Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 29 - Evidence - February 7, 2013
OTTAWA, Thursday, February 7, 2013
The Standing Senate Committee on Banking, Trade and Commerce met this day
at 10:33 a.m. to study Bill C-28, An Act to amend the Financial Consumer
Agency of Canada Act.
Senator Céline Hervieux-Payette (Deputy Chair) in the
The Deputy Chair: Good morning and welcome to this meeting of the
Standing Senate Committee on Banking, Trade and Commerce. Today, the
committee is holding its second meeting on the study of Bill C-28, the
Financial Literacy Leader Act.
In December 2010, after examining the issue for 18 months, the Task Force
on Financial Literacy issued its report. The first of its recommendations
was the appointment of a financial literacy leader, and I will read the
The Task Force recommends that the Government of Canada appoint an
individual, directly accountable to the Minister of Finance, to serve as
dedicated national leader. This Financial Literacy Leader should have
the mandate to work collaboratively with stakeholders to oversee the
National Strategy, implement the recommendations and champion financial
literacy on behalf of all Canadians.
This bill will implement this first recommendation. Today, we will have
two one-hour sessions. We will hear from a group of witnesses during each
session. Each witness or organization will have five minutes, more or less,
for their opening remarks, which will be followed by a short period of time
Our first group of witnesses is made up of the following eminent people,
whom we are happy to have with us: Donald Stewart, former chair of the Task
Force on Financial Literacy. Welcome, Mr. Stewart. Mr. Stewart is the former
chief executive officer of Sun Life Financial.
We also have Laurie Campbell, executive director of Credit Canada Debt
Solutions. Ms. Campbell was a member of the Task Force on Financial Literacy.
Credit Canada Debt Solutions offers credit counseling services.
The last witness on this panel, but not the least, is Douglas Melville,
ombudsman and chief executive officer of the Ombudsman for Banking Services
and Investments, who leads a team that investigates consumer complaints
involving the Canadian banking sector and above all settles them.
Donald Steward, Former Chair, Task Force on Financial Literacy, as an
individual: Thank you for the invitation and good morning everyone.
I will speak briefly to the recommendations of the Task Force on
Financial Literacy in the context of your hearings this morning. You will
all be aware that the task force published a report some 24 months ago
entitled Canadians and Their Money. The report presented 30
recommendations to support a national strategy on financial literacy for
Canada and is available on the website www.financialliteracyincanada.com.
The report represented a great deal of work by task force members and indeed
by a number of the witnesses who made submissions to the task force.
I will briefly comment on three broad topics covered by the report:
leadership, single-source website and education.
The task force's view is that a national leader will be central to
coordinating the diverse resources that are presently being applied to
financial literacy across Canada by a great many stakeholders. In fact,
national financial literacy cuts across every segment of society: consumers,
parents, teachers, youth, voluntary organizations — and I may say a great
many voluntary organizations — employers, researchers and policy-makers.
We believe that a key foundation to reach this incredibly diverse
audience is for the Government of Canada, in partnership with stakeholders,
to continue to build a comprehensive single-source website for trusted
consumer financial literacy information. I say ``continue'' because the
Financial Consumer Agency of Canada has been travelling along this road for
Turning to my third topic, education, the task force heard from many
educational experts, and there was strong consensus on several points.
Financial literacy is an essential skill and it is acquired over a lifetime.
The foundation for this lifelong learning is the school system.
The workplace offers an effective channel for reaching a wide audience
because, of course, people are more receptive to learning in a group setting
or when they start a new job or join a workplace pension or savings program.
Another concept that the task force focused on was teachable moments, key
moments in the lives of individuals, such as leaving home, starting college,
a first job, buying a home, becoming a parent and reaching retirement. Since
most, if not all, of these transitions involve financial products and
services, the financial sector is critical to the learning process.
Government programs are pervasive in Canada and need to be a big part of
lifelong learning. In fact, you could form the view, as the task force did —
and it may be a different way of looking at government — that government is
one large financial institution. Government is a direct channel to many
Canadians, particularly to lower-income Canadians. Governments across the
nation can support the voluntary sector's efforts to build financial
literacy among their clients and can promote financial literacy to specific
It is a privilege to appear before you and I thank you for that
opportunity. I would be delighted to respond to questions.
Laurie Campbell, Executive Director, Credit Canada Debt Solutions:
Good morning, honourable senators and fellow witnesses. I thank you for
allowing me to speak on Bill C-28. I, too, will keep my comments brief.
As a member of the Task Force on Financial Literacy, I can speak to the
recommendations made by the task force. However, I would like to address
specific areas in the recommendations that are part of Bill C-28. I strongly
support the need for a financial literacy leader in Canada under the
auspices of the Financial Consumer Agency of Canada.
In my position at Credit Canada Debt Solutions I have seen the result of
the lack of financial literacy skills very clearly. In 2012, our agency
served over 60,000 individuals, and the reasons for indebtedness are vast.
However, it is evident that not having the basic skills to manage money and
debt is at the forefront of the many problems these individuals face.
They often do not understand the full impact of interest accumulation on
their debt, how to make a simple budget or to save for emergencies. The
individuals we see face a myriad of problems and can fall victim to scams
and questionable practices, such as debt settlement companies, where they
may pay out thousands of dollars to resolve a debt that does not get
resolved. As such, our agency is excited to see that the federal government
has moved forward to make financial literacy such an important issue.
I am hopeful that the leader will be able to bring together the vast
number of organizations across Canada that provide financial literacy to
their communities in various manners. I know that Mr. Donald Stewart spoke
to some of the witnesses who came forward to the task force. We were all
very impressed by the wealth of information and organizations out there
providing financial literacy.
However, there seems to be some lack of cohesion and coordination with
the efforts. As such, we are hopeful that the leader will be able to form an
advisory committee, disseminate current financial literacy information and
determine what Canadian financial literacy needs are to ensure that, where
necessary, there is appropriate training for those involved in delivering
financial literacy services. It cannot be a one-size-fits-all delivery
program across Canada. The leader will need to ensure that there are
specific financial education tools available based on an individual's
current situation and life stage. This can be accomplished through
collaborative efforts and a national website hosting an array of information
on the many aspects of financial literacy. It is, however, highly important
that the whole process involve measurement for success. This is where the
skills of the leader will come in very handy and importantly, so that
efforts are not wasted and duplication does not occur.
It is understandable that it will take time to measure this impact;
however, the important parameters of measurement should be in place to be
able to carry out this important function. This could include, but may not
be limited to, surveys; feedback from financial literacy organizations,
which are providers of financial literacy programs to clients, government
and financial institutions; and data where possible, et cetera. That could
include take-up on some vehicles for saving programs, et cetera.
I look forward to being able to collaborate with the FCAC, the financial
literacy leader and organizations involved in the financial literacy field
as we move forward to see a much more financially literate society.
Part of the effort of Credit Canada Debt Solutions has been to be
involved in the Financial Literacy Action Group. You will find others
speaking about this throughout the day; and some may have spoken yesterday
about the work of FLAG. For your information, attached to my presentation
were a suggested financial literacy action plan and a suggested role for the
new financial literacy leader, which were developed by the Financial
Literacy Action Group.
Thank you very much for having me speak today. I look forward to your
questions and your comments.
Douglas Melville, Ombudsman and Chief Executive Officer, Ombudsman for
Banking Services and Investments: Thank you for the kind invitation to
appear before you today on Bill C-28, An Act to amend the Financial Consumer
Agency of Canada Act.
We are encouraged by Bill C-28 and the proposed creation of a financial
literacy leader. We are further encouraged that such an initiative has been
placed under the direction of a single agency, the FCAC. One single agency,
a body working already to protect and inform consumers of financial products
and services, such as the FCAC, is good public policy and will provide a
good focal point for Canadians seeking useful tools and information on
financial matters of interest to them.
A financially literate individual has a better chance of making better,
informed financial decisions, be it for many of the issues Mr. Stewart spoke
of, such as retirement, buying a house or putting money away for a child's
education. These are important decisions and their results affect not only
individuals but also the economy in general across the country. To truly
improve financial literacy for the benefit of all Canadians and to see the
desired impact, it must be part of a national consumer protection framework;
hence, locating it within the FCAC makes imminent sense, in our view. There
must be a focal point to pull all stakeholder interests and capabilities
together, as Ms. Campbell mentioned, and to tackle clear, measurable
objectives. This must involve several different levels of government and
other consumer-facing organizations including those like ours.
OBSI resolves disputes between participating banking services and
investment firms and their customers if they cannot solve them on their own.
