FCAC’s Plain Language Initiatives and Code of Conduct for the Credit and Debit Card Industry Update

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Libby Gillman spoke at the Canadian Institute’s 8th Annual Forum on Payments Compliance held in Toronto, February 27-28, 2013 on the topic of  “Emerging Technologies: How to Create a Resilient Compliance Program Incorporating New Payment Solutions and Products”.

At that conference, the Financial Consumer Agency of Canada (“FCAC”) gave a presentation regarding some of the recent initiatives they have embarked upon, including, on the consumer side, a review of current state of plain language policies within FRFIs offering lending products. The FCAC found that 60% of the FRFIs had not integrated the FCAC’s plain language principles into their policies and procedures! They plan to ensure that this is rectified in the next year and propose to then review FRFI’s consumer disclosure documentation in 2014-2015. Merchant documentation is likely to be the next target of their review.

On the merchant side, the FCAC has observed three issues which they believe are not in line with key principles in Elements 1 and 3 of the Code of Conduct for the Credit and Debit Card Industry:

  • Negative sales and business practices, including
    • Failing to provide merchants with complete copies of their merchant-acquirer agreements
    • Modifying a merchant-acquirer agreement without providing advance notice
    • Sales representatives advertising and promising rates and fees that participants are not able to honour
    • Inconsistencies between the information disclosed in the merchant-acquirer agreement and the merchant’s monthly statements.
  • Disclosure in multiple service provider agreements
  • Multiple contract cancellation policies, penalties and fees

Since 2010, the FCAC has received more than 200 complaints involving Elements 1 and 3 alone!

Should your financial institution require assistance in ensuring your policies, procedures and documentation comply with the FCAC’s plain language requirements and the Elements of the Code of Conduct, please contact us.

About the Author
Libby Gillman is, by training, an experienced corporate and commercial lawyer with particular expertise in financial institution incorporation and regulation, banking law and regulation, sophisticated and innovative payment systems, electronic banking products, emerging technology-based financial and other products and services, electronic commerce including Internet law, and legal issues of privacy and security on the Internet.