lafleur, have manifested themselves in our recent activities.
By way of background, the government established the Financial Consumer Agency of Canada in 2001 and the act provides the FCAC with two broad responsibilities. The first is to supervise federally-regulated financial institutions to ensure that they comply with the consumer focused provisions found in the federal financial institutions statutes and that they adhere to the codes of conduct and public commitments that the industry puts in place to better protect their customers. The second was for the FCAC to develop and make available to consumers objective information on the various financial products and services available to them in the marketplace to help them to understand better the nature of these products as well as their rights and responsibilities when dealing with their financial institutions. In 2007, the government broadened FCAC's mandate by giving us the responsibility to undertake new activities to promote financial literacy among consumers in Canada, in particular young Canadians.
Most recently, with the passage of the Budget Implementation Act in July of this year, the FCAC's mandate was expanded in two key areas. First, our supervisory role was extended to oversee the new Payment Card Networks Act and the new Code of Conduct for the Credit and Debit Card Industry in Canada and, in turn, to ensure that payment card network operators, such as Visa, MasterCard, American Express and Interac, effectively implement all the elements of the new code throughout their respective payment networks. Second, the government also gave us the responsibility to collect information and undertake research on trends and emerging issues that may have an impact on consumers of financial products and services. This will allow us to be more proactive and forward looking in our approach to identifying and examining financial issues affecting consumers in Canada.
With regard to our payment card network oversight responsibilities, many elements of the new code of conduct took effect in August 2010. We have integrated these elements into our supervisory processes. The FCAC's compliance team has been working proactively with the network operators and other organizations within those networks to help to ensure that the elements of the code in effect are fully integrated into their rules and procedures so that merchants can benefit fully from the rules set out in the code. We will continue to work with these organizations over the next several months as they implement additional code of conduct elements that take effect in February 2011, which focus on key information that will need to be disclosed to merchants on their regular statements. The full code of conduct is slated to come into effect by May 2011.
With regard to our new research responsibilities, the FCAC is in the process of developing a research program that will focus on increased information collection, field testing and stakeholder engagement both domestically and internationally. This will be coupled with strong analytical work with a view to providing valuable and timely information on key financial sector market conduct trends and emerging issues to support the government's regulatory initiatives in these areas. While this program is still in its very early stages, we see this new research role as a fundamental part of our work moving forward.
Thank you again for the opportunity to appear before you today. I would be happy to answer any questions.
The Acting Chair: Mr. Rossi, I want to ask you the same question that I asked the previous witness. Bill S-201 is the reason that we are here today. You have given a brilliant explanation of the Financial Consumer Agency of Canada and your new powers. Could you also comment on Bill S-201 in relation to your new powers?
Mr. Rossi: Absolutely. It would appear from our perspective that one of the goals of Bill S-201 is to ensure that proper information is being collected about the way in which credit and debit cards operate. In our view, the expanded role that the government has given FCAC covers that type of information collection. We would have, within the context of the new powers given to us, the scope to be able to carry out that type of research.
The Acting Chair: Is this the new power to which you alluded that came into effect in the summer of 2010?
Mr. Rossi: Exactly. My colleague, Ms. Lafleur, makes the point that on both fronts, the government has tried to cover off many of the concerns that I believe Bill S-201 is trying to drive at.
Senator Harb: Mr. Rossi, the government gave you the mandate. Did they give you any money in order to carry out your mandate or did you have to use existing resources?
Mr. Rossi: This is a new responsibility for us so we are in the process of building the program. With regard to resources, we are funded through mandatory assessments on the industry. We would be able to access that money through that assessment process.
Senator Harb: What do you mean by "the industry?''
Mr. Rossi: Our regulations set out a process by which our budget is funded through assessments on the industry through a calculation such that a certain per cent of our budget is covered off by the different financial institutions that we oversee. They are required by law to provide that to us.
Senator Harb: That might put you in a conflict of interest, would you not think? You are putting a levy on your membership while you have been mandated to keep an eye on them to ensure that they are following the rules.
Mr. Rossi: This is mandatory for the institutions; they do not have a choice as to whether they pay. They must pay.
Ms. Lafleur: This is a well-established funding mechanism. It is the way in which OSFI is funded as well and has been funded for many years. The mechanism is replicated across financial regulators around the world.
Senator Harb: Ms. Evanoff, in your presentation, you mentioned your mandate and that you are doing a good job as set out in your mandate. The acting chair asked a relevant question in terms of your views on Bill S-201. You were balanced enough to say that you would not give views unless forced.
I understood between the lines that there is a possibility for conflict of interest if we were to ask you to carry the mandate of Bill S-201 in addition to your current mandate. Is that true?
Ms. Evanoff: Bill S-201 would be a departure from OSFI's current mandate, as I have said. It would take us into more of the consumer sphere, which has been the responsibility of the Financial Consumer Agency of Canada. The Government of Canada has chosen to have two regulatory bodies, one that focuses on safety and soundness and basically the financial risks that financial institutions can take on, which can lead to problems with their health; and another that is a separate regulator for consumer issues. Giving OSFI a consumer role would blur that distinction.
Senator Harb: Would that be a conflict?
Ms. Evanoff: It would create a conflict within an organization that has mandates that can take it in different directions. It becomes much more challenging. It has been a decision of this government to keep those activities separate, so there is much more synergy with the FCAC's mandate.
Senator Harb: Ms. Lafleur, in your presentation you mentioned that Mr. Rossi would expand further with details. It seems that there is a tacit understanding that it is the mandate of the FCAC to oversee what goes on in the industry.
Ms. Lafleur: There is an explicit understanding and recognition that the Financial Consumer Agency of Canada is the market conduct regulator. It is the regulator that is responsible for the consumer protection provisions in the federal statutes as they apply to the financial sector. An explicit division of responsibilities has been carved out and determined by Parliament, ultimately, between the market conduct regulator and the prudential regulator.
Senator Harb: Mr. Rossi, if the bill were to remove the name of the Office of the Superintendent of Financial Institutions and replace it with the name of your organization, the FCAC, would you be able to live with that?
Would you let the committee know of any issues or suggestions for amendments or changes?
Mr. Rossi: From my perspective, we believe that the broad mandate already given in the recent changes to the FCAC Act provide us with enough scope to cover off the type of issue addressed in the bill.
Senator Harb: Did those changes come through the government directly or through an act of Parliament?
Ms. Lafleur: It was through the Budget Implementation Act last spring.
Senator Harb: There was an amendment to the FCAC Act?
Ms. Lafleur: That is right; the mandate of the Financial Consumer Agency of Canada was expanded via measures contained in the Budget Implementation Act.
Senator Harb: How does the committee know whether this is working? Will you come back and tell us on an annual basis to let us know how it is working?
Ms. Lafleur: The Financial Consumer Agency of Canada has to table before Parliament an annual report in which it must report on compliance with such things as voluntary codes, et cetera. It has to report on all of its operations and what it sees in the industry on an annual basis.
Mr. Rossi: If I may make a point, the research role we are undertaking is new and we are currently building that program. We would be more than happy to share information with the committee as the program takes shape on how we are carrying out that role.
Senator Massicotte: I will take the same point. I understand your point on the amendments to the agency's authority that you have all the authorities necessary to bring it on side. You know the essence of our recommendations in our previous report.
We believe strongly that in the relationship of power, of negotiation among the parties, the merchants are unfairly situated and have no choice but to accept these contracts. We have to use legislation and the supervisory body to develop a fair balance. Today, I am hearing you say that you know that and are prepared to act upon it because you want to ensure not only that the consumers have full transparency but also that the relation becomes fair.
We are getting reports from other organizations that there are still problems with the current situation. You seem to be saying that you have the authority, a process is underway and you will have sufficient money to implement the program. You just need time. Is that what you are saying?
Ms. Lafleur: In the first instance, the government has decided to go forward with what is called the voluntary code of conduct signed onto by all key players in the credit and debit card space. The provisions of the code give quite a bit of power to the merchants to decide what they want to accept and not to accept, such as the ability to cancel contracts if the fees are changed on them, et cetera. This is a voluntary approach, but the minister and the government decided that a voluntary approach sometimes works better when there is a threat of involuntary approach. That is why in the first Budget Implementation Act there was also the Payment Cards Networks Act, which passed and received Royal Assent.
The PCNA would give the government the ability to regulate all of the aspects of the code of conduct if monitoring by the Financial Consumer Agency of Canada indicated that the code was not being abided by. There is the voluntary approach — the carrot — to do it collaboratively, but if that does not work and the FCAC is watching, the potential exists to make it involuntary and do it through regulation.
