The Canadian Federal Election and the Prepaid Ecosystem Impact: Issues to Follow

On Monday, September 20, Canadians will go to the polls in the 44th Canadian Federal Election. The election period will run for 36 days — the shortest election period possible under federal law.

The CPPO has summarized key updates about issues to follow in the upcoming election that are relevant to the prepaid community. Public Affairs Advisors, who advises the CPPO on government relations matters, is doing work around these issues and the CPPO is diligently tracking them so we can effectively represent your interests as we prepare to move forward after the election.

While the themes below are not major campaign issues, the positions taken by the political parties during the election may be influential in the aftermath as these issues are addressed in the new Parliamentary session.

Key Themes to Follow During the Election Period

Open Banking

The Conservative Party has released its platform Canada’s Recovery Plan which includes a commitment to introducing open banking legislation. The Liberal Party is expected to release a platform also in support of open banking, which indicates that this is the first time the two governing bodies are united on the open banking front — a significant shift for the fintech community. The impact of this advancement has the potential to make banking services more affordable as services become interconnected.

The election has the potential to drive open banking opportunities as political parties are starting to embrace the concept from a government perspective. Having the government back this concept has the ability to make all Canadians more comfortable for financial services products — specifically digital. Legislation might finally fall in favor of open banking, which could incent lagers of digital products.

In early August, the Government of Canada welcomed the final report from the Advisory Committee on Open Banking. The report presents a roadmap for implementing an open banking regime in Canada which includes appointing an “Open Banking Lead” with a mandate to convene industry working groups to develop proposals for common rules for the system, establish an accreditation framework, and develop technical standards.

The Open Banking Lead’s work would take place over the coming 18 months, with the first 9 months intended to establish “foundational elements” and the second 9 months focused on implementation. The report’s 34 recommendations provide further details around the scope of the system, including requiring federally regulated banks to participate and limiting the initial phase to ‘read-only’ activities.

Federal Government Disbursements

In May, the CPPO published a whitepaper, “Modernizing Canadian Government Benefits and Tax Refund Delivery”, that highlights why prepaid solutions are needed to offer modernized, digital-first government payments to Canadians. The whitepaper was distributed to key government stakeholders to maintain momentum on the government’s RFI on alternate payment methods which was launched in Fall 2020.

This month, the CPPO met with policy advisors in the Office of the Minister of Digital Government and the Office of the Minister of Public Services and Procurement. The meetings were positive and allowed the CPPO to continue to make the case for a political mandate for prepaid adoption. The meetings will also enable the CPPO to continue engagement with public servants during the election period. The CPPO is continuing research efforts to better understand and identify gaps with the federal government’s continued use of paper-based cheques to deliver benefits.

Digitizing Government

Future discussions are expected around where cloud solutions in financial services fit into the above issues. The pandemic has accelerated the conversations to modernize government payment mechanisms through innovative methods that are cost-effective and provides greater access for all consumers. This has a direct impact on prepaid industry as there is the potential for prepaid to play a larger role in providing an equitable platform to innovative government departments.

Consumer Privacy

Another area worth tracking is enhanced privacy regulations. The Liberal government released the Digital Charter in 2019 which outlined the government’s approach to Canada’s digital sphere, including consumer privacy matters. In November 2020, The Government of Canada introduced Bill C-11 – the Digital Charter Implementation Act, 2020 – which aims to modernize Canada’s framework for the protection of personal information in the private sector. The legislation did not advance past the preliminary stages of debate in the House of Commons and was effectively terminated with the dissolution of Parliament for the launch of the federal election.

Canada’s Conservatives believe that digital data privacy is a right that urgently requires strengthened protection through legislation and enforcement. Their platform has emphasized that Canadians must have the right to understand and control the collection, use, monitoring, retention, and disclosure of their personal data. the Party has committed to passing legislation to protect privacy in ways it believes are stronger than Bill C-11.

New privacy legislation will need to be introduced in next Parliamentary session. The debate between the parties on consumer privacy will come down to the details in the legislation and how far it goes to protect consumers.

Party Platforms

Liberal Party of Canada Platform

While the Liberal platform does not cover prepaid specifically, it contains several commitments of interest to CPPO. Of note, the Liberals commit to moving forward with a “made-in-Canada” model of open banking set to launch no later than early 2023. The platform promises to modernize Canada’s payments technology to “deliver faster and lower cost options” so people can “securely and conveniently” manage finances, pay bills, and transfer funds.

The document also references the Liberal’s advancement on a plan to lower credit card fees for small businesses. In addition, the Liberals commit to require financial institutions to offer flexible repayment options by default if individuals face financial stress. The platform also includes establishing a single, independent ombudsperson for handling consumer complaints involving banks; address predatory lenders by lowering the criminal rate of interest; enhance the powers of the Financial Consumer Agency of Canada (FCAC) to review prices charged by banks and impose changes if the price is excessive; and establish the Canada Financial Crimes Agency to investigate financial crimes including fraud, money-laundering, insider trading, and organized crime. The full platform can be found here.

Conservative Party of Canada Platform

The Conservative platform does not include specific commitments on prepaid, however, it does address several issues areas of interest to CPPO. With respect to making banking more affordable, the platform commits to introducing legislation on open banking so Canadians can connect with fintech companies that provide a better offer for banking services; order the Competition Bureau to investigate bank fees; and require more transparency for investment management fees.

The Conservatives also promise to strengthen the Code of Conduct for the Credit and Debit Card Industry to “better protect consumers and small businesses from fraud and things like unwarranted chargebacks that can be devastating for them.” On AML, the Conservative platform commits to implement comprehensive changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, and give FINTRAC, law enforcement, and prosecutors the tools to identify, stop and prosecute money-laundering in Canada’s real estate market; establish a federal Beneficial Ownership Registry for residential property; and examine the recommendations of the Commission of Inquiry into Money Laundering in British Columbia. The full platform can be found here.

New Democratic Party of Canada Platform

Similarly, the NDP platform makes no specific commitment on prepaid. The NDP commits to combat money laundering by working with the provinces to create a public beneficial ownership registry and require reporting of specific transactions. With respect to consumer protection, the NDP commits to bring in more powers to investigate and enforce consumer protection. This includes introducing legislation to protect consumer privacy and prevent credit and debit card companies from selling personal information. Finally, the NDP will address credit card fees by instituting a cap of 1% on credit card merchant fees. the full platform can be found here.

Stay tuned for more government relations updates that relate to discussion around the upcoming Federal Election.

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