We are independent and impartial, and our services are free to consumers, so
we have a kind of unvarnished view of the world and, therefore, are in a
unique position to understand the kinds of financial literacy challenges
faced by Canadians as they interact with their providers of financial
services. After 17 years of helping thousands of Canadians resolve these
disputes with their financial institutions, we have developed an acute
awareness of how financial literacy challenges and impacts the lives of
Canadians and their financial well-being. While our work is limited to
determining whether an individual has suffered a financial loss due to the
action or inaction of their financial institution, we certainly see how the
level of financial literacy affects the choices made by an individual as
well as their ability to effectively handle the financial complexities of
day-to-day life in Canada.
Sadly, our work usually involves picking up the pieces after the problem
has occurred. Would it not be nice if, as in health care, the prevention of
the problem, which is far more time- and cost-effective and avoids the
associated stress and hardship that can come from financial issues, could be
tackled proactively? From a financial literacy perspective, it is not enough
for consumers to simply receive product brochures, disclosure forms and
other fine print. They must understand what they are receiving, while being
in a position to make educated and appropriate choices.
All Canadians would benefit from an increased level of financial
literacy, but some groups, such as seniors, as the task force noted, are
particularly vulnerable and have limited time to recoup their losses. This
is compounded by the fact that many are retired and rely on fixed incomes.
Most have worked hard their whole lives and likely have saved to fund their
retirement. We are witnessing the largest intergenerational transfer of
wealth in Canadian history. Unfortunately, some are taking advantage of this
vulnerable population for their own financial gain. In many of the cases we
witness, this takes the form of criminal scams, poor investment advice and,
perhaps most sadly of all, abuse by the senior's own friends and family.
An analysis of our case volumes reveals that approximately half of our
complaint volumes are from seniors, vastly overrepresented compared to the
Canadian population. There are numerous factors why this is the case. Some
people would suggest they have the time to make the complaints, but I do not
believe that is the case. I think that socio- economic realities, lifestyle
choices, examples of elder abuse and the topic we are discussing today,
general levels of financial literacy, are all factors in this reality. These
issues are not exclusive; and, in fact, many of our complaints involve a
number of underlying issues all compounding each other.
We look forward to sharing our insights, knowledge and experience with
the new leader and with the FCAC in the future. Thank you for the invitation
to be here today. I look forward to answering any questions you may have.
Senator Massicotte: This is a very important subject and a very
important objective and fundamental to a working society and one where
market forces do not always provide an easy answer for those who have to
make financial decisions. I thank all of you for your efforts. They are
laudable and critical.
Both the information we have received and the information you have
provided confirm that there is a lack of literacy in financial matters; and
you talked about senior citizens. I will say the same thing 100 years from
now: It will never be enough; it will always be deficient; and people will
misunderstand consistently what the objectives are. Do we have any sense of
how deficient we are in Canada as compared to the United States, Europe
generally or Sweden? Has a comparison been done? Are we worse off than other
countries or are all illiterate to some degree?
Mr. Stewart: That is an excellent question. Unfortunately, it will
be answered in qualitative rather than quantitative terms because there is
no global index. Efforts have been made to have students participate in
international assessments, but there is no global assessment. However, we
can say a couple of words about what is going on in other countries and
where they are on their journey.
It is fair to say that many countries have done considerable work over
the last decade on a national strategy for financial literacy. All are
struggling with the fact that this is a journey that continues forever and
will never be optimized. It would appear that some countries may be ahead of
Canada. We did not think that was quite the case because some countries have
a smaller, more cohesive population, and their national strategy is not
quite the same as Canada, where work of considerable advancement was going
on in each and every province but did not come together at a national level.
That did not undermine the fact that there was a lot of good work going on
coast to coast in this country.
Our view would be that Canada is somewhere in the middle vis-à-vis
countries that have embarked on a national strategy, such as Australia, New
Zealand, the United States and the United Kingdom, in particular, which
tended to be the benchmarks for the task force simply because they have done
the most publication of work. We are somewhere in the middle, as best we
could tell, but that is not a quantitative answer.
Senator Massicotte: Mr. Stewart, I think your report has 30
recommendations. In fact, I suppose this nomination comes a bit from the
report, where you do recommend that the federal government assume a
leadership role and assign responsibility. In your report, you also talk
quite a bit — and I totally agree with it — about a need for accountability,
a need for defining the objectives, a need for measurement.
Mr. Stewart: Yes.
Senator Massicotte: You obviously support this legislation and the
nomination of this position. Are you concerned that the terms of reference
are vague and that they report to another party? Could we get lost in the
forest, whereby what you report to be very important — accountability — will
be undermined or will not be attained? One more person among the many
thousands of bureaucrats in Ottawa will not make much of a difference unless
it is really defined with measurements and so on.
Mr. Stewart: I am a great believer in the power of the individual.
I think the choice of individual is absolutely critical. We were impressed
by a worldwide survey of what was going on in the financial literacy
industry, so to speak, or in the financial literacy dimensions of life, by
the commissioner in New Zealand, who is a one-woman wonder. Not only does
she handle financial literacy but she is also in charge of retirement.
Although New Zealand is a country of perhaps 4 million people, it has all
the challenges and complexities of financial literacy that any country has.
I think the view of the task force, if I may say so, would be that the
choice of individual — the right individual — would take the country a
considerable way, regardless of any structure and parameters.
Ms. Campbell: If I can add something to that, I think having an
advisory committee for that individual to rely on and to use as part of the
building of the expertise that is necessary to execute a good financial
literacy strategy is going to be key. One of our key recommendations was to
have an advisory committee that this individual can rely on.
Senator Massicotte: Is the advisory committee somewhat equal to
what you call the ``council of stakeholders'' in your report?
Ms. Campbell: Yes.
Senator Massicotte: The members will be representative of what you
envisage in your report?
Ms. Campbell: Exactly. A cross-section of individuals — it could
be public, private, community organizations, any organization or group that
might have a stake in financial literacy. We know that we want to see
corporations, as well as government and NGOs, be involved in the process.
Senator Massicotte: You also put a lot of emphasis on the need for
a website. There are many people in the field. There is an immense need for
coordination, and you put a lot of emphasis on a website. Will this emanate
from this position? Is it a natural outflow, or should it be done
Mr. Stewart: We would consider an important responsibility of this
position to be ensuring that there is a high-quality website. It is
instructive to trawl the Government of Canada's websites, of which there is
a large number on financial literacy matters. You get a diverse perspective
that is crying out for coordination, notwithstanding the good work the FCAC
has done. This is a central recommendation and would be an important
responsibility for the individual.
Senator Maltais: Mr. Melville, I am glad to see you here. I have
long said that seniors have less than sufficient financial literacy, either
because of their lack of understanding or because they are not familiar with
When you talked about education, Mr. Stewart, we know that education is a
provincial jurisdiction. Do you have agreements with the provinces to have
it in schools? How will that work? Young people are also an under-informed
target group, obviously, since they don't have life experience.
Do you have agreements with the provinces on this?
Mr. Stewart: Unfortunately, I speak English.
Senator Maltais: No problem, we have skilled interpreters.
Mr. Stewart: We do not have agreements. We did have discussions
across the country, and, of course, the committee is very familiar with the
pressures and forces at work across the country. Of course, the federal
government does have some responsibilities for education for certain
segments — First Nation-related responsibilities — and has the opportunity
to do work in that area that could be benchmark work. However, the success
of financial literacy in the country in the future will rest on discussing,
negotiating and obtaining agreements with various provinces and territories
on their curricula. We were encouraged by our engagement with the council of
ministers of education, but it will not be a compulsion. It will be an
encouragement and an engagement.
Senator Maltais: Mr. Melville, you are the ombudsman for Banking
Services and Investments. Banks are not the only ones to offer financial
services, but insurance companies and a myriad of other institutions in
Canada also do so. Do those other financial services fall under your
Mr. Melville: I should probably clarify the limits of our mandate,
senator. Our office handles banking and investment complaints from
consumers. There are counterpart organizations similar to our own that
handle life and health insurance and another one that handles property and
casualty insurance in Canada. The three of us coordinate informally.
Sometimes we even have investigations that are caught between our two
offices, and we will collaborate on those investigations. Sadly, some of the
other bodies that you speak to, like credit bureaus, are actually beyond our
reach. They have actually presented some of the more interesting complaints
that have come to our office because they are dependent upon the banks and
other creditors for the information that is put on a citizen's credit
bureau, and sometimes getting that fixed is challenging.
Senator Maltais: May I ask how many complaints you receive each
Mr. Melville: We would receive between 6,000 and 8,000 inquiries
from Canadians a year. Of those, we will conduct in the area of 800 to 1,000
full-blown investigations. We make recommendations for compensation based on
those investigations. In about a third of the cases that we investigate, we
are making recommendations for compensation for consumers, based on the
facts that we uncover in our investigation.
Senator Maltais: The biggest challenge with this bill will be to
find these people who need information, whether they be youth or seniors.