Senator Massicotte: You speak to the code of conduct as it is written.
Ms. Lafleur: Essentially, yes. Drafting is different in the regulations but all of the provisions of the code could be regulated through the PCNA.
Senator Massicotte: Fundamentally I agree with transparency and letting consumers decide and letting everybody know the terms. Merchants can offer a discount if the consumer pays in cash. If you change the conditions and they have the right to cancel, you cannot change the fees on that right to cancel. It is all very good but does not address the significant difference of power in the issue. We have heard a lot of testimony. I am sure merchants will say, "So what? Thank you very much, but it will not change the balance. I have no choice but to accept Visa or MasterCard; otherwise clients will go elsewhere.''
There is still an imbalance of power. Other countries have tried that. It is a good step but inadequate to deal with the issue. We need an agency to police it. I believe that you are saying you have the authority and the money to get there, but you need time. You have to get there with the thought of addressing the situation to ensure that it is fair. If you look at a lawsuit, it is significant. There has been acknowledgement in the world of the unfairness in the relationship, but you have to start with this point of view, as opposed to full transparency, which is usually the consumer agent's job.
Ms. Lafleur: One of the fundamental differences between the American system and our system is that they do not have a financial consumer agency. They are setting up one now but they do not have a market conduct regulator to look at the issues. We have had an agency up and running since 2001. We have the ability to ensure compliance. As you say, if it is not working, we have another way of doing it.
Senator Massicotte: On that note, we issued a report two or three years ago. The agency has been in existence for about nine years. We have the impression that it is not doing the job. It has been too passive. We were speculating that perhaps it is because of a lack of funds, a lack of mandate or lack of political will. We had a sense that it could do so much more than what it was doing. I hope that will change. Certainly, you have the mandate to do this work. I hope the vigilance will increase and two years from now people will be saying that you guys are doing a good job. Will that happen?
Mr. Rossi: If I may, I will address the concern about the agency and its effectiveness. One of the things we have undertaken is to look proactively at modernizing our compliance approach. We had been set up originally with the idea of being much more a reactive regulator, whereby we reacted to complaints from consumers, in particular, and addressed issues arising out of that complaints mechanism. We still deal with complaints but we have instilled a proactive risk-based approach to compliance, which is much more in line with other regulators both federal and provincial. We try to get out in front of potential compliance issues rather than waiting for them to impact the consumer.
With that new approach to compliance, we are much more proactive and more able to get out in front of potential compliance gaps in the marketplace so we can address them and minimize their impact on consumers. We have duplicated that on the merchant side as well.
Senator Massicotte: What is your total agency budget? How much money do you get from those fees?
Mr. Rossi: We are in the range of $10 million to $11 million.
Senator Massicotte: We thought we came up with a good recommendation in our report. Senator Fox made the recommendation to force all issuers of cards to have a thing in the right hand box of their statements that says, "for credit card information comparison, please refer to the FCAC website,'' where there is a listing of all credit cards and the comparison of fees. It will be informative to the consumers in terms of fees and choices. Would you have the authority to force those companies to put that little reference to your website on their monthly statements?
Mr. Rossi: From our perspective, that is neither worked into the powers provided to us nor into the legislative framework at this time. From the agency's perspective, that is our consumer protection mandate and our consumer education mandate, in particular. We put out a lot of information through our website and the documentation that we produce to provide that kind of educative material to consumers so they are aware of their rights and responsibilities, key questions and key risks. That is what our consumer education mandate is all about.
Senator Massicotte: The difficulty is that many studies indicate that the average consumer is not well informed and not financially literate. If they go to your website, they have to spend time a goodly amount of time on the differences in the credit cards. I would be a bit more proactive in helping people to make the right decisions.
The other difference between the bill and what exists is the bill would force OSFI, or whichever agency would be best suited, to prepare an annual public report on what they have learned, what is wrong in the system and what they recommend to ensure that the public is very much aware.
This would coerce companies into avoiding being in that report. The message to them would be that we understand they do not want the authority; their sole reporting is internal; they need to correct some things; and they must follow the same political process. Am I right in saying that is the difference between the bill and what is currently authorized?
Mr. Rossi: From our perspective, in the context of our power, we have the ability to obtain the information and feed it into the policy-making. As an agency, we do not have a policy-making role; that rests with the Department of Finance. We are trying to ensure that we have a program to pick up the information and feed it into the process. In that way, the proper policy decisions can be made based on sound and well researched information that we bring to the table. That is our focus.
Senator Massicotte: It assumes that the consumer can make the right decision.
Mr. Rossi: We are sensitive to the idea of financial literacy because one of our key mandates is to promote financial literacy in the marketplace. We have a program to deal with that within our organization.
Ms. Lafleur: I would remind honourable senators that a federally established task force on financial literacy is getting ready to wrap up its work and report to government.
Senator Massicotte: The difficulty is not a lack of knowing what to do but getting it done.
Senator Ringuette: Mr. Rossi, from your comments, I do not think you have read the scope of the bill. In clause 7.2, I propose the monitoring and publishing of information relating to the use of credit and debit cards in Canada, including the operation of the payment system relating to such cards, the fees and charges relating to such cards and the privacy of users of such cards.
Under your current mandate and the current code of conduct, have you the power or the authority to gather information on the fees charged by financial institutions and credit card companies? The code of conduct says nothing about fees and charges or any report mechanism to ensure fairness. I refer to Senator Massicotte's statement about this committee's evidence gathered over almost two months as witness after witness said that the relationship is unfair because the merchants have nothing to say about the fees and charges. We all know that in this Canadian market, merchants need to use credit and debit cards as well as cash for their payment systems. What authority do you have to look into Visa's and MasterCard's financial statements and identify reasonable and unreasonable fees and report to Parliament on that information?
What mechanism do you have to look at the financial statements of all financial institutions in Canada that issue credit cards to determine their costs and their benefits by the interest rate they charge to consumers? That is what this bill talks about. It has nothing to do with the current code of conduct as per your mandate.
Mr. Rossi: I will be frank. I will not speak to the issue of reasonableness of fees and charges. That is not something that the government has come out with a policy decision on, so it is not something that we would oversee. In terms of reasonableness and fairness, that is not something we would do. Let me be clear on that front.
With regard to actually knowing the fees, I will speak from two angles. I will start with what we have been doing for a long time: fees that consumers have to pay. Within the current regulatory framework, there are requirements for financial institutions to clearly list the fees that they charge to consumers. This is delineated in disclosure documentation, and recent changes to the Business Implementation Act in July 2010 require financial institutions to have information summary boxes at the front of those disclosure documentations that require a list of fees.
That has been on the consumer side for a long time, and the government has implemented new requirements so that it is included and up front in the documentation they are reading. Even if the consumer did not read the entire document, they would have the summary box at the beginning containing that list. That was implemented by financial institutions. We have proactively monitored that it is happening in the marketplace. We are confident of the fact that that is there.
On the merchant side, the first element in the code speaks to disclosure of fees and charges. The honourable senator is correct in saying that currently we do not see that in the marketplace. I agree because that provision comes into effect in February 2011. We are working proactively with the network operators to ensure that they and those within the network, which includes acquirers, have the information disclosed properly to the merchant on their respective statements.
Ms. Lafleur: When we developed the code of conduct, we did so in consultation with all relevant stakeholders — the merchant groups, the payment card issuers, the payment card networks, et cetera — on this specific element one of the code, which enumerates the kind of information going forward that must be disclosed on the websites. We took advice from the merchants in terms of the kind of information they want to have and the kind of information that is useful to them in making business decisions. This is very much reflective of what they told us they wanted and needed.
Senator Ringuette: The central issue with credit and debit cards that we have discussed for the last two years is that of fees and charges. First, Mr. Rossi spoke to financial institutions displaying the charges to consumers of those credit cards. The only item in the code of conduct is the interest rate charged to consumers for late payment. All other charges are not displayed on your website, and they are not part of your code of conduct either.
Second, you do not have access to the financial institutions and the credit and debit card markets in respect of reasonable and unreasonable fees and charges. That is the purpose of this bill.
The U.S. — the capital of capitalism — has started to move on this issue. The U.S. Federal Reserve is in charge of determining a reasonable fee for debit card transactions. Who should have that mandate in Canada? Should it be the FCAC or the OSFI? Maybe that is a topic for discussion. The issue in this bill is regulation concerning the reasonableness of fees in the marketplace. Seven years ago, Australia mandated the Reserve Bank of Australia in this regard.
