OTTAWA—The new federal Code of Conduct for the Credit and Debit Card Industry in Canada doesn’t do enough to protect consumers or address the stability of the payments system, says a new report by the Canadian Centre for Policy Alternatives (CCPA).
The report, by Doug Peters, former Secretary of State (Finance) and former TD Bank Chief Economist, and economic consultant Arthur Donner, says that the Code of Conduct is a step forward, but it is voluntary. To be fully effective, it would need to be both mandatory and have penalties spelled out.
“Canada’s credit card payments system is currently largely run by two unregulated U.S. companies,” says Peters. “There is no question that these companies should be subject to Canadian regulation, both for systemic risk reasons and for consumer protection.”
Although it is not widely recognized, credit card use and the credit card payment system are possible areas that might endanger the financial system.
“The failure of either or both of these U.S. companies would put the Canadian payments system into a panic. That would threaten Canada’s economic growth, and the ensuing uncertainty could well push the country back into recession,” says Donner.
The report concludes by laying out two different options for regulating Canada’s payments system.
Credit Card Institutions and Canada’s Payment System is available on the CCPA website: http://policyalternatives.ca.
For more information contact Kerri-Anne Finn, CCPA Senior Communications Officer, at 613-563-1341 x306.