By: Doug Kreviazuk, Executive Director, PayTechs of Canada
In late 2020, I had the opportunity to engage Canada’s Commissioner of Competition, Matthew Boswell in discussion to gain his perspective on the evolution of Canada’s payments system and the importance of promoting a competitive marketplace for the benefit of Canadians and the Canadian economy. The second part of this two-part interview will be released next week, January 28, 2021.
Question 1: The Minister of Finance is directly responsible for banking and the payments system in Canada. How does your mandate compliment these responsibilities, specifically in the financial services sector?
The Competition Bureau works to maintain and encourage competition across the Canadian economy. As an independent law enforcement agency, we are responsible for administering and enforcing the Competition Act, as well as three other federal laws. We also advocate for a greater reliance on competition in regulated sectors of the economy. We do this because the competition is the best way to drive lower prices, improved productivity, and increased levels of innovation to the benefit of all Canadians.
As part of our law enforcement role, the Bureau investigates a wide range of anti-competitive behaviour, including abusive conduct by dominant companies, deceptive marketing, price-fixing, and bid-rigging. The Bureau also reviews mergers and acquisitions to ensure that they do not substantially harm competition.
Some of our more high profile enforcement matters in the financial services sector include cases involving Interac, as well as VISA and Mastercard. We take action where we find evidence of contraventions of the law. Anyone who believes that a company or an individual has contravened the law should let us know by filing a complaint.
As a complement to our law enforcement activities, the Bureau is Canada’s competition authority, providing advice to policymakers at all levels of government on how to craft regulations in a manner that supports a more competitive and innovative economy.
We work with the Department of Finance Canada, the Bank of Canada, and other regulatory bodies regarding financial services regulation. Sometimes this comes in the form of in-depth studies and formal written submissions, which we publish on our website. In other cases, we provide less formal advice directly to regulators. Anyone who feels their business model may be hampered by regulatory barriers should let us know through our online advocacy suggestion form.
Question 2: In regulated industries, there is a need to strike a balance in regulation to address the market failure and market forces so as not to impede competitive forces. Why is this critical to the success of these industries?
Our perspective is that competition should determine market outcomes. Regulation should only be used where market forces will not achieve policy objectives and, even then, only to the extent necessary to address those objectives.
We believe this because competition is the best way to support a stable, productive, and growing economy. Competition pushes businesses to reach their full potential, and provides consumers with competitive prices, product choices, and the information they need to make informed purchasing decisions. This in turn drives economic growth, innovation, and productivity—all of which are significant factors in increasing the wealth and prosperity of all Canadians.
Question 3: With the convergence of payments and electronic data, there are countries supporting open banking/consumer-directed finance, yet Canada seems to be lagging. Do you support a move to grant consumers greater access to and control of their personal financial data and a public-private arrangement to deliver the appropriate underlying framework? What role, if any, will the Bureau play in the creation of an Open Banking sector in Canada?
The Bureau has long been a proponent of open banking and consumer-directed finance. Our 2017 FinTech Study recommended that policymakers embrace open banking. We followed this up with a supportive written submission during the Department of Finance Canada’s 2019 review of the merits of open banking and, in that same year, advocated for open banking in front of the Standing Senate Committee on Banking, Trade, and Commerce. More recently, on January 18th of this year, we provided written comments to the Advisory Committee on Open Banking on how to best design a pro-competitive and innovative open banking system in Canada.
We have advocated for open banking because we believe that it will enable greater competition in the Canadian financial services industry. Allowing consumers to safely and securely share their data between financial institutions makes it easier for those consumers to switch to the provider or product that best suits their needs. Encouraging this switching behaviour places greater competitive pressure on incumbents, and supports new and innovative business models. Additional competition in the Canadian financial services industry will significantly enhance choice and bring about lower prices, increased convenience, and higher levels of innovation in an industry that is of central importance to the Canadian economy.
Note: The final segment of the interview with Commissioner Boswell will be released Thursday, January 28, 2021 and will examine the Bureau’s contribution to Canada’s Digital Charter, lessons learned from the Interac Association Consent Order of 1997, the importance of broadened access to the payments system, and the future role of the Bureau in the payments sector.