However, Canada has a system that very few people can avoid: Revenue Canada.
Is there not some way we could slip a brochure inside their tax return in
order to alert them, inform them of your existence and how to reach you?
Perhaps a few people would be excluded, but you would still manage to reach
the majority of people this way.
Mr. Melville: I think you are absolutely right. The research we
have done suggests that fewer than 2 per cent of Canadians would be aware of
the existence of offices like our own. However, they need us when they need
us. Trying to get general levels of awareness up is very expensive, probably
in the area of a million dollars per percentage point. I do not have those
resources, and I am not sure that anyone would see fit to provide us with
On your point, how do you find the appropriate contact point with each
consumer so that at the time when they most need that referral, information
and knowledge, it is provided to them? With our participating firms, the
understanding is that when a complaint has been looked at internally and
they conclude their work on it, they must inform the client of the ability
to escalate to our office. In most cases this is working quite well and, I
believe, gives us as close to a sealed system as we can have. Where firms do
not do that, we follow up at the highest levels with the firm, but by and
large compliance is pretty good.
Senator L. Smith: Ms. Campbell, could you give us some insight
into lack of cohesion among participants?
Ms. Campbell: When the task force was going from city to city and
hearing witnesses, we found that many groups did not know that other groups
were doing financial literacy work, and we did not know that either. I think
many organizations are operating in a vacuum. They have developed their own
financial literacy program in a silo and are delivering it in a silo, and
the group across the street is doing the exact same thing. That is
duplication of effort.
We and the financial literacy leader need to be aware of the level of
expertise that is being delivered through these financial literacy programs.
I am not suggesting that they lack expertise, but providing a platform for
financial literacy information to be disseminated across the country by
these organizations would ensure cohesiveness and also that the same message
is getting out to all Canadians in a way that the FCAC believes is
I myself was surprised to learn of the vast number of organizations
working on financial literacy issues and doing a great job of it. I had no
idea, and our organization has been around for almost 50 years. I did not
know this was going on, so some coordinated efforts obviously need to be
Senator L. Smith: You talk about silos. Getting to Senator
Maltais's point about jurisdiction, will the new leader simply have to
identify a champion in each province to break down the silos? How would you
recommend that this be set up?
Mr. Stewart: To be effective, a new leader has to be able to
engage every province in the country. I endorse Ms. Campbell's statement.
The diversity, range of work and lack of appreciation of other work going on
was both problematic and a great opportunity.
An effective leader will have to be able to work constructively in each
jurisdiction. The task force was made up of men and women from across the
country, and we saw that as a benchmark of the kind of advisory group that
could be supportive. A well-placed and knowledgeable individual in a
province could be of enormous assistance for the national leader to be
effective in each jurisdiction.
Senator L. Smith: Will you folks have any input into the selection
of that individual or the creation of a profile?
Ms. Campbell: We have not yet been asked to.
Mr. Stewart: I think every member of the task force was deeply
vested in the continuing success of the financial literacy effort in Canada.
We would all be prepared to stand in and help. I have a day job, as does Ms.
Campbell, but we would all like to help. I think I am safe in saying that
each individual would be willing to provide time and input, but we are now a
former task force.
Senator L. Smith: I mention that because it would be useful to
have both practical and theoretical perspectives to assist in a search. Some
of the government folks may have a more theoretical approach as opposed to
having worked in a financial institution and seen the people at the
Mr. Stewart: I think it is fair to say that we would all be
willing to assist.
Ms. Campbell: Absolutely.
The Deputy Chair: Following the honourable senators' questions, I
would like to clarity a few things. There are some people in Canada who are
illiterate, just as there are in developed or underdeveloped countries. In
that case, written communication is not an option for teaching them about
how to manage their life. Of course there is a lot of written material out
there that even people with a fairly high level of education find
Let us suppose that you are volunteer and that you will be participating
in a strategic development meeting with the new financial literacy leader.
You will spend one weekend with him. What would your priorities be? Which
clientele would you address in order to maximize the influence of one person
accompanied by five or six public servants to help find a solution to the
problem? In a strategic development meeting, I think that you are the best
person to advise this financial literacy leader. He can't come up with a
strategic plan on his own overnight. He needs the expertise that you have
collected from across the country.
Based on your experience and your report, there are two types of
clientele: youth and seniors. I am not neglecting one or the other. However,
we have to prepare our youth for the future to ensure that as they age, they
will be better able to manage their affairs and use electronic tools. If an
elderly person ends up in the streets overnight, I understand that Mr.
Melville will help that person get their finances in order. However,
generally speaking, the damage done is significant.
Senator Maltais and I are aware that in Quebec, a number of seniors lost
a considerable amount of money. The situation is not unique to seniors:
people in my own family lost hundreds of thousands of dollars because they
took financial advice from completely incompetent or dishonest people.
What priorities would you establish with the extra 3 million dollars and
six additional people?
Mr. Stewart: That is a first-class question, and you will probably
get individual perspectives.
The national effort to raise the standard of financial literacy in any
country, including Canada, is inevitably and inherently a long-term effort.
We cannot wave a magic wand to instantaneously raise the level of financial
literacy. It will take place over a very long time, and that would lead me,
as an individual, to focus first on youth. We need to embed good financial
habits in young people through sound educational programs. The sterling
example is British Columbia where Planning 10 has been in force since 2004.
It is a well kept national secret, but that is another matter.
If you are successful in embedding effective financial literacy in young
people, you will set this country on a good course for the longer haul. I
agree that there are other pressing concerns, such as seniors, as you
correctly highlighted, but there are mechanisms in place to help them.
However, for the longer haul, which this is, in my view, an important place
to start is in schools.
Ms. Campbell: That is well said and I agree.
Senator Hervieux-Payette, you are right. In our organization we see many
elderly people, as I am sure Mr. Melville does, who have been victims of
scams or who have lost money through a lack of understanding of how they can
best take advantage of financial services.
We need to concentrate on young people; that should be a big focus. I
like Senator Maltais's idea of reaching the masses through some type of
mechanism, such as the Canada Revenue Agency or other area where the
government communicates with large numbers of Canadians.
A number of organizations came forth to address the issue of illiteracy
in Canada and how the financial leader might address this while trying to
address financial literacy. That will be a big challenge for the leader. It
means that we will have to communicate with people in different mediums, for
example a website or personal counselling or individual educational
presentations, so that we can meet the needs of all Canadians.
One thing recognized by the financial task force was the need to hit
people where they are and the stage of life they are at. Talking to a
student at the age of 16 years about their retirement probably will not fly.
They are not interested so they do not care. However, talk to them about
their cell phone plan and how they can take advantage of online data and
they will listen. The challenge of the leader will be to have a finger on
the pulse of Canadians where they are at, how they learn and what will
benefit them in the long term on financial literacy issues.
Mr. Melville: Perhaps it falls to me, but how do you not be
contrary while offering an opposing point of view? I agree that the
education of our youth is the long-term key solution to this problem.
However, there is also a need for short-term intervention because there is a
crisis out there. There are vulnerable people in our population.
In our work, I see two groups that are overrepresented, which is tragic:
seniors, who represent about half our caseload; and newcomers to Canada, who
represent 10 per cent to 20 per cent of our caseload. To say there are not
opportunities for intervention at the point of entry when people arrive here
to help them cope appropriately with the complexities of this new society
they are joining is an abdication. I think there are opportunities. Groups
like ours are reaching out into the community as best we can with our
limited resources. There are opportunities for others who are more
appropriately positioned to deliver services to newcomer Canadians. They can
be part of the solution. That is a short-term and necessary part of the
In answer to your question, I would split the team into a long-term
planning unit and a short-term intervention unit. I would find a good reason
to divide the budget between those two priorities. I believe that the
intervention piece now educates the now. The case studies coming out of the
work that many of our organizations are doing in the field can be
interesting pieces. The media love them. Why? They tell human stories. That
educates the middle you speak of, which we do not need to leave. Yes, we can
educate the youth and intervene with some of the vulnerable populations now;
but those stories are useful to educate the entire population. We all can be
part of the solution in getting those stories out.
The Deputy Chair: Yesterday, we heard about someone who was paying
only the interest on their credit card balance. The person eventually
discovered after making many inquiries that the amount was so high because
she had not been paying on the principle debt, and she had to declare
bankruptcy. I can understand that happening to someone here, and people
coming from another country where credit cards are not distributed so
generously might find it happening more. An inquiry about capacity to pay
does not take much time. I have the impression that there are some measures
that everyone would find informative regarding credit cards.
Senator Moore: Mr. Stewart, I am interested in your comment that
the foundation for this financial literacy lifelong learning is the school
system. You mentioned a model in B.C. called Planning 10. I would like to
know what you would recommend to the financial literacy leader in terms of
establishing some kind of system in the schools and at what age and grade.
