Only one in five Canadians are confident in their financial ability. Two-thirds of Canadians are functionally illiterate when it comes to investing. Most Canadians need access to financial information and advice. These are just some of the findings of the “2005 Symposium on Canadians and their Money” attended by 150 people from the public sector, private sector, non-government organizations, social policy groups, and the academic community.
William Knight, the first Commissioner of the Financial Consumer Agency of Canada (FCAC) shared these findings with delegates attending the national credit union conference earlier this year. FCAC, an independent body, was established in 2001 and exists to provide free information and interactive tools written in plain language. FCAC also receives complaints and inquiries through its call centre. In addition, the agency monitors financial institutions’ business practices and ensures their compliance with legislation and regulations.
Canadians have the right to know that they can cash their government of Canada cheques without charge. They have the right to know that financial institutions cannot refuse to open an account for them because they are unemployed or have a poor credit rating. Anyone who’s tried to decipher mortgage or banking documents will appreciate the efforts of the FCAC to simplify and clarify the language used in the documents. According to Knight, 42% of Canadians do not have the basic literacy and life skills to cope with demands of our society and economy.
The FCAC aims to increase the financial capability and the ability of Canadians to make informed financial decisions. Improved knowledge, understanding, skills and competences will help victims avoid the predatory practices of payday loans and pawnshops. This competency allows people to see the long-term impact of their decisions. It also helps people establish a good credit history, qualify for mortgages, and use retirement planning tools like RRSPs (Registered Retirement Savings Plans). Equally important, the FCAC breaks down feelings of financial and social exclusion.
In 2002, the average household debt in Canada was 121% of disposable income, while the savings rate was only 0.02%. The debt load per capita doubled between 1982 and 2001. There is an increasing reliance on payday loans. There are now about 1,200 payday lenders offering short-term loans at rates of between 30% and 50% of the next pay cheque. It becomes a vicious cycle.
FCAC tools are written in plain language and include mortgage calculators and interactive tools. Two of the tools are titled “Credit Cards and You” and “The Cost of Banking.” Help is available by calling 1-866-461-3222 or by visiting the FCAC website located at http://www.fcac-acfc.gc.ca. The website is easy to navigate with a frequently asked questions (FAQs) section, Commissioner profile section, simple language links to areas like low cost accounts. For those wanting more in-depth information, there are links to reports and studies.
I guess my concern is how the average Joe would know this agency exists. I’ve never seen banks or credit unions advertise its existence. Are the people most in need of this information likely to have the computer and Internet access to check out their rights or access the teaching tools? The gap between those in the know and those not in the know may just be widening, from where I sit.