I am sorry, Mr. Rossi, but you do not have access to the inside financial statements of all these institutions in respect of establishing reasonable fees and reporting to Parliament.
Mr. Rossi: I do not disagree. As I previously mentioned, reasonableness is not part of the regulatory framework that we oversee. I have no issue with that.
However, with regard to the disclosure aspect, the regulations are clear, which we have interpreted in this way: It is not only disclosure of the interest rate but also disclosure of non-interest fees. That is pretty clear from our perspective, and that is how we have always enforced those regulations.
With regard to our access to those fees, we have an online tool that consumers can use when they access our website. They are able to enter what they want, for example using our credit card selector. They can slice and dice the database of credit card information, which includes interest rates and fees and other types of promotions. With their information entered, they can get a list of credit cards that can meet their needs. This tool is available on our website. We developed the program and it has been on our website for many years. It is actually one of the most popular areas on our website because consumers like to learn about the options available to them. The consumer can make their choices about card fees, promotions, et cetera. We collect that information and try to provide it in a package to consumers so that it is useful in helping them to choose the products they want.
Senator Ringuette: In June 2009, this committee made a unanimous recommendation. The minister followed it up with a code of conduct, which as you explained earlier, you have the mandate to implement. At the time of those committee hearings, we were told by the Retail Council of Canada and by other users that Visa was planning to introduce its debit card into the Canadian market. We made a specific recommendation about that. It is in the code of conduct. Visa and CIBC have never had the intention, code of conduct or no code of conduct, to change what they were planning. I can provide you with all the dates of the various press releases issued by Visa about their debit card. You know that they have breached the code of conduct. What will you do about it?
Mr. Rossi: It is difficult for me to speak about what happened in 2009 because that predates the code. Perhaps you could narrow down the recommendation from the Senate committee so I may address it.
Senator Ringuette: Mr. Rossi, you are mandated to enforce the code of conduct. CIBC and Visa Debit are breaching the code of conduct that you are responsible for enforcing. What will you do about it and when?
Mr. Rossi: As with any type of new code or regulation, there are always implementation issues; and we pick up on those issues. We have found implementation issues. We have engaged all the parties involved. First,if there is any negative impact on a merchant, we move to stop that activity automatically. Then we work with those institutions to ensure that they fix the problem before they restart that action. Our role is not to prevent products from coming to the market. We have not been given a mandate to do that. However, when we pick up on compliance issues, our immediate reaction is to engage the organizations involved; address the issue proactively with them; if required have them stop the activity to limit the impact on the merchant; encourage them to take corrective action if there is any negative financial impact on merchants or other parties involved; and to fix the problem. That is the primary way we fix compliance issues in the marketplace.
Senator Ringuette: Mr. Rossi, I want a yes or no answer. I have a follow-up question that is extremely important because there is a breach in respect of the code of conduct; and the FCAC has the mandate to look at the breach.
The Acting Chair: As acting chair, I will say that we have ten minutes left in this session. Senator Kochhar has not had a chance to ask a question. You asked for an additional question, and Mr. Rossi has answered. I would like to go to Senator Kochhar and let him put his question. If there is time, you can ask your third question. You have had more than five minutes more than any other senator to ask questions. I have to give a chance to everyone.
Senator Ringuette: Yes; thank you.
Senator Kochhar: Thank you, panel for doing a good job. Do I understand from your presentation that Bill S-201 is not necessary because you have the necessary power to implement the code of conduct and you can control and discipline the financial institutions as required? Am I right in understanding that?
Mr. Rossi: The government has given us the capacity to work within the context of the code to ensure compliance with that, yes.
Senator Kochhar: My second question is: When you talk about reasonable fees, in a free enterprise system, fees are levied by the banks depending on supply and demand. When consumers do not like the fees, they have other options. On your website, do you post the rates of different banks? If someone wants to get a new card, can they go to your website to determine the rates, suitability and other options?
Mr. Rossi: The credit card calculator on our website is designed to do specifically that. The database has a number of variables, including interest rates and fees and the various different features available. I call them promotional offers. The consumer can enter their desired profile and bring up a shorter list that shows options for their consideration. Obviously, they will look at those options, including information on interest rates, fees and so forth, and make a reasonable decision around the card that best suits their needs.
Senator Kochhar: I have been a consumer of credit cards for the last 50 to 60 years.
Senator Harb: You are revealing your age. That means you got a credit card when you were underage. How did you manage that?
Senator Kochhar: You killed my process of thought. As a consumer and as a retailer, I have dealt with all credit cards. I have the power to decline any credit card that is hurting our business. For example, for Visa and MasterCard we pay a fee of about 2.25 per cent. Funds are immediately transferred to our account at the consumer's expense. The American Express fee was about 5 per cent, and it takes them 22 days to transfer the money to us. We decided to discontinue with American Express, and we put up a big notice to consumers that they would receive a 5 per cent discount if they charge their bills to MasterCard or Visa or use a cheque. Our business increased because of that move. I do not think there is any concern about the reasonableness of fees because you do not have to use credit cards if you do not want to. You know upfront how much the fees will be.
My question is about the unsolicited offering of credit cards. Three credit cards were sent to me in the last two or three months which I can use just by signing them, and they have quite a high limit. Is that proper for the banks to encourage people to build up debt, or is that under your mandate, to control the sending of unsolicited credit cards?
Mr. Rossi: From our perspective, if your concern is around negative optioning people or even merchants into requiring them to accept a certain product, both the code and the regulations prohibit that from happening. Negative optioning is not allowed in the card world and the Canadian marketplace.
Senator Kochhar: In other words, they cannot send you unsolicited credit cards anymore? Am I right?
Mr. Rossi: They can send you solicitations to apply for a card. They cannot send you a card and say "You are in.''
Senator Kochhar: When does that regulation begin? Within the last three months three different credit cards were sent to me, MasterCard and Visa from different banks, and I did not even ask for them. I already have both of those cards.
Mr. Rossi: If it is the case that you have been sent a card whereby you are automatically in, certainly we would be more than happy to talk about that bilaterally so we can understand what the issue actually is and then follow up for you.
Senator Moore: I have one question following up on Senator Ringuette's questions. Mr. Rossi, we have been advised by the Canadian Federation of Independent Business that following the adoption of the code of conduct there were breaches. I think some of them have since been fixed, but I would like to know how you find out about a breach and what you can do about it. Can you prosecute?
Mr. Rossi: First, in terms of how we find out about breaches, in the context of this code, we have been very proactive in terms of engaging the payment card network operators and working with them through the implementation process. With regard to compliance deficiencies, regardless of whether it is a code or a regulation or legislation, there are always those types of issues with regard to compliance gaps early on in the process. Our process is to engage quickly, identify it, and then start to rectify the problem as quickly as we can.
With regard to codes of conduct, regardless of whether it is on the merchant side or on the consumer side, we do not have the full enforcement mechanism that we would have on the regulatory and legislative side of things, so we cannot penalize and issue violations with regard to a breach of a code of conduct.
However, one of the key factors in any code of conduct is we are required by law to provide reporting to the Minister of Finance. We find, in this particular scenario, that is the important aspect of this whole code. Ultimately we have to let the Minister of Finance know how things are going with regard to implementation and ongoing compliance with the code, and then the minister will be able to use that information to render whatever decision he believes.
Senator Moore: If you cannot achieve compliance in some situation, then you report to the Department of Finance?
Mr. Rossi: To the Minister of Finance directly.
Senator Moore: That department then pursues it?
Mr. Rossi: That goes back to my comments.
Ms. Lafleur: As I mentioned, the minister now has the authority to make the voluntary code involuntary under the act.
Senator Moore: Yes, you mentioned the regulations.
The Acting Chair: Before I turn to Senator Ringuette for the final question, I have one question for Ms. Evanoff. In your presentation you gave a detailed, clear overview of the powers of OSFI now as a prudential regulator. Do you know of any other jurisdiction around the world where prudential regulators like OSFI's powers now deal with market conduct issues such as that proposed in this bill?
Ms. Evanoff: There are other regulators around the world that are omnibus regulators. For example, they deal with prudential issues as well as some consumer issues and so on. The United Kingdom has been a case in point through the financial services authority. However, they have recently decided that is no longer appropriate and are separating the functions. There will be two separate regulators going forward.
In terms of regulatory start-ups, you get countries like Australia that from the beginning decided to separate the two aspects for the same kinds of reasons we did. I am not personally familiar with examples of one regulator that does solvency as well as this type of regulation.