Maybe you could tell us a bit about the model in British Columbia, how it
works, the results and what grades and ages the model is applied to.
Mr. Stewart: Planning 10 was aimed at grade 10 and was introduced
in 2004. The Financial Consumer Agency of Canada has taken Planning 10 and
made it into a more general course called The City, which is available on
the website of the Financial Consumer Agency of Canada.
Each educational jurisdiction across the country has looked at
introducing financial literacy in one form or another in their respective
curricula. Manitoba and Ontario would be noteworthy in that regard for more
There are opposing views about what age is best to introduce financial
literacy. Some proponents have suggested that it can begin early on. They
have remarked with some concern about the young age at which children are
acquiring cell phones and, thereby, acquiring debt obligations or at least
understanding the real meaning of spending money. It is perceived generally
that serious education is at or around that grade level.
Senator Moore: Is that grade 10?
Mr. Stewart: Yes, grade 10, although there is a case to be made
for earlier grades. The advice for the leader you allude to is that we have
individual education systems with initiatives. It would be an essential
reality that one would build on whichever target each provincial education
body has chosen. The idea would be to ensure that information available
elsewhere is being used. I found it astonishing when I spoke to a number of
provincial ministers to learn that no one had heard of Planning 10 outside
B.C., including ministers of education of our provinces. There are
opportunities to use existing advancements across the nation, but,
inevitably, these approaches will be customized province by province.
Senator Moore: This has been in place since 2004. Further to
Senator Massicotte's question, in terms of the nation have surveys been
done? As a result of this 2010 plan, is B.C. leading the nation in financial
literacy among youth? Has anyone done a follow-up to see what the results of
that plan have been?
Mr. Stewart: B.C. has done a number of surveys that show an
improvement in financial literacy. I am not aware that anything has been
done across the nation that would give you comparable measurements.
Ms. Campbell: The challenge is that there has not been anything to
compare it to. In the fall of 2011, Ontario started a grade 4 to 12
financial literacy program woven throughout the school system. We know that
efforts have been made across the country, but there is no comparative
analysis. They can do before and after such that a student was at one level
of financial literacy before the course and at another level after the
course. Longitudinally it is uncertain. To compare that across the country
is the challenge because there has been no data from other provinces.
Senator Moore: That is interesting. Normally, the ministers of
education of each province and territory meet and discuss things. It is
interesting that they have not heard of this plan in B.C.
Mr. Stewart: Let me say clearly that I did not speak to a full
sample of the provincial ministers of education. I did attend the Council of
Ministers of Education, and you are quite correct. Of course, there is a
fair bit of turnover of ministers, and I might well have been speaking to
ministers who were not in that role. However, it was quite surprising with
the people I spoke to.
Ms. Campbell: I think it also speaks to the problem out there
today that financial literacy has not been on the radar as an important
educational piece for young people. After many years of being in my
organization, I think the two things young people need to learn are how to
parent and how to manage their money. Those are two things that have been
lacking in the school systems across the country since the beginning of
time. Now, I think the radar is finally on the issue of financial literacy,
and I am hopeful that that will make a difference in the long run.
Senator Tkachuk: Ms. Campbell, what would they teach for eight
years? You mentioned grades 4 to 12.
Ms. Campbell: That seems like a long time to be teaching.
Senator Tkachuk: You can go into commerce for four years. What
would they teach for eight years?
To all of you, out of all of the issues of financial literacy, what are
the ones that people are most ignorant about?
Ms. Campbell: I will quickly answer your question about what they
can possibly teach for eight years.
One of the things that Credit Canada Debt Solutions was involved in was
giving them some advice on how to put this program together. One of the
things that we have understood at our organization is that there are
teaching moments in time for young people. Obviously, every board of
education understands this. Financial literacy can be very complicated. It
could be that you start at grade 4 and say, ``You get an allowance. What
would you do with that money?'' In grade 5 or grade 6 you start to babysit.
Now you are talking about getting some income. What would you do with that
money? You might have savings; you might put money toward charity or toward
spending. Because it is woven through, it is not as if they are having a
full year of financial literacy. It might be in their math or home education
course. It is about teachable moments. That is the goal.
Senator Tkachuk: And my second question? There was no answer to
the second question I asked.
Mr. Melville: If I may, my observation is that the number one
issue that I wish I could wave my magic wand and change is to move people
from cash flow thinking to assets and liabilities thinking. The number of
people who get themselves into difficulty and relay stories to us that are
absolutely tragic are people who are living literally moment to moment,
spend to income, and not thinking about the longer-term implications of some
of the decisions they make. That is always driving a lot of the business
toward the pay-day lender institutions on the street because people get
themselves into this situation and say, ``If I can borrow $300 until Friday,
I do not care that I have to pay back $325 next Monday.'' From a cash flow
standpoint that might make intuitive sense to them, but it is economically
disastrous for them.
Senator Ringuette: You are all very passionate about this. Were
the three of you on the task force?
Mr. Melville: Not me.
Senator Ringuette: You were not, Mr. Melville?
Mr. Melville: No.
Senator Ringuette: Ms. Campbell, you were very passionate with
regard to the advisory council. Nowhere in the bill do we see any provision
for an advisory council; that is, there is always an appointment process, a
number issue over the council members, et cetera. This is not in the bill.
Out of the 30 recommendations, we know that most of them do not need any
legislation. Actually, this one does not either; it is just creating a
position. However, since the government decided to go through a legislative
process, I am quite surprised that all of the issues contained in your
second recommendation, which is the advisory council, are not within the
bill. There is no provision for it.
Ms. Campbell: Yes, I recognize that. I would hate to slow down the
bill; I would hate to say, ``Go back to the drawing board, put the advisory
committee in there and throw it back out'' because it has been two years, as
Mr. Stewart mentioned at the beginning. However, it is important. It is key.
What we saw across the country is that there are so many intelligent people
and organizations. We have to take advantage of that. There is no point in
starting from scratch. We have a wealth of expertise out there, and I would
hope that this leader — and this is where the choice of that leader becomes
very important — has the foresight and humility to appoint an advisory
committee to make sure the job gets done the way it is supposed to.
Senator Ringuette: He needs the legislative means to do that.
Ms. Campbell: Would that person need the means, or could that
person just develop an advisory committee? That is the question.
Senator Ringuette: There are all kinds of financial implications
that would need the approval of Parliament.
Ms. Campbell: That is a good point.
Senator Ringuette: That is just to say that I agree with you that
the advisory council is a key element in the strategy.
Senator Massicotte: Given that we have three or four minutes left,
I thought I would venture a little bit away from the legislation and ask for
your comments. There is obviously a literacy problem that we talked about,
and this legislation will help. However, when you look at the mistakes or
misunderstandings of Canadians, there is also a problem that everyone should
understand that it is buyer beware. The banks and financial institutions are
not very clear about what they are selling. Their selfish interest leads to
possibly misleading or exaggerating the benefits of their investments or
How do we deal with that issue? We say, ``Poor consumer, he is
ignorant.'' At the same time, maybe the vendor exaggerated, and we should be
harsher or penalize those people more seriously. Any comments on that?
Mr. Stewart: I think there very much needs to be an ongoing
raising of the bar. The task force report quoted, quite compellingly, an
example of incomprehensible standard literature as one area. It was around
page 70 or 71 of the report. A particular leaflet was written at a level
that was considerably above that of the average recipient and would be
incomprehensible to many of its intended audience.
I know a number of financial institutions are addressing that, but what
other measures need to be taken worldwide? I see — and I currently work in
financial services in other jurisdictions — a significant movement toward
having simpler products and more understandable literature. I see Canada
having to travel along these lines, but the best means of doing that will be
Senator Massicotte: Should there be legislation? Should the
government be heavier-handed, with heavier supervision, to ensure that
disclosure is complete and understood?
Mr. Stewart: The OECD put out 10 consumer principles for financial
products, in the last year or so, which are aimed at improving the
transparency and effectiveness of communication and understandability.
Canada should adopt, and is adopting, these principles and implement them,
if necessary, through legislation.
The Deputy Chair: I am tempted to tell you what we hear on
television: ``You are richer than you think.'' You feel good about that. The
problem is that you should not go shopping after that. However, I think we
get the message. We have some legislation regarding false public advertising
and so on, but there is a difference between false advertising and unclear
instruction. It is about taking the time to read a document because, when
you read a document and there are small characters and it is long, you get
bored fast. A prospectus is probably the best example. I do not know many
people who can read the whole prospectus, even the people selling these
I would like to thank you for your contribution and for your previous
contribution of writing this report. You should be proud of helping to
create this new position. We just hope that they will continue to capture
your talent and that they will find a fabulous woman for the job.
