In April of 2015, the Financial Consumer Agency of Canada (the
"FCAC") released an updated Code of Conduct for the
Credit and Debit Card Industry in Canada (the "Code of
Conduct"). In connection with the update to certain Policy
Elements under the Code of Conduct, the FCAC has now released, for
public comment, three draft guidance documents (CG-10, CG-15 and
CG-16) which provide explanation and guidance on the Code of
Conduct. These draft guidance documents are available at
CG-10 — Increased Disclosure in Sales and Business
Practices and Cancellation of Contracts without Penalty
This guidance was originally effective on November 12, 2013. It
required clear disclosure of key elements of merchant-acquirer
agreements on a cover page at the beginning of the agreement and
strongly encouraged the adoption of an information summary box.
The draft amended guidance updates the prior guidance to reflect
changes made to the Code of Conduct in 2015. This includes
amendments to reflect the now mandatory requirement of a cover page
on all merchant-acquirer agreements containing an information
summary box and fee disclosure box, both of which are discussed in
more detail below. In this connection, given that elements of the
existing form of this guidance have been added directly to the Code
of Conduct, the FCAC has revised the guidance to remove potential
areas of overlap, duplication and inconsistency with the amended
Code of Conduct.
However, guidance continues to provide that appropriate remedies
will be available to merchants in connection with merchant-acquirer
agreements entered into in violation of the Code of Conduct,
including amending or voiding such agreements. The guidance also
provides that merchants are able to cancel their merchant-acquirer
agreements and related service contracts without penalty, following
notification of any new or increased fees by any participant or
CG-15 – Information Summary Box examples for the Code of
Conduct for the Credit and Debit Industry in Canada
The 2015 updates to the Code of Conduct add the requirement that
a cover page containing an information summary box summarizing the
key contractual elements be included in merchant-acquirer
agreements entered into or renewed starting November 13, 2016. This
new guidance provides examples of information summary boxes for
merchant–acquirer agreements with no related contracts and
with multiple related contracts.
CG-16 — Fee Disclosure Box for the Code of Conduct for
the Credit and Debit Industry in Canada
In addition to the information summary box, the 2015 updates to
the Code of Conduct add the requirement that a fee disclosure box
setting out the fees for the most common types of card transactions
and processing methods be included in merchant-acquirer agreements
entered into or renewed starting November 13, 2016. This fee
disclosure box and disclosure of all other fees must be included on
the cover page immediately following the information summary box.
The fee disclosure box requires disclosure for each payment card
type broken out by processing method. All other fees must also be
disclosed in language that is clear, simple and not misleading.
The guidance recommends disclosing such other fees in a table
grouped by theme with descriptive headings. Flat fees must be
disclosed as the same fee for each payment card type and processing
method in accordance with the template fee disclosure box. Other
variables that affect the rate charged must be disclosed in the
contract disclosure with footnotes added in the fees disclosure box
to explain those variables. International cards are not to be
included in the fee disclosure box.
The information summary box and fee disclosure box will be not
be required for automatically renewable merchant-acquirer
agreements renewed starting November 13, 2016 for a term of no
longer than 6 months with no changes to the initial terms and
conditions of the agreement.
The FCAC will be accepting comments on these draft guidance
documents until April 15, 2016. The guidance documents are set to
become effective as of November 13, 2016 at which time payment card
networks and their participants will be responsible for ensuring
compliance with the guidance documents.
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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