Senator Ringuette: Did you issue a warning to CIBC, Visa Debit card when you were first made aware of the non- compliance with the code? Last week I was in an establishment in Fredericton, New Brunswick, and the owner told me that just the day before the technology provider had changed the mechanism in regard to debit cards. As we were warned in June 2009, the technology, when you put your Visa card in, the first item is not Interac but is automatically directed to Visa Debit. It is still ongoing. What will you do about it?
Mr. Rossi: As I previously mentioned, in our view any type of breach of that sort would warrant even more than a warning. In that particular case, we would engage directly with them. This is not something we would work through a letter or through some sort of broad warning. We would engage directly with the organization involved to rectify the situation and stop the activity, if it is in some way negatively impacting merchants on this particular front.
Senator Ringuette: How can you stop it? You have no tools to stop it. You have no disciplinary mechanism to enforce your mandate.
Mr. Rossi: I would have to respectfully disagree with the senator on this particular point. I think reporting to the Minister of Finance is a huge, huge part of that process.
Ms. Lafleur: The threat of regulation is a very effective tool.
Senator Ringuette: It does not seem to be very effective so far. Maybe we need the regulation ASAP.
The Acting Chair: On behalf of our committee, Mr. Rossi, Ms. Lafleur and Ms. Evanoff, thank you. You have been clear, frank and professional and have helped us understand this bill and your position on the bill.
We now have, from the Canadian Council of Grocery Distributors, Mr. David Wilkes, Senior Vice-President, Trade and Business Development; from the Coalition québécoise des marchands contre l'augmentation des hausses des frais de transaction sur les cartes de crédit et de débit, Danielle Chayer, Vice-President and General Director, Association des hôteliers du Québec, and her colleague, Pierre-Alexandre Blouin, Director, Public Affairs, Association des détaillants en alimentation du Québec; from the Retail Council of Canada, Terrance Oakey, Vice-President, Federal Government Relations. Finally, representing the Canadian Independent Petroleum Marketers Association, David Collins, Vice-President of Wilson Fuels and CIPMA Board Member.
I understand that we will have three separate presentations. The first presentation will be by Ms. Chayer.
As there will be three presentations, I would ask you to keep them to a maximum of around six or seven minutes.
[Translation]
Danielle Chayer, Vice-President and General Director, Association des hôteliers du Québec, Coalition québécoise des marchands contre l'augmentation des hausses des frais de transaction sur les cartes de crédit et de débit: Thank you for agreeing to hear us speak on Bill S-201. We have a brief in French.
[English]
Ms. Gravel: It has not been translated. Do you want to distribute it only in French?
The Acting Chair: Do we agree we can have it circulated in French?
An Hon. Senator: Yes.
The Acting Chair: Yes, it can be circulated in French.
[Translation]
The Coalition québécoise des marchands contre l'augmentation des hausses des frais de transaction sur les cartes de crédit et de débit [the Quebec coalition of merchants opposed to the increase in transaction fees on credit and debit cards] is made up of 12 organizations, representing more than 35,000 merchants in all regions of Quebec and in all areas of activity, from food to renovation to the tourism industry. Its main objective is to seek the supervision of various aspects of electronic payments, including setting fees and business practices.
Our coalition was formed when our members noticed the increasingly flagrant practices of electronic payment networks, given that the credit card is often the one and only method of payment in a number of areas of activity. The combination of predatory fees, suspicious business practices and the refusal to hear our legitimate claims has made us determined to join forces and take action.
Although the federal government has recognized a number of problems and has provided some solutions to the code of conduct proposed for the Canadian industry, we believe that it has overlooked some fundamental aspects and its support is still insufficient. Although this code has our support and although we want it to be respected, the fact remains that adherence to the code is voluntary and there is no coercive or mandatory quality attached to it.
The Coalition québécoise des marchands contre l'augmentation des hausses des frais de transaction sur les cartes de crédit et de débit feels that Bill S-201, which proposes to expand the mandate of the superintendent of financial institutions, is a step in the right direction. It will allow the superintendent to control the use of credit and debit cards in the country, the operation of the payment system, the interchange fees, and to make recommendations in accordance with this mandate. For all these reasons, our coalition is in support of Bill S-201.
Pierre-Alexandre Blouin, Director, Public Affairs, Association des détaillants en alimentation du Québec, Coalition québécoise des marchands contre l'augmentation des hausses des frais de transaction sur les cartes de crédit et de débit: Our association deems as a major inconsistency in the system the fact that no one, not a single monitoring or economic agency, has been mandated to study the costs of the Canadian electronic payment system. Unfortunately, this essential aspect is not in the mandate of the task force created to review the payment system.
One thing our coalition is wondering about is whether it is responsible on the Canadian government's part to overlook a major irritant in a sector as central as Canada's economic development. Our coalition believes that the supervision of the electronic payment system as a whole has to be much more dynamic, as proposed in Bill S-201, and has to be able to adapt to ever-changing business practices.
We believe that the code, or any other measure under the responsibility and supervision of a public authority, has to embody respect. The superintendent's mandate also has to be strengthened. The coalition also considers that it is important to raise awareness and promote merchants' rights in terms of credit or debit card payments.
In support of its concerns, the coalition draws attention to the shortcomings of the voluntary nature of the code. Canadian merchants are vulnerable to increases in fees by credit card companies and the new aggressive money rebate offers aimed directly at some sectors; the food sector rebate is a concrete example of those shortcomings. New debit options are also emerging and are creating confusion at the point of sale to the detriment of retailers.
Finally, the Quebec coalition would like to point out the importance of studying the costs of the Canadian electronic payment system. There are many examples around the world. In Australia, the United States and, just recently, in France, studies on the costs of electronic payment operations have shown the need for extra attention. A number of public policies on ongoing monitoring have been adopted or are in the process of being implemented.
We would like to thank the people behind Bill S-201, which will allow the Quebec merchants we are representing and our Canadian colleagues to look forward to a brighter future with a payment system providing equitable service and especially predictable fees that do not jeopardize our activities in the long term. We would be happy to answer your questions.
[English]
The Acting Chair: I would like to hold all questions until we hear from all three groups.
David Wilkes, Senior Vice-President, Trade and Business Development, Canadian Council of Grocery Distributors: Mr. Chair. Mr. Oakey will begin the presentation and I will conclude it.
Terrance Oakey, Vice-President, Federal Government Relations, Retail Council of Canada: We would like to start our presentation by thanking Senator Ringuette for challenging this issue. As some of you know, without her leadership on this front we probably would not be where we are today. Her efforts have helped educate both policy-makers and Canadians about what we believe is a dysfunctional payment system that does not serve the best interests of all Canadians. The payments market in Canada is evolving rapidly, with an expanding number of options available to consumers and business, each with their own set of rules and regulations.
Over the past several years, new forms of payments have entered the market and at present Canada is ill-prepared to protect the rights of consumers and the needs of merchants serving Canadians coast to coast. The Retail Council of Canada has long advocated for a robust regulatory framework for Canada's payments industry.
We supported, as a first step, the recently enacted voluntary code of conduct for debit and credit cards in Canada because we believed it represented the beginning of a process to bring true choice, competition and accountability to Canada's payments industry. The code has, in some ways, succeeded, as it has shed light on some of the questionable practices the payments industry indulged in to the detriment of merchants.
For example, the business model of some card companies and banks requires negative option acceptance for payments products, hiding information from merchants in statements and forcing retailers to explicitly say what payments they do not accept. We believe those business practices should not be supported.
Mr. Wilkes: We are now at a crossroads with a new payments paradigm in North America and around the world. While other stakeholders have held the view that voluntary measures are enough, RCC and CCGD continue to believe regulations are not only needed but are necessary in view of this new payments environment.
We believe a regulatory framework would increase competition for merchants' business, providing them with more choice. It would ensure alignment of costs with the services provided, thereby giving merchants greater cost certainty and clarity. Further, it would facilitate the creation of a forum for governance to identify payments-systems-based rules and standards. This framework, however, while being robust and durable, needs to be adaptable to the rapid technological changes taking place in the world.
From the very beginning, RCC and CCGD advocated for a regulatory framework based on the payments system as a whole, and not piecemeal regulation based on individual payment type. We believe, as Mr. Oakley indicated, that the voluntary code is an initial first step. With respect to Bill S-201, and anticipating one of your questions, we are concerned about the ability of OSFI to fulfil the mandate and the objectives that the bill anticipates, given the mandate that the earlier presenters talked about, and we believe that FCAC, which has a much more consumer-focused role, is probably the right government agency to fulfil the tasks that Senator Ringuette outlined in her bill.
