Flaherty shifting his focus to credit card companies?

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Mortgage brokers’ prayers may finally have been answered – Finance Minister Jim Flaherty is raising the possibility that he will attack the credit card problem from a regulatory front.
 
This move by Flaherty comes on the heels of a major case brought against Visa Canada and MasterCard that was dismissed by the Competition Tribunal – a decision that came with the suggestion a “proper solution” will have to come from the government.
 
“I will be carefully reviewing the Competition Tribunal’s decision and also monitoring any potential appeal,” Flaherty told reporters after the anti-trust body rejected the Competition Bureau’s arguments against the credit card giants. The bureau had alleged that they were imposing undue fees on retailers.
 
Brokers are all-too familiar with Ottawa’s intervention in the mortgage sector over the past few years through ever-tightening regulations. Requests to ease or reverse previous decisions from associations like CAAMP have slowed that pace. Nor has the government directly answered criticism levelled at the major banks about a “laissez-faire attitude” towards consumer credit cards. 
 
“Recognizing the importance of this issue to all involved,” says Flaherty, “I have also asked that a special meeting be convened of the government’s FinPay committee – a consultative committee on payments issues that includes representatives from the credit card industry, small business, retailers, consumers, and many more – to discuss this matter and next steps.”
 
Brokers have repeatedly cried foul that the mortgage and housing sector were being unfairly targeted by the finance minister – while personal debt continued to spiral upwards with seemingly no regulation on how many cards a consumer could have, or how high the credit limit.
 
Any intervention being considered by Flaherty is likely to stop short of addressing those concerns.
 
Although not speaking directly on the ruling, the minister issued a statement that “as job creators and drivers of economic growth, Canada’s small business owners and entrepreneurs – along with consumers – deserve clear information and fair and transparent rules on the type of payment system they use.”
 
  • Paolo Di Petta | dipettamortgage.com on 2013-07-24 9:16:43 AM

    Good to see Flaherty tackling the next big issue.

    He was prudent to deal with mortgages first - had he initially gone after credit cards, there's a very good chance that all we would have seen was a bunch of people transfering unsecured debt to secured debt via refinances.

    Now with the new mortgage rules in place, he has some leverage - the Credit Card companies can't offload debt onto people's homes and now they'll have to play ball.

  • Ken Lankin on 2013-07-24 9:28:20 AM

    Well no poop !! Is about time. Between the CC co's and the banks dishing out unsecured LOC's like candy - fees that a Manhattan lawyer couldn't figure out - the buck MUST stop here. Many of us have barked up this tree yet Flaherty continued to slam mortgages when his focus should have been right here 2 years ago. Lets hope Paolo is right and we can grab some more biz from what we have already lost !

  • Kent Farnsworth, Meridian Simply Mortgages on 2013-07-24 9:33:47 AM

    It's about time. Maybe that was his plan all along. personally I don't think he's that intelligent though. That being said, there has been plenty of other changes that has been made to mortgage regulations that didn't apply to refinancing. These changes has had significant impact on my business and I'm sure most other brokers as well. It is nice to finally see the feds go after one of the real problems with household debt though. Hopefully next they'll start to regulate the auto finance business.

  • Russ Cameron on 2013-07-24 9:36:06 AM

    Finally after several of us have stated before to our MPs credit card is the problem at 20% is to get credit with credit companies increasing limits to $50m to $75m which has put many into bankruptcy and everyone get hurt. Mortgages are at 3.50% and everyone has to have a place to live in Canada but everyone doesn't have to have a uncontrollable high rate credit card..now Flaherty needs to actually look and see what CMHC is doing as the controls on mortgages are being mishandled ..controls are ok if used with common sense.

  • Jason Scott on 2013-07-24 12:01:54 PM

    I don't like high credit card limits and outrageous interest rates either but there will be unintended consequences if banks' profits in this area are reduced. One consequence could be higher mortgage rates for consumers.

  • Chris Dixon on 2013-07-24 1:41:19 PM

    Try not to blow your horns too hard folks.
    The issue that is being referenced, that has been rejected by the Competition Tribunal, is one of FEES. Fees being charged to retailers who are providing POS for their customers. While I have not read the complaint, none of the news reports that I have seen indicates in any way that this has anything to do with interest rates or the issuing of unsecured credit. As such, it doesn't address "Mortgage brokers’ prayers" as written in the first line of this article. In reality this article is not on point and appears to be little more than sensationalism. Although to the authors credit he has included this sentence "Any intervention being considered by Flaherty is likely to stop short of addressing those concerns.".

  • Wendi on 2013-07-25 6:07:35 AM

    Whereas interest rates are a concern, one goes into a relationship with credit card companies knowing full well that those rates are extrodinarily high. As a retailer with a POS system in place, I was told by my provider what the fee was for Visa and MC HOWEVER what was with held from me was the PREMIUM card fee which brought the transaction fee to me to just under 4%. This was hidden under a section in my statement called "Other Charges". As a small business owner, I cannot afford to take that hit and am refusing to accept those cards as payment in my store. I object to paying for my customer's holidays (I have not taken a holiday since 2006), cash back or other premiums. This is highway robbery. If the banks want to offer these increased premiums to their customers, that is up to them and perhaps the presidents and other executives will be willing to take a salary adjustment to accomodate that but do not ask me to take the hit.

  • Jody Nason, AMP on 2013-07-25 9:34:42 AM

    When the change to only allow refinances at 80% came in last year, I asked the question "If people need money for schooling, vehicles or any other true necessity and cant get it at a low rate by using their equity, where do they go?" By not putting any restraints on the credit card companies, Flaherty allowed them to jump up and say "We will give it to you!" and at a much higher rate. What will happen is you will see, 5-10 years down the road, homeowners with equity and debt in loans and credit cards bringing their average interest rate to a much higher number.
    The average mortgage from day 1 takes 25 years to pay off. How long do you think a persons credit card debt takes to pay if you are only required to pay the minimum?

  • Kent Farnsworth, Meridian Simply Mortgages on 2013-07-25 9:39:48 AM

    I'm really just hoping that there will be a change in guard with the next federal election. If Harper get re-elected I think that we're pretty much all screwed. Short of complete election fraud, I don't think that will happen. Trudeau should win by a landslide, and hopefully that government will see things the way that the bulk of mortgage brokers do. Liberals tend to be more for the people and less for corporations, so things could change for the better quickly once they take the reigns.

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