The Deputy Chair: I would like to welcome our next witnesses. I
would like to introduce them first and I will introduce Mr. Bryant at the
end. First we have Gary Rabbior, President of the Canadian Foundation for
Economic Education, which is a not-for-profit organization that offers
education programs to help people make economic decisions with competence
and confidence. Nicholas Cheung is the Director of the Canadian Institute of
Chartered Accountants, an association representing Canadian chartered
accountants nationally and internationally. We have two other people who
belong to the same association but who have different roles: Eleanor
Farrell, Director of the Office of the Investor at the Ontario Securities
Commission, and Tom Hamza who is the President of the Investor Education
Fund, a not-for-profit organization that was set up by the Ontario
Securities Commission and is financed by settlements and funds that result
from their legal proceedings.
Our last guest is John Hope Bryant, Chairman and Chief Executive Officer
of Operation Hope. He is with us by video conference from California.
Operation HOPE is the private banker of poorer workers in the marginalized
and middle class who have a hard time making ends meet. Its mission is to
make free enterprise and capitalism work for everyone, which is what they
call silver rights.
Thank you for taking the time to share with us your experience, and
welcome to Canada by satellite.
For those of you from the Ontario Securities Commission, do you have one
or two statements? Are you both going to speak?
Mr. Bryant, we will keep you for dessert, and you will see how we
Gary Rabbior, President, Canadian Foundation for Economic Education:
Thank you very much. It is a pleasure to be here with you today. I want to
thank you for this opportunity. There are two parts to my presentation. One
is a bit about our organization and what we do, and second are some thoughts
to share about what is required in terms of leadership and financial
literacy in this country.
The foundation is a non-profit, non-partisan organization, around since
1974. I have been with it since 1978 and running it since 1981. The years go
by quickly. We operate nationally. We work with the schools. We are very
active with the schools and with the departments and ministries of education
and school boards. We do a lot of work with newcomers to Canada. We work
with economically disadvantaged, the general public and parents.
To give you some examples of our work, and I know it was discussed in the
last session, we are currently working with Manitoba, Saskatchewan and
Alberta to integrate financial education into their grades 4 to 10
curriculum. It is not an intense program, as you might think, for six years.
It is, in fact, integrated into different subjects of study.
There is a map of what is to be integrated, where it is to be integrated
and lessons developed for helping teachers to integrate it. Manitoba is
quite far along, Saskatchewan is one year in, and Alberta is just about to
As Mr. Hamza knows, Ontario is doing the same thing. They have indicated
that financial literacy or education is to be integrated into grades 4 to
10. They have not yet developed a full strategy for how it will be done.
Right now school boards and schools are responding to the ministry mandate
that this should be done, but right now no one owns it and there is some
struggle with how the implementation will occur.
However, the project we have, the Building Futures in Canada initiative,
is now in place and evolving in Manitoba, Saskatchewan and Alberta, and we
are hoping the Atlantic provinces will come onside. We have talked with
B.C., and they will go through a wholesale curriculum revision. This
Planning 10 program is nice, but things in education always change. That is
why you have to be adaptable to circumstance, because Planning 10 may change
One of our resources that I hope you received is our day planner for
newcomers to Canada that helps them with their integration challenges. It
provides information for them on their money and financial matters. We have
distributed over 600,000 copies of those in Canada through over 1,000
immigrant-serving agencies. There is a copy of it there in English and in
French. It is available free and central libraries use it, people use it for
training in English as second language and also for citizenship
We have just announced a program with the Bank of Montreal called Talk
With Our Kids About Money Day. Because so many people struggle with this to
try to provide an easy start and a catalyst to get the conversation started,
this April 17 we will have a two-pronged program called Talk With Our Kids
About Money Day. The home program will encourage parents and guardians of
kids of all ages to engage in some kind of activity, discussion around the
kitchen table, go to a movie, watch a TV show, read a book — something that
will get that conversation started. We know young people need to have
discussions, they need to elevate their confidence to ask questions, and
getting the conversation started at home is very important.
The program will also have a school component where we are encouraging
all grade 7 teachers, or first year of high school in Quebec, of all
subjects on that day to teach a lesson related to their subject area
focusing on a money topic, again trying to just provoke and get it going. We
know every day can be a Talk With Our Kids About Money Day, but we hope this
will be a catalyst that will carry on throughout the year.
We also have a publication that has been shared with you called Money
and Youth. This is a resource we have distributed free copies of to
schools across Canada in English and French, over 300,000 copies. We just
finished a new run of a new edition of 20,000 copies three weeks ago, and we
are out of stock already.
The Province of Manitoba is distributing a copy of that to every grade 10
student in the province so they have a resource and financial literacy
guide. It is targeted at the high school level for around grades 10, 11 and
Those are some of the activities we are involved in. We are also
participating in the FLAG organization, the Financial Literacy Action Group,
which Ms. Campbell may have referred to and of which Mr. Hamza is also a
member. We did share with you, and I am not sure if you have received it or
had it in circulation, a joint submission from all those organizations
indicating views as to what we think the role of the leader could be and
what we think some of the action priorities could be. It is again the
consensus document from those organizations shared with you and others who
might be interested in the perspective of seven organizations involved in
financial literacy in Canada on what we might need going forward.
One of the things that I want to share with you is that the challenge of
improving financial literacy, as ominous as it has sounded, is even more
ominous than it is. It is a difficult job, because part of the challenge we
face is that many people and many efforts and a lot of money have been spent
assuming that the key challenge is for people who know stuff to tell people
stuff they need to know. The reality is that telling people things does not
work. We are very much supply-driven in this business. We have a whole bunch
of people who care because there are very serious issues. What we need to do
is shift it from a supply-driven effort, to get things to people, to a
demand-driven effort, where people want what is available.
I think a lot of the effort we are focusing on now in leadership has to
be a communication with the public, parents, kids and whatever to understand
why this is important and get it so that they are interested in what is
offered, not simply finding occasions where we can have an opportunity to
tell them what they think they should know, because that has not proven
fruitful in the past.
I did share with you my presentation in the past. I do not know whether
you have it to be able to look at a figure that I shared with you. If you
cannot, this is a figure from a book called A Whack on the Side of the
Head by Roger Von Oech. I share it with you, and I would have shared, if
you can see it properly, the challenge of picking which figure does not
belong. I will quickly say that if you are like most people and most of the
kids I have ever taught, you would pick Figure B. It is right: it is the
only one which has all straight lines. However, Figure A is the only one
with points of discontinuity. Figure C is the only one which is
asymmetrical. D is the only one with a straight line and a curved line and E
is the only one that looks like the projection of an non-Euclidean triangle
into Euclidean space.
What are kids looking for? The most obvious right answer. They pick what
is obvious because what we are doing is processing information in schools.
We are not educating anymore. It is almost a trivial exercise. We are
pumping and pumping loaded curriculum at kids. It is going in here, out
here, and all they want to do is process to move on.
The challenge of financial literacy is not getting occasions where we can
get seniors in a room or kids in a classroom and tell them what we think
they should know. We have to engage them. We have to take the time to let
them learn. Learning is a complicated and variable process. Increasingly we
are trying to reach larger numbers and put more to them. I think part of the
challenge of leadership is really to get behind the problem we have in
education and learning. We have to overcome some of the historical, systemic
things that have been put in place that even I, and other adults and seniors
above me, have been involved in in terms of how they learn. For some writers
in the document the FLAG group has shared, the leadership challenge
represents our opinion on that, but I share with you that the challenge of
leadership will be even greater than what I think a lot of us think it might
The Deputy Chair: Thank you, Mr. Rabbior. I just caution our next
presenter to keep the presentation as short as possible so that the senators
can ask some questions. We are trying to cover all the angles. We will have
Nicholas Cheung, Director, Canadian Institute of Chartered
Accountants: Thank you for the invitation to appear. The Canadian
Institute of Chartered Accountants firmly believes that a collaborative and
coordinated approach is needed to improve the financial literacy of
To accomplish this, a financial literacy leader is needed to coordinate a
national effort to help Canadians become better money managers. This
individual not only will need vision and an understanding of the issues but
also must serve as a bridge between not-for-profit organizations, the
private sector and government to develop and push forward a national
strategy that will truly make a difference in the lives of Canadians.
The CICA welcomes working in concert with other organizations to assist
Canadians in gaining the financial skills, knowledge and confidence required
to make the best choices for their circumstances. In other words, financial
decisions — and, yes, indecisions — do matter.
Many Canadians are making financial decisions that are not in their
long-term interests. According to research conducted for the CICA, many
Canadians, in all life stages, are in difficult financial circumstances and
many lack basic financial management skills. They are looking for help, or
need help, with the basics: saving more, spending less and reducing debt.