We look forward to the questions of honourable senators and to continuing the discussion as we have since the beginning of this debate.
David Collins, Vice-President of Wilson Fuels and CIPMA Board Member, Canadian Independent Petroleum Marketers Association (CIPMA): Being a fellow Nova Scotian, I have always followed your career, Senator Oliver. We are very proud to have you as our senator.
Hon. Senators: Hear, hear!
Mr. Collins: I am Vice-President of Wilson Fuels. We are a family-owned firm now in its eighth generation. We directly supply and operate 55 stores and supply another 220 stores in the four Atlantic Provinces. I am also here as a director of CIPMA, which represents other firms like Wilson Fuels. We are not the corner gas station, but we are not big oil. Most of the rural service stations in Canada are now supplied by member firms such as mine.
I am an overgrown version of the members of CIPMA, and they have asked me to share some of our concerns. Our concerns are pretty simple, and they are not altruistic. We are concerned about dues and fees and our lack of ability to negotiate with the banks.
I was propelled out of my chair in Halifax by my last credit card statement. Fees were up 45 per cent in the first four months of this year. It is a stunning amount of money. The horse has left the barn on this one. With such a complicated credit card system, with qualified, nonqualified or unqualified rates, there is a cacophony of numbers at the bottom of the page and you have no way of knowing whether you have been double charged or undercharged. It is simply out of control.
While it is good to have a voluntary system, it is just that, voluntary. The credit card companies do not have to comply with anything. What is the worst that could happen? We could run and tell the finance minister. That reminds me of my sister and me. When we had a disagreement, we would threaten to tell mom. That will not yield quick results or give a balance to the system. It is important to mandate the collection of data and then decide whether Canadians are well served.
I support the bill. I will defer to your wisdom on whether it belongs with the FCAC or OSFI. I am not at all a government expert.
With the voluntary code we were able to provide a discount for cash. Our company had done this quietly. We were not allowed to advertise it for some time, but now we are. It has been very good at moving people away from credit cards. Every customer can get some benefit, whether they pay cash or debit, just as they can earn points on credit cards. Our customers have responded strongly and credit card sales have gone down from 40 per cent to 20 per cent of transactions. When given an option, they do move, which is what we want to see.
Another concern is the CIBC Global Payments card. It creates customer confusion. It is an Interac card that is now branded "Visa.'' How can I market "Discount for cash or debit'' when I have a Visa slip on the transaction? That is the thin edge of the wedge. It is important to have an informed consumer who can make an informed choice. They do not know whether they are using a debit card or a Visa card, whether they get a discount or not. It is a problem, and I struggle with that.
I urge you to help me with this and help us bring costs down so that I can keep doing what I do.
The Acting Chair: Thank you for your excellent presentations.
Mr. Collins, I want to ask you about the 45 per cent increase in dues and fees. Can you give me a specific example of a due or a fee? When someone comes in to buy $50 worth of gas at one of your stations, what are your dues and fees on that transaction?
Mr. Collins: It depends on the card. The most maddening one is MasterCard. They have a base rate of 1.45 per cent, but if it is a high-spend MasterCard, which looks exactly the same as a low-spend MasterCard, it will attract as much as 1 per cent more on a transaction, so I suddenly get a 2.4 per cent penalty on that transaction. I have no way of knowing what the penalty will be and neither does the customer. People are not making an informed consumer decision.
The Acting Chair: You only find out at the end of the month when you get your statement?
Mr. Collins: That is right. I have no way of auditing it. I do not understand when a high-spend MasterCard becomes high-spend or when it stops being high-spend. There is no way to police it the way it is currently structured.
There is also an out-of-balance system where credit card companies are competing for new customers using my money. They offer a new incentive and then bump the rate category up, which this bill does not stop them from doing. They can create any number of rate brackets to keep raising fees. The system has no counterbalance.
This committee has done great work, and I urge you to look at how to rein that in.
Senator Massicotte: Most here, including myself, would agree that there is an imbalance in that the consumer decides what credit card to use without knowing the full cost of it, because the cost is borne by a third party, who is the retailer. There is not a fair negotiating relationship so the retailer is caught with a fee. As you said, they increase the rewards to compete, but that indirect cost is not transparent. I buy that and I understand.
The issue when I read some of your recommendations, Ms. Chayer, is that in Canada it is not normal for us to fix prices. It is not normal in this market economy for the government to determine the interchange rate. If we said it was 5 per cent, you would disagree. You agree because you think it will be lower than what it is today. It is not our business in this market economy to decide what is fair between the buyer and the seller. Some places, like Australia and France, have had lawsuits and there has been no choice but to do so. I would suspect that our legislators would only do so if there were not adequate competition or transparency to get the market to set the rate.
Let us have that debate. We tried in our report six or nine months ago to even out the relationship and give you the right to offer cash or discounts and a right to cancel. Is there any way to get there without fixing the rate? Is there any way to give the retailers more power to make the relationship more equitable? Is there no solution other than to impose a fee? An imposed fee will be quickly outdated; technology will change it. The thesis in this country with a market system is such that with adequate competition we get what is fairest for the consumer and the producer. Is there no way to get there?
Mr. Wilkes: If I may, you have hit upon the nub of the problem. The competition is not necessarily balanced, so the individuals who pay are not those who are competed for. It is exactly as Mr. Collins said. The code of conduct certainly goes a long way in helping to clarify the rules and some of the transparencies and in ensuring that the inability to have two different payment functions on the same card all are steps in the right direction. However, because of that inherent imbalance in the competitive framework of this market, which is unique I would argue, I do not believe that you can get there without a regulated solution, whether that is right.
Senator Massicotte: The government sets the interchange fee and it will be imposed. Is there no solution to that?
Mr. Oakey: There are lots of models around the world. In the U.S. there is the notion of reasonableness, and the fee is not set. It could be 1.5 per cent one year and when the market changes it could go to 2.50 per cent. In Australia, the interchange rate was initially 0.8 per cent, and now they are saying it should be lower.
As Mr. Wilkes said and as Mr. Collins identified clearly, that market system is not working. If it were working, we would not be here asking for that fix.
[Translation]
Mr. Blouin: There are a number of ways to answer your question. I could tell you what the various rates are in different countries. But I do not think that would help us to better understand the rates that should be set here. It is unacceptable that we have no study in Canada to show us what the associated costs are, what the real fees are in Canada. We are told that consumers are able to find out exactly how much each card costs them and what the benefits are. In our case, no merchant can find out what the costs associated with the card will be at the end of the month. It is impossible. It will depend on which card the consumer brings.
Senator Massicotte: That is being taken care of. It is a question of transparency and organization. Under the current legislation, they will be able to know. Is that the solution? People are telling us that it is not a question of transparency or certainty. The fees must be imposed.
Mr. Blouin: I was going to continue. In Australia, the process started with a specific study on fees; then people saw the level the fees were at. One aspect we have not talked about in our brief is the reward system. At the moment, 44 per cent of transaction fees go to rewards. Should we be the ones paying for the marketing done by banks and credit card companies? Is that our job? Is that our contribution to the payment system? We are ready to pay fees. We pay fees for all our services. But is the ratio fair right now? I highly doubt it.
Senator Massicotte: The answer is that we have no choice. Someone has to be in charge of imposing fees. I am disappointed that this is the only answer.
Ms. Chayer: I can tell you that all attempts so far have been in vain. So it is time for regulations. It is important to understand that, in some areas of activity, including the hotel industry and tourism, the credit card is the only method of payment. You cannot book a hotel room if you do not have a credit card. There are no other options.
The merchants end up with fees they can do nothing about. They cannot say: give me your debit card because they cannot take a reservation. If there were other methods, we would much rather use them. But it is important to act fast, because a merchant's fees can go up to $60,000 or $100,000 per year, and they cannot absorb them. So then the consumer might end up paying.
Senator Massicotte: It is always the consumer who ends up paying at the end of the day.
[English]
Mr. Wilkes: The Competition Bureau is looking into abuse of dominance and price fixing within the credit card market. The investigation has been going on for a long time.
The Acting Chair: They told us about that when they appeared before the committee.
Mr. Wilkes: I cannot comment on the length of the investigation. I think it could provide some real guidance to the government and to this committee depending on the results. If there have been inappropriate pricing behaviours within the market, it is the Competition Bureau's responsibility.
