OTTAWA - The heads of Canada's largest credit card companies are cautioning against government meddling in their business, saying it could hurt consumers.

The presidents of Visa and MasterCard told a Senate committee that the recently enacted voluntary code of conduct on the industry is working just fine, and a mandatory system could have unintended consequences.

The defence did not sway Liberal senators on the committee, who accused the companies and banks of being part of a system that charges customers and retailers exorbitant fees and interest.

Liberal Senator Pierrette Ringuette says the industry needs to be reined in and a voluntary code, which was introduced by Finance Minister Jim Flaherty earlier this year, is not sufficient.

Another senator said he was told by one merchant that fees he was charged for usage of one credit card rose 45 per cent in a period of four months.

And a third gave the example of being given notice that the interest rate on one card was being raised to nearly 30 per cent.

But MasterCard's Canadian president Betty De Vita said the experience of capping fees in Australia shows savings by merchants were not passed on to customers.

If fees are reduced by government fiat, she said, banks will be forced to take action by charging card users more for cards and offer fewer benefits.