On July 29, 2016, the Financial Consumer Agency of Canada (FCAC) published the following guidance documents on its website:
- Amended Commissioner’s Guidance 10 (CG-10) – Increased Disclosure in Sales and Business Practices and Cancellation of Contracts without Penalty
- Commissioner’s Guidance 15 (CG-15) – Information Summary Box examples for the Code of Conduct for the Credit and Debit Card Industry in Canada
- Commissioner’s Guidance 16 (CG-16) – Fee Disclosure Box for the Code of Conduct for the Credit and Debit Card Industry in Canada
The guidance documents take effect on November 13, 2016 and relate to recent changes to the Code of Conduct for the Credit and Debit Card Industry in Canada (Code). For a description of the Code changes, please see our April 2015 Blakes Bulletin: Amendments to Code of Conduct for Credit and Debit Card Industry. The Code applies to credit and debit payment card network operators and their participants, such as card issuers and acquirers (collectively, Participants).
CG-10 INCREASED DISCLOSURE IN SALES AND BUSINESS PRACTICES AND CANCELLATION OF CONTRACTS WITHOUT PENALTY
CG-10 was originally published in 2013 to address three credit and debit card industry practices that the FCAC determined did not comply with the spirit of elements 1 and 3 of the Code, namely:
- Sales and business practices: the FCAC received complaints that merchant-acquirer agreements were confusing or incomplete; disclosure across different documents was inconsistent; Participants were amending merchant-acquirer agreements without providing the required notice; and Participants were advertising rates and fees that they could not honour
- Disclosure in multiple service provider agreements: merchants often found multiple service provider agreements opaque and difficult to understand
- Multiple contract cancellation penalties, costs or fees: cancellation penalties, costs or fees were not linked together in respect of multiple service provider agreements, causing merchants to be penalized for termination in some circumstances contrary to the Code
In the amended version of CG-10, the issue pertaining to disclosure in multiple service provider agreements has been deleted entirely since disclosure of multiple service provider details will now be contained in the information summary box. The information summary box must be included with all merchant-acquirer agreements pursuant to element 1 of the Code, and there is now specific guidance on the information summary box in CG-15 (described in the following section).
CG-10 has otherwise remained substantially the same regarding the remaining two issues, although there have been several drafting changes, seemingly to make consequential changes and to ensure consistency in terminology. The previous version is currently available on FCAC’s website for comparison purposes.
CG-15 INFORMATION SUMMARY BOX EXAMPLES FOR THE CODE OF CONDUCT FOR THE CREDIT AND DEBIT CARD INDUSTRY IN CANADA
CG-15 provides examples of the information summary box referred to in element 1 of the Code which, effective November 13, 2016, must be included as a cover page for every new and renewed merchant-acquirer agreement. The information summary box is intended to contain a summary of the key elements of each merchant-acquirer agreement, including information on related service provider agreements, if applicable. This formalizes the previous guidance set out in CG-10 for Participants to present key information regarding multiple service provider agreements in a cover page format in a manner that was easy for merchants to find and understand. The FCAC has stated that, effective November 13, 2016, existing cover page disclosures that Participants may currently be using can no longer be used and the prescribed information summary box must now form the cover page of each merchant-acquirer agreement.
CG-15 includes three sample templates. Participants are free to determine which template is suitable, but the headings in the left-hand column of the templates may not be altered. The sample wording provided in the right-hand column of the templates is provided for illustrative purposes only and this information should be tailored to the relevant agreement(s) between the Participant(s) and merchant.
CG-16 FEE DISCLOSURE BOX FOR THE CODE OF CONDUCT FOR THE CREDIT AND DEBIT CARD INDUSTRY IN CANADA
CG-16 provides the following:
- A template for the fee disclosure box referred to in element 1 of the Code that Participants must include at the beginning of every new and renewed merchant-acquirer agreement, effective November 13, 2016 — the left-hand column and the top row of the template disclosure box can be amended only in limited circumstances
- A sample table that Participants can use to disclose all other fees, as required in accordance with element 1 of the Code — this sample is provided for illustrative purposes only and should be tailored to the Participant and the merchant
- An appendix setting out frequently asked questions and answers (Q&A) in respect of CG-16 relating to disclosure, terminology, international cards and general guidance — notable information from the Q&A includes the following:
- All merchant-acquirer agreements entered into, or renewed or extended, on or after November 13, 2016, must contain the information summary box, the fee disclosure box and the disclosure of all other fees, in that order
- A Participant’s existing pricing schedule can be used to disclose all other fees in compliance with element 1 as long as the pricing schedule meets the requirements of clear, simple and not misleading language and all applicable fees are included
- The FCAC encourages Participants to include a glossary of terms, use industry naming conventions and provide example scenarios in merchant disclosure
CLEAR LANGUAGE REQUIREMENT
There are no specific font or other formatting requirements with respect to the template information summary boxes or fee disclosure box, but there is a general Code requirement that all disclosure provided to merchants under the Code be presented in a manner that is clear, simple and not misleading. In CG-15 and CG-16 the FCAC refers Participants to Commissioner’s Guidance CG-3 – Clear language and presentation principles and guidelines for the industry, for guidance on the presentation of the required disclosures.