We often forget that there are many different activities surrounding this issue: The CB investigation, the code of conduct, and the work of this committee. We have to recognize the collective wisdom being gathered. There is a mechanism.
Mr. Collins: I am no fan of regulation. In the case of our company, a certain part of the electronic payment system has become a public utility function, whether the wires or the interchange or the moving the digits around on the computer. It funnels down to one or two providers; and there is a cost of doing that. They will not go below their bank interchange rate. We have no idea of that number, which is made up and reflects no efficiencies over time or change over traffic. I am no fan of regulation, but a certain part might need to be regulated, like a public utility. When you move to a cashless society, you regulate currency. We are not regulating electronic payments, which in my business amounts to 85 per cent.
Senator Massicotte: I appreciate the arguments and the difficulties we have in the economy and the inappropriate negotiating position. There will be a natural tendency in this marketplace to avoid price fixing. Maybe we will see what the Competition Bureau does but the whole incentive of the system is to create enough competition to ensure fairness. You are saying that we will never get there. The FCAC wants to get there and any suggestion without price fixing will go a long way. I hear you saying there is no solution. Australia has experienced some negative consequences and it has not been only positives.
Senator Ringuette: One of the major issues we found when we studied the marketplace in Canada was that even our parliamentary committee could not have access, because every document that we receive is public and comes into the public domain, to the numbers to look at the real costs. However, I would like to highlight to all of you the following press release from Visa entitled: "Visa posts a 51 per cent gain in fourth-quarter profits on increased card use.''
We also have a press release on September 2. It says here:
Sonia Baxendale, president of CIBC Retail Markets, recently told analysts on a conference call that the bank has been "working on a number of product changes'' to offset expected rising costs of new credit card regulations, a CIBC spokesman confirmed to QMI Agency.
In other words, they were looking at other kinds of fees that would not be included in the current code of conduct to make up for their said losses because of the code of conduct. I do not see how they can lose anything in regard to the code of conduct, however. There is no measure whatsoever in the code of conduct in regard to the already high fees that we saw for ourselves in June 2009, and these fees, as Mr. Collins has just indicated, are constantly increasing.
There is no way that you can look at a card and know what kind of fees you or the retailer will have to pay to accept that card because they will change. They will change. It is just mission impossible.
I could go on for probably a week talking about this issue. The main purpose of the bill is so parliamentarians will have a report on a yearly basis on the situation of fees and charges to consumers and retailers. There is no way that the Financial Consumer Agency of Canada can have access to the financial statements of Visa, MasterCard, AMEX, CIBC, Royal Bank, whomever the issuer may be, and report to Parliament the accuracy of the situation and have Parliament assess if it is reasonable or not.
Ideally, we would have a reserve bank of Canada, just like all the other countries. However, our committee unanimously said we do not want to have another bureaucracy to deal with fees. What everyone is telling me is that we may have to bite our tongues and do like other countries and mandate the Bank of Canada to do what the other federal reserves in Australia and the U.S. are currently doing.
The Acting Chair: We have all of these witnesses here and it would be wonderful if we could put some questions to them to benefit from their knowledge and experience.
Senator Ringuette: It is a statement requesting comment.
Mr. Wilkes: Where we gain confidence is the focus that is being brought to this issue, the discussions that are happening. We are in agreement that a regulated approach is ultimately the right approach. We have confidence that the Minister of Finance, as earlier witnesses have indicated and have reminded us of the minister's quote, will enforce an involuntary code if a voluntary code does not work.
I believe that this government has been struck with the issues we are discussing here. There is no question that this marketplace is out of balance. We are struggling with the fact that the first step with the code of conduct is not the ultimate step. We have to gain experience within the code. We have to understand how merchants are being impacted by it. We have to understand the bureau's investigation, but we have been steadfast in that we do not believe that this market can fix itself, that a regulated approach is the right one.
I provide a statement and opinion in reply as Mr. Oakey and I indicated in our opening remarks, but we are in full agreement. We want to ensure it is the right solution and not a solution that we have to change later on, and we want to ensure that we look at all payment forms because the payment forms that we are discussing today — credit, debit and cash — are not the only ones because mobile is around the corner with a variety of other things, and we need a universal solution.
Mr. Chair, thank you for the opportunity to reply. I am not sure whether that helps the debate, but that is where the merchants' mindsets are at.
The Acting Chair: Mr. Collins, do you want to respond?
Mr. Collins: No, I am in complete agreement with what was just said. Given the current state of concentration in the business, I do not understand how you cannot regulate at least for some period of time, then, at the same time we have that part protected, look to encourage and reintroduce competition.
[Translation]
Mr. Blouin: I would like to add one thing. At the moment, some elements in the code allow us to take some of the pressure off, by ending a contract or providing discounts, for example. In the food sector I am representing, our profit margins are between 1 to 3 per cent. If we give a 5 per cent discount to someone who does not use their AmEx, you understand that there is no profit at all. There are already a number of products that are sold at a loss to attract consumers, it is our way of marketing.
However, what makes this difficult is that other companies are doing their marketing on our backs. That has to stop. If banks want to invest a portion of their profits in attracting clients, they can go right ahead, but not at the expense of the companies we are all representing.
[English]
Senator Harb: We have heard three things from you today, the first being transparency. Mr. Collins, you mentioned the fact that you receive your bill and do not know what they are actually charging you for. In some cases it may be 1 per cent or 2.4 per cent, so there is a lack of transparency. You cannot get to the bottom of it, and I presume the same thing with the others.
The second one is the competition. You brought up the notion that there are very few players in the market and they are dominant in the market and that is an issue.
The third one is the enforcement element. The consumer association has been delegated with the authority to go out and enforce compliance, but when my colleague Senator Moore asked the question about whether they can enforce, if they can prosecute, the answer was no but they can report. Mr. Collins jumped in with an analogy to the effect "I will go and tell my mother,'' but that will not solve the problem.
In light of these problems, the government has put this notion out trying to get the industry involved because the industry also has a vested interest. They want to ensure you survive and run your operations so you benefit and consumers can buy. They have a vested interest and are partners in that endeavour. The government did what I thought was the reasonable thing to do. They went out and said let us do it on a voluntary basis and see if it works. If it does not work, we will go toward regulations.
It has been a few months and you are before us now. Mr. Wilkes has said that he does not believe it will happen. He believes we need regulations.
Would Mr. Collins and Ms. Chayer tell us not if, but yes or no, the government should introduce regulations? If so, which agency do you think would be best fit to administer that: Consumers' Association of Canada, OSFI, or the Bank of Canada, for that matter?
[Translation]
Ms. Chayer: It does not really matter to us which agency will be in charge of that. We believe it is up to the government to determine who should be in charge. It is important that the job get done and that we be given the resources, regardless of the organization.
We cannot really answer your question because there are many unknown variables. What is important is to have regulations. In the short term, what we must understand is that, since the 2009 economic crisis, as you know, everything has been fragile and any small money loss has an impact on jobs, and on the economic system as a whole. And presently, merchants are doing their best to absorb these fees so that prices are not affected, but they will not be able to keep it up for much longer.
When we are talking about transparency, we are not only talking about transparency in the end-of-the-month statement. When we get a client's card, we do not know what that card means. The Visa Debit card is a great example because everyone is confused. And this card just came out. Imagine when there are fees.
What we cannot grasp is that buying something with a business credit card costs us more than buying it with a personal credit card. And if it is a foreign card or a points card, it is even more expensive. Yet the transaction is worth the same amount. We end up paying for the gifts, the benefits or the marketing associated with it. So we come back to the fact that we are the ones paying. Ultimately, it will be the consumer.
[English]
Mr. Collins: I think you need some regulation, because the latest thing that has hit us in our company quite strongly has been the move towards chip and PIN and PCI compliance in order to thwart fraud, which we all support. In essence, that would lower the costs to the bank. They are asking me to spend, and this is a number that I am still struggling with, $2.8 million over the next two years to redo 55 stores for their point of sale terminals. It is $25,000 per point of sale, and they do pay at the pump, so that will definitely hammer down the liability and the amount of fraud. It will disappear. However, you would think that, in a normal balanced relationship, they would say, "Now that we have all this reduced cost, we will reduce your rates.'' No, that is not on the table. I specifically asked and was repeatedly told no. I said, "You were supposed to be a good business partner to help us get rid of fraudsters.'' "If you do not do it, we will kick you off the network.'' That is a problem. It is not a balanced relationship. What other business do you know says, "I want to save some money, and I want you to pay for it?''