For example, we found out in 2012 that almost 60 per cent of those
surveyed save less than 10 per cent of their total income. In fact, our
survey found that individuals are saving less than they did two years ago.
Of those 55 years or older, 43 per cent reported that they have not set
aside enough for their retirement; and nearly four in ten surveyed think
they will still be paying off debt after they turn 65.
Clearly, if we are to have a thriving economy, action is needed to help
Canadians take control of their personal finances.
To assist the efforts of the financial literacy leader and the Financial
Consumer Agency of Canada, the CICA is committed to sharing our thought
leadership, expertise and resources in supporting this critical cause.
Protecting the public interest has always been part of our mandate.
Canada's chartered accountants believe that helping Canadians develop
financial knowledge is critical to Canada's ongoing prosperity and growth.
This year we are looking to launch a new program, delivered by our members,
focusing on providing community-based financial education across Canada.
Canadians do need help in becoming more knowledgeable about how to
improve their financial situation. To be successful, financial literacy
requires lifelong learning, which must start with our children and youth.
According to our research, many parents are attempting to help their kids
develop financial knowledge, but they feel that others should be involved as
For example, the good news is that 85 per cent of Canadian parents with
school-aged children have attempted to teach financial skills to their kids,
but the not-so-good news is that just over a third of those parents felt
successful at doing so. A strong majority of respondents also believe that
schools, the financial services sector, as well as the government all have a
role to play.
While many organizations are working toward a common goal of improved
financial literacy for Canadians, no one organization can effectively
address all of the issues on its own. There is a need to develop synergies,
build cooperation, increase efficiency and reduce duplication of efforts.
This bill is a critical first step to achieving that collaborative vision.
Implementing a national strategy requires a broad and sustained Canadian
effort. The CICA supports Bill C-28 in the hope that the financial literacy
leader will serve to bring all the stakeholders together. There is strength
in numbers, and working together we can all make a difference in the effort
to improve the financial literacy of Canadians.
Eleanor Farrell, Director, Office of the Investor, Ontario Securities
Commission: Good morning. With me is Tom Hamza, President of the
Investor Education Fund. We thank the committee for inviting us to
participate in this public hearing on Bill C-28. We will make a joint
statement before your questions.
The OSC has been a long-time supporter of investor and financial literacy
as part of our mandate. In 2001, the OSC founded the Investor Education
Fund, which has become Canada's most popular financial literacy website and
the largest financial literacy trainer of teachers and students in Canada.
We are pleased that the Task Force on Financial Literacy's recommendations
are being implemented. In particular, we support the proposed amendment to
create the position of financial literacy leader within the Financial
Consumer Agency of Canada.
The financial literacy sector has no shortage of materials and programs
offered by not-for-profit groups, governments, regulators and industry. A
leader could identify any gaps in dealing with literacy issues and make
recommendations to address them.
Furthermore, the leader's focus on collaboration is very welcome.
Collaboration will require stakeholders across Canada to focus on specific
results. We look forward to working with the new leader.
We also agree that the leader should support research. To be effective,
investor education has to engage Canadians to help them understand how to
meet their investment needs. Therefore, it is critical that we better
identify and understand the issues and concerns facing Canadians to
determine the most effective way to promote financial and investor literacy.
The Office of the Investor is using focused research and direct outreach
to consider these issues, make recommendations and implement improvements
within the OSC's investor education program. The task force followed this
approach, and we encourage the leader to do the same.
Bill C-28 represents an important step in advancing financial literacy.
Financially literate Canadians will be able to make more informed financial
and investing decisions and better protect themselves in an increasingly
complex global financial marketplace.
It is a key priority for the OSC to deliver strong investor protection in
everything we do. Investor education is an important part of our investor
protection focus. Regulators, governments, educators and financial industry
professionals all play a role in delivering effective investor education,
which is vital to the ongoing financial health of Canadians and our economy.
Thank you. Tom Hamza, from the Investor Education Fund, will conclude our
Tom Hamza, President, Investor Education Fund: The Investor
Education Fund is one of the founding members of the Financial Literacy
Action Group, together with Mr. Rabbior from CFEE, and we have collaborated
with most major financial literacy groups in Canada. We understand and
strongly support the coordination and alignment of the many resources and
the role that this person will have in that coordination.
There are a few points that we would like to ask be considered as we
review the legislation that sets the parameters of this role.
A very important task will be to focus the priorities of this leader with
a fact-based rationale for action based on research. There are many opinions
on what needs to be done, and there is much research out there that is
uncoordinated. We believe it is critical for a convincing rationale to be
developed that helps to prioritize the topics that will have the most impact
Further, having the office of the financial literacy leader act as the
main information and knowledge repository on financial literacy in Canada
will help this individual and this office demonstrate the thought leadership
and the authority that will be necessary as they coordinate government,
industry and the not-for-profit sector. We are convinced that this is a
critical step to improving what we have today and having the first important
steps to actually reaching and changing the state of the financial literacy
The other point we want to mention — and this one is especially important
— is communication. One of the critical elements of this role is to be seen
as a leader by both the public and the various elements of the financial
literacy community. This office should be able and allowed to communicate
its intentions and priorities if it is to resonate with Canadians. It should
be a platform that communicates directly with Canadians, including through
the use of social media and traditional media. Its ability to persuade will
be much stronger if it is seen as a moral authority because it has the
expertise and the capability of getting its message out directly.
This is not always just about the message; it is about the delivery in
many cases. Without proper delivery and understanding what the audience is
thinking about, it is difficult to reach and resonate with people so that
they change their knowledge and their behaviour.
Finally, we co-authored and strongly support the framework document from
the Financial Literacy Action Group that was distributed to you earlier. It
presents a comprehensive game plan and a detailed set of priorities, and we
believe this course of action will start the office off in the right
We look forward to working with the new financial literacy leader. On
behalf of the Ontario Securities Commission and the Investor Education Fund,
we thank you for the opportunity to summarize our views.
The Deputy Chair: Thank you to both of you. Now Mr. Bryant. You
are dealing with one of the most vulnerable clientele, so I suppose you have
some good ideas for this new position in Canada. It is your turn.
John Hope Bryant, Chairman and Chief Executive Officer, Operation
HOPE: I do. First, I owe you a trip. I would have been there in person.
I believe it is important to show up in life. You cannot raise your children
by email. You have to show up in life. My birthday was yesterday, and I had
to spend time with my team in a team-building exercise on the occasion of my
birthday here in California. Otherwise, please know that I would be there
with you in person.
Once again, I owe you a trip at some point in the future. I love Canada.
Of course, you are a neighbour of the United States and a friend, but you
are also a friend to me personally. Given several trips that I have taken
there to give speeches and such, I consider myself to be an honorary
Canadian. God bless you for doing this.
The Deputy Chair: You are most welcome.
Mr. Bryant: Once again, you have shown yourself to be ahead of the
curve and to be visionary. When I could not be there in person, you proposed
a video conference. That is just one example. You did not give up. On this
phase in financial literacy, once again I think you are ahead of the curve,
taking action when most nations in the world are still reeling from the
global economic crisis. Sure, Canadians and the Canadian government are
dealing with its impact as well, but you have weathered it better than most
countries. Also, you are not sitting in fear.
Most leaders, unfortunately, lead by fear. That causes a lot of defensive
and harmful actions. You have taken a bold and visionary step here. You will
be criticized for it. No good deed shall go unpunished, but that does not
mean you are not on the right track. People will say the creation of this
new position is imperfect: financial literacy leader. I love that title,
particularly the focus on leadership. When you are criticized I would simply
push back and say not to let the best be the death of the good.
The founder of LinkedIn, the social network, said that if you are not
slightly embarrassed by your 1.0 product release, then you released it too
late. It is important that you take action and then amend as you go.
I will now make a couple of quick statements. I assume you know about our
work, so I will not bore you with that. However, you may or may not know
that I have advised the last three U.S. presidents — President Bush,
President Clinton before that and now President Barack Obama — who were on
both sides of the political aisle. This is a nonpartisan issue. What you may
not know is that during Clinton's presidency, I utterly failed to get this
on the agenda. When Bush was president the crises hit this country. The poor
and the underserved were most notably hurt. Interestingly enough, the middle
class, which is where this crisis was centred, were as vulnerable, we found,
as the poor. It is just that the poor did not have the financial wherewithal
to respond or protect themselves like the middle class. In essence, this
crisis was about people asking, in many ways, what the payment was and not
what the interest rate was. You never ask what the payment is when there is
an interest rate attached. Of course there was greed and predatory practices
on the other side, but the consumer, unfortunately, aided and abetted this
I decided to push policy with President Bush. For seven years he ignored
me because he had other things on his mind, but in the last year he made
financial literacy federal policy in the U.S. because of Operation HOPE's
advocacy and hard work — so I commend the non-profits that are there — and
he created the President's Advisory Council on Financial Literacy. I served
as vice-chairman on the Committee of the Underserved. We had some successes
but did not go far. President Obama continued it with the President's
Council on Financial Capability. I served as chair of the Subcommittee for
the Underserved and Community Empowerment. This is a point that I would like
to make briefly about your new position.
