From the Hill
By MP Kevin Sorenson
As part of the measures to improve access to financing and strengthen Canada’s financial system in Budget 2009, our Government promised to bring forward measures to help consumers of financial products. For a long time Canadians have been asking for laws to ensure that consumers have access to credit on terms that are fair and transparent.
Specifically, we are taking action to protect consumers who use credit cards. We are making sure consumers get clear and useful information, not jargon and fine print, so they can make informed financial decisions. Approximately 25 million Canadians have credit cards, and while most of us pay our balance in full when the bill arrives, when we can’t or if we miss a payment, we are forced to pay high penalties in fees.
Canadians don’t expect that all of our rights as consumers disappear whenever we use a credit card. Few of us take the time to read the terms of use for our credit cards. Too often, we learn about our credit card agreements after missing a payment or failing to pay the balance that is due. As the government, we want to ensure that Canadians who are unable to pay their balance are treated fairly, that interest rates and penalties are clearly shown, and that companies use only appropriate debt collection practices.
Our new regulations will require clear and simple information on credit card application forms and contracts, and clear and timely advance notice of changes to rates and fees. We are also limiting credit business practices that are not beneficial to consumers. Our government has invested in financial literacy, funding initiatives through the Financial Consumer Agency of Canada, focusing initially on youth.
Measures to regulate business practices of financial institutions that are not beneficial to consumers include: a minimum 21-day, interest-free grace period on all new credit card purchases when a customer pays the outstanding balance in full; express consent required for credit limit increases; and limits on debt collection practices. Amendments to existing regulations to improve disclosure include: a summary box on credit contracts and credit card applications; disclosure of the implications of paying only the minimum balance; and timelier disclosure of interest rate changes.
Credit cards have become a part of our daily lives. Even those of us who try and ‘pay as we go’ as much as possible, must use a credit card in specific instances (i.e. renting a car). Canada’s laws have not kept pace with the high level of use of credit cards. Our government’s proposals to improve the way credit cards work in our society range from very simple (i.e. boosting the fonts on the agreements we sign so we can actually read them) to spelling out what procedures should be followed when dealing with credit card users who fall seriously into debt.
As many of my constituents who have contacted me over the years regarding credit cards have asked, we’re trying to re-balance the power between the companies offering credit services and the average Canadian consumer trying to use those services.
If you have any questions or concerns regarding this or previous columns you may write to me at 4945-50th Street, Camrose, Alberta, T4V 1P9, call 780-608-4600, toll-free 1-800-665-4358, fax 780-608-4603 or e-mail sorenk1@parl.gc.ca.