Regulate them somehow to rein them in. Voluntary will not work. They did a voluntary code of conduct in our business, to put low sulphur diesel in vehicles. That failed miserably because entrepreneurs, being who they are, will look for every gap. If they do not have to do it, they will not to do it, and they will use it to their competitive advantage over their competitors. They need some bright lines, and they need to be reined in.
[Translation]
Senator Mockler: First, I would like to say that the committee meeting is too short for us to be really able to engage in a dialogue with the witnesses.
[English]
Mr. Collins, you have had an increase of 40 per cent. How have you determined that percentage, and where and when have you determined it?
Mr. Collins: It comes on my financial statements. That is the credit card dues and fees. It is a pretty simple number. It is the amount that went through the transactions and how much I was left to put in the bank.
Senator Mockler: Coming from the institution.
Mr. Collins: Right.
Senator Mockler: You represent the entrepreneurs, the business community. What is reasonable, if government has to intervene and regulate?
Mr. Oakey: The first thing that needs to happen is merchants do not know the cost of what it would take to process the transaction. Studies out there show 40 per cent of the cost is marketing, some show 80 per cent is marketing and it costs about 2 per cent, of the interchange rate, not 2 per cent of the transaction. Merchants do not know what is reasonable, and that is a function of a government agency that would be able to compel that kind of information. We do not know. We do know, based on public statements and public filings with certain regulators, that profits are going one way and our fees are going the other way.
Senator Mockler: Mr. Chair, I just came from a NATO meeting in Poland, and they were talking about financial institutions and the economy. Canada was looked upon as being the best example of coming out of the present recession that we have had since 2009. It depends who you talked to, and some will say 2007. We were applauded for the fact that we had less regulation and government intervention. Do you have any comments on that point?
[Translation]
Ms. Chayer: We must remember that, before we had this fee schedule, two years ago, fees were set at around 1.70- 1.75 per cent, and that was working fine, the market did not crash and everything was going well. If we had a study on associated costs, we would be able to understand the institutions' profit margins. But, in the beginning, once again, the 1.70 or 1.75 per cent rate was working. As an indicator, we should perhaps start there, where things were before.
[English]
Mr. Oakey: On your question about regulation, most of the financial press that I have read has actually praised Canada's regulation in the financial sector, which caused us to ensure that the economic downturn was not as great.
Mr. Collins: In my case, we do regulate and protect our banks. It is an act of Parliament to be a tier 1 bank. It is a highly regulated business, but their entrepreneurial spirit seems to be busting out big time and, using their government protected base, they are taking a lot of advantages of retailers — liberties, I would say. Maybe I am turning green with envy or something, but to be able to get someone else to pay for all the upgrades to lower your costs, to get someone else to pay for all your marketing efforts so you can expand your bottom line is fun and games, but someone must put an end to it. The only way that I know of is to regulate the payment systems just like you regulate currencies. Find a reasonable cost, give it a backbone, and allow them to market their cards. Maybe you want to do Visa, the plain vanilla is this, and Visa Plus is this and you get your bonus points, and the merchant can say, "I do not want to take Visa Plus or levy a surcharge for Visa Plus because it costs more.'' Something can be done. There are simple ideas that people can think of to free up some competition. I do not want to go to full regulation, but they are a victim of their success. They have become a public utility in Canada. Most merchants will tell you 80 per cent of the business that we do is no longer cash but through this unregulated system.
[Translation]
Mr. Blouin: A business has to deal with a number of transaction costs, including banking service fees. But our problem with these fees is that we have no way of assessing them. Over the past year in Quebec, the minimum wage has gone up. The same is true for other provinces. We can foresee these types of increases. I am not saying that we are happy, but we can predict them and organize ourselves to try and compensate for these increases.
There are also licences, energy and various expenses that come with our operations. The problem with this system is that it is unregulated and that we let them have whatever profit they want, regardless of the results on the market.
What we want to know is not the rates, but rather when we are going to do something about them.
[English]
Senator Kochhar: I have been a free entrepreneur all of my life, and I can tell you that I hate any kind of regulation. I do not want anyone to be telling me how much I can charge on my product. I can make 500 per cent profit or I can decide not to make any profit, to offset where I am going to make 500 per cent. That is how the free enterprise businesses are run. I am embarrassed to say that you are not willing to give self-regulation a chance for two or three years before you determine whether or not it is working.
You gave an example of running to your mother. When I ran to my mother, things were fixed and fixed fast.
Mr. Collins: You have turned out to be a successful man. Sorry to interrupt, but you regulate currency now. You poked me so you are going to get a poke back. You regulate green back currency now and you regulate the amount that comes out, how that is handled and what the fees are. We have to take it at face value. We do not sit there. It is a regulated item. Yet you are saying the electronic side can be the Wild West show. I am saying that I have a problem with that.
Senator Kochhar: Mr. Collins, some things may have to be regulated, but you cannot keep on increasing the regulation, one after another, unless it is absolutely necessary. We have not given a chance to make it absolutely necessary when we have established a regulatory body that will determine whether or not they can fix the problem. We are trying to jump in to bring more regulation. As far as I am concerned, I am dead against it.
Mr. Collins: There was a famous line about pornography: You know it when you see it. I guess we see it. Why represent a bunch of people? We see it as being an abuse of position and we are asking for your help. You do not see it that way. That is fair enough. That is democracy.
Senator Greene: I want to thank Senator Kochhar for launching this line of attack or line of questioning, perhaps I should have said. He has raised a lot of good points in his questions.
You all represent lots of organizations, lots of companies and lots of people. It seems to me that you have considerable market power that you are not using. Why do you not, as individual groups or together, simply stop using the products that you say you are required to buy?
Mr. Wilkes: It is not an option. If you, as a grocer, indicate that you are not accepting a particular payment option because it is costing you too much, not the customer at your cash, then you will lose that customer. The inherent inability and imbalance in the marketplace makes that suggestion that you have just offered completely unacceptable.
As business people, we like to believe and our members like to believe that they are strong negotiators and that they are strong competitors. They would prefer the line of attack, if you will, that is being suggested here. We recognize, as Mr. Collins has, that it does not work. We would not be here seeking regulation as we have consistently over the course of this debate if we believed the competitive marketplace would solve the problem. It simply will not for the reasons we have all been stating.
Senator Greene: If I were you, I would try that. I would broadcast that you are doing that. I would begin with the least used payment option, the least used credit card, and use that as a warning.
Mr. Wilkes: I do not believe the Competition Bureau would allow us to collude like that.
Senator Greene: I would try doing it anyway. It will be years before they discover it.
Mr. Wilkes: Our members are not in the business of breaking the law.
Senator Greene: I have been a member of lots of trade associations and I understand that their public profile or their public activity is only as strong as the weakest member. There is not much discipline within trade associations. I believe that there are mechanisms that you are not using and the case that you are making still must be proven, in my view.
[Translation]
Mr. Blouin: If I understand correctly and if the Senate is allowing us to join forces and negotiate on the industry's behalf, it would be great if that were written somewhere. As a number of people said, I do not believe the Competition Bureau would be very happy about something like that.
But I would like to come back to a point because I was not able to do so earlier. You may say that the code is fairly new. Yes, but the matter itself is not new. It has already been two years and a number of consultations have been held. If the banks had been really afraid of this process, they would have already made changes to their policies. We have not seen any changes. We have not seen a drop in rates; on the contrary, we have seen hikes in rates. If you ask me, this is nothing but a blessing for credit card companies at the moment.
[English]
Senator Greene: All you need is to have one day of protest. If you were really serious, that is what you would do.
Senator Ringuette: There has been three years of protesting.
[Translation]
Senator Massicotte: In other words, in response to Senator Greene's comments, it is against the law and it is not allowed. If I remember correctly — and I cannot remember if it was mentioned in our brief — we actually had an open discussion as a committee about adding a provision to the legislation that would grant an exemption from the Competition Act for legal alliances to get some bargaining leverage. I know you do not have that, but if the government agreed and the bill was amended, would that solve the problem? Would that be a strong enough tool for you to negotiate with Visa and MasterCard?
Ms. Chayer: A year ago, we tried to negotiate the fee schedule when the rates went up. The answer was "no.'' Since there is nothing forcing them to do it, why would they do it?
Senator Massicotte: But if you all agreed —
Ms. Chayer: For example, when we only try at provincial level or in a particular sector, we cannot succeed. If it were really mandatory, or if there were some willingness and it were made public, things would perhaps change.