In some ways, I think I failed. I will repeat that: I think in some ways,
when we got President Bush to make financial literacy the federal policy of
the U.S. government by executive order, we failed. If you want to put a kid
to sleep, give him a traditional financial literacy course. No one wants a
car loan; they want a cool car. No one wants a mortgage, which is what we
have in the United States; they want to become a homeowner, maybe too badly.
No kid wants a lecture about graduation, or good grades, or even 401(k)
plans, or investment vehicles that you have there in Canada. They will go to
sleep; they will turn off. Someone talked about focusing on the demand, the
customer. That is absolutely right. You have to empower people. People
respond to fears and aspirations. We found that we should not be pursuing
financial literacy per se but financial dignity. It is right brain, left
brain; not left brain, left brain or left brain, right brain. In other words
it is not analytical first. Particularly with the poor and the underserved,
you have to get their aspirations up if you want them to take their lives up
and be interested in their aspirations and dreams. Financial literacy is the
vehicle to get there.
We created, at the President's level, a focus on local financial literacy
councils now. Under my Subcommittee for the Underserved and Community
Empowerment, we have created 115 mayors' financial literacy councils
throughout the United States. My goal this year is to double that number to
250. My goal in Obama's term is to get to 2,500 cities that have their own
councils. I will not go into detail because you have limited time, but I
will answer questions if you are more interested in how that focuses on
Consumer Financial Protection Bureau Director Richard Cordray is a friend
of mine. I am sending him a copy of your bill right now; he will be
impressed with it. I hosted him two weeks ago at the new HOPE Center that we
built at the King Center in Atlanta, Georgia. We believe a couple of things.
First, Dr. King would be doing this work if he were alive today. This is the
civil rights issue of our generation. If you do not understand the language
of money and you do not have a bank account, you are an economic slave in
this environment today. Second, and this speaks to the broader issue of
poverty, Mr. Cordray's issue and your issue of protection, there is a lot of
language in your bill about protection, and rightly so. I told Richard
Cordray that if you do not have robust consumer empowerment, then you can
only do so much around consumer protection. When someone is making the most
important decision of their life, sitting at their kitchen table, around a
long-term financial vehicle to become a homeowner, a 30-year vehicle or
whatever, there is no mortgage police or home ownership police at their
table with them; they are making that decision and a range of other
decisions that are life changing. We all know that the number one cause for
divorce in America and in developed worlds is money; I imagine that is the
case in Canada as well. The number one reason that minorities drop out of
college is not academics, it is money. You are alone when you make these
decisions. You have to empower yourself.
We have come up with a couple of empowerment strategies that are
aspirational — again, looking beyond protection, financial literacy, the
tools, and looking toward financial dignity, which is empowerment, and
lifting up the spirit and taking their lives back.
Regarding the 700 credit score communities — and here in the U.S. it is
all about credit scores — we found that these cheque cashers, pay-day loan
lenders, rent-to-own stores and title lenders are not racist. They are not
discriminatory consciously, they are just target marketing. They are
targeting a 550 credit score neighbourhood, which has certain
characteristics: low levels of financial literacy, low levels of financial
I.Q., low levels of well-being, hope, engagement, self-esteem, et cetera.
These are right brain issues. We raised credit scores 120 points, on
average, through our HOPE Centers and our counselling over 18 months. When
you raise someone's credit score from 550 to 670, you change their life.
Our bet now — and this is what we are doing at the HOPE Financial Dignity
Center at the King Center at Ebenezer Church — is that over five years we
will move liquor stores to convenience stores, cheque cashers, payday
lenders, rent- to-own stores to credit unions and banks through market
forces and using this baseline of financial literacy as a hand up and not a
handout. This is the legacy that we believe Richard Cordray has for his
Consumer Financial Protection Bureau here in the U.S.: ultimately financial
The final thing we do is with children. We have moved from our work
around financial literacy with kids — and we have served almost 1 million
kids in low income neighbourhoods, 3,000 schools — to this, which is
important: Do not do this or that; do not go to the cheque casher. However,
no one will change their life based on ``do not''; you need a vision for
yourself. We now have a 100-year partnership with the Gallup organization —
again, I will not give you details; you have limited time, but I will answer
questions if you have them — to measure well-being, hope and engagement, all
right brain; economic energy, right brain; and financial literacy, left
brain; in every school in America. To do what? To move the needle on those
numbers. How? Through intervention strategy, which includes HOPE Business in
a Box. We are targeting, between now and 2020, 30 million kids, grades 4 to
12. This is the bench strength, the playoff games of the rest of our lives,
and this is where GDP, jobs, small business and entrepreneurship will come
from. We will create businesses by funding businesses between $50 and $500
by doing pitch events at their schools. Think Shark Tank for kids, if
you have that television show in Canada. If you do not, essentially it is an
entrepreneur who gives a pitch before judges. We will take young people and
give them two minutes on the stage at their school and let them pitch their
business idea before business leaders; and we will fund their businesses.
This will bring alive and transform this concept of financial literacy in
their lives and make school cool again for a generation, which is a
challenge for every developed country.
I will stop there. I have given you a lot to chew on. I wanted to give
you a context that this is not a partisan issue; it is part of a long leg of
history from Dr. King forward globally from civil rights to silver rights.
This is worthy of the government's attention. Democracy was the issue of the
20th century, but money, capital, finance and business are the issue of the
21st century. It affects all elements of society but most notably the middle
class and down, where the stability will come from.
The strategies in place, such as what you are doing, are critical. As
well, there are strategies that we have to look forward to about what comes
next for this to be effective. That next leg broadly defines
``empowerment.'' I have given you a couple of ideas, one for youth and one
for adults, on how to get there. I commend you for your leadership.
The Deputy Chair: Thank you, Mr. Bryant, for your presentation.
You are always welcome in Canada and Ottawa. We are happy to have you any
We are close to paradise here in Canada, but what prompted this
initiative is the fact that the debt of Canadians is now at 152 per cent of
income. We have to address the question of how to face the debt owing on
mortgages, cars and credit cards, et cetera. I suppose it can look like a
dream come true to have certain things, but it is always better when they
are paid for. Thank you so much for your presentation.
Senator Massicotte: Our principal role in the Senate is to review
this bill, which has been passed in the House of Commons, and then either
vote in favour of it or against it. I understand that all of you are in
favour of the bill and none of you have any proposed amendments to the bill.
Is that accurate?
Mr. Bryant: Yes.
Mr. Rabbior: Yes.
Senator Massicotte: Mr. Bryant, you are not Canadian. Is there
anything in the bill that is wrong or in need of amendment?
Mr. Bryant: The bill is directionally correct, as I have said. My
only recommendation for the committee would be to think about a line that
would focus on the aspirations and empowerment. There are two ways to make
money: make more and spend less. You are focusing on the debt side, which is
noted, and on managing finances. However, you also need to focus on growing
the Canadian dream for people. Otherwise, people will lose hope. This could
engage the private sector, free enterprise and others to encourage the
growth of GDP in the country and the people along with it. That is my only
Senator Massicotte: Mr. Cheung, you talked about the fact that
Canadians are not saving enough.
Certainly, I agree about the importance of financial literacy. However,
that is the technical side. It is like losing weight. Everyone knows that
being overweight is not good for you, yet a high proportion of Canadians are
overweight. On the savings side, every Canadian knows it is important to
save, so I am not sure that it is a lack of knowledge as opposed to a lack
of willpower or vision or self-esteem. It is beyond literacy and
understanding. How do you get Canadians to save more?
Mr. Cheung: Your analogy about losing weight is certainly a good
one. It is one that I have used. It is easy to put on weight just as it is
to spend more and take on more debt. However, it is important to take
action; and everyone can take action. It is entirely within your control. If
you want to lose weight or spend less or reduce debt, it is up to you. You
can have all that knowledge, but it is up to you to take personal control of
your finances in order to improve your financial situation.
Some research I have seen has said that there are Canadians in difficult
financial circumstances. We have found as well that there is some reason for
hope, because two in five Canadians that responded to our survey have
reported some improvement with their financial situation. How did they do
it? They paid off or reduced some of their debt and generally improved their
financial situation, and they learned more.
