Law Times

PAGE 10 Lawyers disappointed at reaction to payments review Recommendations from the task force review FOCUS out in March 2012, the expec- tations for reform were high. However, W hen the task force for the payments system review's final report came reaction to the report has disap- pointed many observers. "Unfortunately, the report the government's landed with a bit of a soft thud so far as government reaction was concerned, Borden Ladner Gervais LLP. "That was a big letdown." Jacqueline Shinfield of Blake Cassels & Graydon LLP is of similar mind. "The minister certainly didn't to further discussion and for- ward movement but no concrete acceptance of any recommenda- tions." BY JULIUS MELNITZER For Law Times • Implement electronic invoicing and payments for all government supplies and benefit recipients. • Partner with the private sector to create a mobile ecosystem. • Propel the creation of a digital identification and authentication regime. • Define a discrete payments industry and require service providers to become members. • Create a new public oversight body for the payments industry. • Encourage industry to create a self-governance organization includ- ing providers and users. • Reinvent the objects, governance, powers, business model, and funding of the Canadian Payments Association. Source: Task Force for the Payments System Review final report " says Eric Boehm of 'Our infrastructure and regulatory schemes are seriously outdated,' says Wendy Gross. say the report was great," she notes. "There was a commitment to review the safety, soundness, and efficiency of the system; to determine whether there' The task force's mandate was cient innovation in it; to exam- ine the competitive landscape; to analyze whether payments system providers are serving businesses and consumers well; and to look at whether over- sight mechanisms for the cur- s suffi- rent payments system are still appropriate. "There are a lot of legal issues surrounding the payments sys- tem such as who' vency or fraud; what constitutes a deposit under provincial law; how safe are the funds advanced; and to what extent, if any, are these funds insured, s an insol- " notes money when you buy a pre- loaded credit card from a retailer; what happens if there' s holding your Wendy Gross, Stephen Clark of Osler Hoskin & Harcourt LLP. According to Clark' challenge permeating the task force was striking the right bal- ance between consumer protec- tion and facilitating new entrants into the marketplace from both a technical and corporate perspec- tive. But whether the task force achieved this end is controversial. the overarching Reach one of the largest Canada! legal and business markets in regulatory framework for the payments industry, including a self-governing organization and public oversight body. The radi- cally new system would main- tain the Canadian Payments Association as a core infrastruc- ture entity. "From a substantive perspec- The report lays out a proposed s colleague tive, the most significant of these recommendations is that pay- ment industry participants, such as processors, software, and hard- ware manufacturers, acquirers, loyalty-point program operators, and ATM operators that were not previously subject to specific payments legislation, would now be swept up in the definition of payments system providers and subjected to the new proposed payments governance regime, says Shinfield. It' " industry may not be unhappy with the government' enthusiasm for the recommen- dations. "The radical approach of add- s no surprise, then, that the s lack of ing new regulatory layers will not be appetizing to the industry in general, would stakeholders who are currently not regulated want to move away from the unregulated freedom they now enjoy?" Quite apart from govern- " says Boehm. "And why June 4, 2012 • Law Times ment and industry reaction, con- stitutional issues may delay or even thwart implementation of the recommendations. The task force noted that full implemen- tation of would require constructive inter- action with provincial legislation and expressed confidence that the provinces would co-operate. "It remains to be seen wheth- its recommendations er the task force has been too optimistic in anticipating the co- operation of the provincial gov- ernments," says Shinfield, who points to the strong opposition of certain provinces to the fed- eral government' national securities regulator that didn't pass constitutional muster at the Supreme Court of Canada. "It will be interesting to see if some provinces similarly oppose the broad regulation of the pay- ments industry by the federal government." Digital payment mechanisms With more than 250,000 page views a month, canadianlawlist.com captures your market Th e all-new canadianlawlist.com features: — A fresh new look, designed for improved user experience — Eff ective new ways to reach the legal market — Gold and silver advertising packages For more information contact: Colleen Austin at 416-649-9327 or toll free at 1-800-387-5351 colleen.austin@thomsonreuters.com www.lawtimesnews.com s scheme for a and processes, of course, lie at the heart of almost all electronic commerce. "There' in terms of what policymakers are going to make of electronic wallets and mobile payments," says Clark. "Everyone wants to know s a great deal of interest where the business is heading and what future regulation may look like. eral government has been late to the chase. "Our infrastructure and regu- Minister of Finance Jim Flaherty announced the launch of the task force review. The final report didn't come out until almost two years later. It was only in June 2010 that " says Gross. LT Unfortunately, Canada's fed- " latory schemes are seriously out- dated, Online Print and in

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