In response to Senator Greene, in the hotel industry, when you say that we could spend a day without using credit cards, that means there would be entire sectors that would not be working. The hotel sector cannot boycott the credit card. In the food industry, we might be able to get by for one day. But it is unthinkable for other sectors; just think of all the Internet shopping that goes on.
Senator Poirier: We talk a lot about credit card companies and their service fees. Will debit card rates go up at the same pace? Will there be fees for you as consumers?
[English]
Mr. Wilkes: Under the consent order with which Interac operates, the Competition Bureau, they can only charge a flat rate and it has not gone up. That was one of the concerns that we had. We had to ensure transparency that the Interac system was maintained. The introduction of the Visa Debit card and some of the challenges they have had in the introduction of it is a concern to us as well. At this point in time, the direct answer to your question is no.
Senator Poirier: I have a final comment along the same lines that some of my colleagues were addressing. I know this may not be the solution for all businesses, depending on the business, but I know of a restaurant business in New Brunswick — in my local community actually — that has a sign at the entrance. The sign says they do not accept credit cards because they say the price of their products would have to go up due to the fees. The clients, as soon as they walk in, know that they do not accept credit cards. The restaurant has been there and very successful for a number of years. It would be interesting to go back to see how many potential clients actually walk out because of that situation. People accept it and just pay with cash, or they will go to the caisse populaire and take cash out with their card and go back to the restaurant. They are a well known restaurant in the area. I know the challenge is different for different businesses.
Mr. Collins: I already offer a discount for cash, and I have lived and died by the market. Senator Greene can talk about that. I have been regulated, so I know it is no fun to be regulated. I would prefer not to be regulated in my market.
Senator Massicotte: What percentage cash discount are you giving?
Mr. Collins: For cash, two cents a litre.
Senator Moore: It is better Thursday nights. It is pretty good.
Mr. Collins: Thank you very much, Senator Moore. It is three and a half cents on Thursday nights, so we do that already.
The biggest concern is now that I have a Visa Debit, can I use that to get that discount or not? That is another concern. It really hammers us. Like everything else in this world, sure, there are not a lot of bright lines, and that is the reason you are senators and I just run a business and pay taxes. I know what I am no good at. I encourage to you to help us out.
The Acting Chair: Honourable senators and distinguished guests, sadly our time is up: In fact, we are overtime.
Senator Moore?
Senator Moore: After you dismiss the witnesses, I would like to have the floor for a moment.
The Acting Chair: We thank, all of you for coming and taking your time tonight to present to us. It has been informative. We have learned a lot and it has helped us in our deliberations. I hope you will come back again sometime and we can continue this important debate.
Senator Moore, did you want to have the floor in camera or public?
Senator Moore: I would like to speak in public.
The Acting Chair: Senator Moore, you have the floor.
Senator Moore: Thank you, chair. Last week at our committee it was clearly the understanding that we would be dealing with Bill S-216 this week. It is not on the agenda anywhere, so I want to make a motion and I want to have a recorded vote on it.
I move that at its meeting tomorrow, November 25, 2010, the committee proceed to clause-by-clause consideration of Bill S-216.
Senator Ringuette: I second that motion.
The Acting Chair: You do not have to second it. Senator Moore, do you have that in writing so I can read it to everyone?
Senator Moore: I can read it to you again.
I move that at its meeting tomorrow, November 25, 2010, the committee proceed to clause-by-clause consideration of Bill S-216.
The Acting Chair: It has been moved by Senator Moore that at the meeting of the Standing Senate Committee on Banking, Trade and Commerce tomorrow, November 25, 2010, the committee proceed to clause-by-clause consideration of Bill S-216.
Honourable senators, are you ready for the question?
An Hon. Senator: Question.
Senator Massicotte: Could I ask a question? I am not on the steering committee. Can I ask where the delay is? Where is it at?
The Acting Chair: Is there anyone here from the steering committee?
Senator Greene: That is the problem. The chair and the deputy chair of the committee are both absent. Senator Mockler is part of the steering committee, but he was not at the last steering committee meeting: I was. We have a problem. It is a good question. There is no one here from the steering committee.
Senator Massicotte: How about next week? Can we agree to make it next Wednesday?
Senator Greene: I had a conversation with Senator Hervieux-Payette this afternoon. I caught her at the airport.
The Acting Chair: She is the sponsor of the bill.
Senator Greene: No, Senator Eggleton is.
The Acting Chair: Sorry, I had the wrong bill.
Senator Greene: I had a conversation, and I cannot reveal the contents of it, unfortunately. However, the conversation was certainly not along the lines of having clause-by-clause consideration tomorrow. I cannot reveal what the conversation was about.
Senator Harb: I think, in fairness to everyone, I was with my colleague, Senator Greene, last week when we all agreed that we would deal with the bill this week. This will allow cool heads to prevail, reflect on it and come back. It is not a complicated bill.
This committee works through consensus all the time, and that was the consensus. We even put pressure on our colleague, Senator Eggleton, who wanted to have a call for "yeas'' and "nays,'' and we gently persuaded him that it will come this week.
I know the chair and the deputy chair are not present. We are grown boys and girls here. I think, in fairness, if Senator Ringuette would defer her bill until next week, it should not take very long. That bill is only three or four clauses long. We should be able to deal with it quite quickly. We can dispose of it tomorrow very quickly. With all due respect to the chair and the deputy chair, we love them dearly, they are not here, and unfortunately there is a time issue, and great representations by those involved. Lots of hard work is being done on both sides of the equation. Actually, we are all on the same side of the equation.
To be honest with you, colleagues, it will be a black eye and a terrible thing for the committee not to deal with the bill tomorrow, because that is what we agreed to last week.
If Senator Ringuette will agree to defer hers, so we can deal, in the first few minutes, with the clause-by-clause, I think that will solve our problem.
Senator Ringuette: Chair, I agree with Senator Harb. Bill S-216 has a timing aspect. This bill has to go through third reading in the Senate and three readings in the House of Commons before Parliament adjourns for Christmas. This is the bill's second birth. It has been in the Senate since last April.
As adamantly as I feel that Bill S-201, in regard to credit card fees and charges is important, I certainly understand the deadline that is looming for the people who will be affected by Bill S-216. Therefore, I absolutely agree that Bill S- 216 should go before my bill tomorrow.
Senator Moore: There is ample time on the agenda tomorrow to deal with this bill. Everyone has spoken about the time considerations and all the rest of it. I have made a motion, and I prefer a vote. I want a clear decision of the committee today.
Senator Greene: You all have some really terrific arguments. In the interests of the affected workers, we will do it. We will move your bill to next week.
Senator Ringuette: We could do it tomorrow. There are not a lot of witnesses.
The Acting Chair: You said "we will do it'' and I do not know what that means. I want Senator Greene to explain. What will happen tomorrow under "we will do it''?
Senator Greene: We will do the clause by clause on Bill S-216 tomorrow and we will move Bill S-201 to next week.
Senator Moore: Please put the question.
Senator Mockler: I have a question for the chair regarding the motion. Can we not wait until Senator Hervieux- Payette is back, or do we know when she will be back?
The Acting Chair: She will be here tomorrow. Senator Moore is insisting upon a vote. Is that the will of the committee?
Senator Harb: Unanimous, anyway.
Senator Moore: Let him put the question.
Senator Greene: I do not mind a vote, but we did not have one last week. We agreed by consensus. There is a consensus.
The Acting Chair: Senator Moore, you have heard what the honourable senators have said.
Senator Moore: I would like you to call the vote and we can do it. If it is verbal and it is unanimous, so declared by the chair, I will be happy.
The Acting Chair: Senator Greene, on behalf of the steering committee and on behalf of the government, has said it is unanimous.
Senator Greene: I said there is a consensus. I cannot speak for everybody around the table.
Senator Moore: I want a vote, chair. That was my motion.
Senator Mockler: We can still debate the motion. If we look at the spirit of the committee and we look at the spirit of other committees, they work by a consensus. I object to the idea of the mover of the motion wanting a vote on it. I object to that. We have worked as a consensus, so we should have a consensus. Senator Greene, who is on the steering committee, is accepting that it is a consensus and we will move in the spirit of the motion that the honourable senator is asking for.
I am not finished.
Senator Moore: I would like to help you out. I withdraw my request for a vote on division. I would like you to call it, though, and we can declare. It is treated as in the Senate and is a verbal vote.
The Acting Chair: Honourable senators, is there consensus that tomorrow we will go to clause-by-clause consideration of Bill S-216?
Hon. Senators: Agreed.
(The committee adjourned.)