While financial learning is important across all life stages, it starts
with our youth. When asked, 50 per cent of youth said they already worry
about money and that they want to learn to be better savers. When adult
Canadians are asked who should teach our youth, they say parents, schools,
government, and financial institutions, in that order. When our youth and
children are asked who they want to learn about financial literacy from,
they say their parents — number one by far. The problem is that parents are
not necessarily teaching their children well, as we pointed out. It
continues to be a bit of a taboo subject. I hope we continue to increase the
resources to help parents teach their kids so that they can practise, learn
and be able to take that knowledge with them as they grow.
Senator Massicotte: Ms. Farrell, you talked about the need for
motivation, which is the hard part. A solution also lies with those offering
services, in your case financial services. In my opinion, there is a lot of
misleading information out there with companies who take advantage of people
who are less than very literate in financial matters to entice them to buy
their products. Maybe the other arm has to be more severe or restrictive or
maybe more legislation is needed to ensure that companies are complete and
use simple language in their presentations. Are there comments on that? What
is the OSC doing in that regard?
Ms. Farrell: The OSC is concerned about investor protection. It is
part of our mandate. We have come to realize that giving people more
disclosure is not good. Madam chair mentioned the prospectus earlier. We
realize that for the average retail investor a prospectus is impenetrable
and something they do not understand. The Canadian Securities Administrators
have introduced fund facts. It is a document that sets out the key issues
with respect to a mutual fund that investors should consider before they
make a decision to invest in a fund. The aim of all securities commissions
across the country is to help the investor better understand so they can
make a more informed investment decision. The office of the investor has
been created and I have been here since September, focusing on better
understanding investors' needs and behaviors so that we can more effectively
tailor regulation and investor education to their needs.
Mr. Rabbior mentioned earlier about engaging the investor to help them
understand and become more involved in the process. That is necessary. In
addition to regulation and ensuring that there is adequate protection and
disclosure, we also want to engage investors and get them more actively
involved in their investment decisions.
Senator Maltais: I have one short question. Everyone talks a lot
about educating youth, financial literacy for youth, the middle class and
seniors. Nobody has mentioned how you are going to educate the financial
sector. They are the sector receiving the youth's money. Do you have an
educational program for the banks so that they know how to properly advise
Mr. Rabbior: I do not know whether it is confidential information,
so I will not be specific. However, I do know that one financial institution
has mandated that they will work to improve the financial literacy of their
entire staff. They are working on a multi-year strategy and embarking on a
survey to determine where their staff want help, and they will put together
a plan to put financial literacy into place throughout their entire
organization. I think the point you are speaking to is recognized by the
banks. They need to make sure that they understand, too, especially if they
are the front line of communication with people. Hopefully that is an
indication of a greater effort on their part to improve the financial
literacy of their employees.
Senator Maltais: During the financial crisis, I saw many fellow
citizens doing business with recognized financial institutions whose
financial consultants had been granted two or three certificates by the
bank, and yet these people lost $40,000, $50,000 and even $100,000 in their
RRSPs. Perhaps we need to educate not only the members of society, but also
the financial institutions.
The Deputy Chair: Thank you, Senator Maltais. I think we all agree
Senator Ringuette: My question will be quick. It is a request,
actually. I want to request that Mr. Bryant supply the committee with the
different strategies and programs that you are working on because what you
doing, from my perspective, is exactly what Mr. Rabbior was talking about
earlier, which is that there is only so much push strategy we can do with
regard to financial literacy and dignity. We also need to have a pull
strategy, which is what I consider you are doing. I think your material
would be very welcome.
Mr. Bryant: I will put something in writing so as not to take
precious time from the committee. I will put something in writing and send
it to you. I might even do a short video presentation for you. I will ensure
that the committee has that within the week. I will do one on public policy,
one on community and one on the private sector engagement so that it is a
I do just want to note that what the young lady mentioned about the
banking sector is a completely separate conversation that could take two
hours by itself, so I will not address that.
Senator Ringuette: I certainly agree with you.
Mr. Bryant: As for what the gentlemen mentioned about parents, let
us be clear about this. Parents are not responding because parents feel
shame. Let us be blunt about it. Money is one of those emotional issues.
Half of those in foreclosure in America, until recently, did not call their
lender. It was not that the lender gave them a bad answer. They just did not
call. That is shame. You are dealing with a financial issue, but the
override is an emotional issue, which is what one of the senators noted. Our
work with Gallup is about behavioural economics. That is the next frontier.
You have to tie these things together if you want to create fundamental
change in society. Just hammering people over the head with the regulations,
as you just said, will only do so much. You should be doing it; it is
important to put the framework in place. However, you have to put the
framework in place, and you have to build the house. The house is tied to
The Deputy Chair: We had one witness saying that before people get
sick you could have some preventive measures, so I guess you are working on
that side of the issue rather than on repairing after the fact.
Senator Tkachuk: We have had some discussion here about making
consumers more informed when they get a mortgage or a loan and adding
clarity to it, but is part of the problem not the more regulations and
legislation we have? When you look at what a credit card company sends you
before you sign up, they are basically protecting themselves and explaining
all of the legislation that government requires. It is pages long; there is
really no room for clarity. What is a mortgage? A mortgage is ensuring that
you have your butt covered because of all the legislation that is piled on
provincially and federally. That is what it is all about. By adding more,
you are just making the document bigger, not clearer. Then you need a book
to clearly explain what the document says because the document is
complicated. It is not a simple question of, ``Let us make it all clear on
the credit card.'' It is complicated because of the mountain of legislation
that governs that credit card.
I do not know how we get through all of this, but I think that the last
thing we need is way more legislation to compound and make a mortgage
document or a visa document bigger. I do not know how we get around this,
but we have to start trying because I agree with you that we all need
financial literacy. It is just not that simple.
Senator Massicotte: Is there a question?
Senator Tkachuk: I am just asking them about my statement on all
of this. That is the question.
Mr. Hamza: It certainly is impossible to argue against the fact
that there is thick language behind some of these legal documents. That is a
lot of what we are trying to do with financial literacy. When, for instance,
we have someone come to visit our website who wants to know about a mortgage,
we are not giving them 45 pieces of information; we are addressing the three
or five things that they need to focus on that will differentiate this
product from another product, as well as the long-term implications of the
product, giving them the capability to see down the road, with tools or
calculators, what the implications of their decisions will be.
From the financial literacy side, in a way, we need to be acting. I think
the role that we have on the table here needs to be acting as, in effect,
the coach of that individual because financial literacy, for some people, is
viewed as raising the entire tide so that everyone knows more. Another way
to look at it is that financial literacy is completely different when you
are 22 and have student loans, when you are 28 and saving for a home and
getting married and when you are 35 and having children. In each of those
cases, this role and financial literacy's role need to be about getting
through the mire that you are talking about of a complicated situation that
someone might not be expert in or be numerate enough to truly understand. It
needs to be about giving them that information in a way that is obvious and
understandable and that gives them a clear leg up from where they were
before and helps them to make a better decision.
It is certainly not in our purview to be changing the credit card
agreement, but, from the financial literacy side, this role needs to be that
of a coach on the shoulder of that individual making the decision.
Mr. Rabbior: Quickly, there is so much talk about the complexity
of the world of money today. I think that speaks to, following up on what
Mr. Hamza said, one of the roles of leader. In our role of trying to improve
financial literacy, we see they do not need to know it all. I think one of
the roles of the leader could be asking what people need to know and putting
it in context. If we overwhelm people with what we perceive they need to
know, they will not start to learn anything. Volume inhibits action. We need
to put it into a manageable thing. There is not just their need to know but
the need to give them the questions they need to ask to protect themselves.
If we put it in a manageable package and say, ``Make sure you ask these
questions,'' that is the best we can do.
Senator Tkachuk: Thank you. That was a good answer.
The Deputy Chair: Mr. Bryant, since you do not come to Canada
often, do you have a last piece of advice to give us?
Mr. Bryant: First, I commend you for taking this action. I think
this is not the ending; it is the beginning. This is a life-changing event,
this global economic crisis. Nothing will be the same ever again. I do not
want you to think that you are just working with some little program at the
edges. Here in America, we had 26 million people who did not have the right
to vote in 1962. There are 40 million unbanked in America today. More people
today do not have a bank account than did not have the right to vote in the
richest country in the world. Greece is not dealing with the right to vote
or other issues; they are dealing with debt. The country is broke. They do
not have GDP. Europe is dealing with the same issue. Africa is dealing with
the same issue. We are dealing with the same issue, and on balance, with all
due respect, you are dealing with the same issue.
You have to be bold in the way you approach this issue. Do not criticize
yourself because this is not going to be the ultimate fix. It is a step in
the right direction, but it is a process. This is a marathon, not a 100-yard
dash. I am with you every step of the way. You are literally sitting in a
moment in history.
Dr. King is praised as a civil rights leader, and he should be. People do
not know that his father, Dr. King, Sr., served on the board of a bank for
40 years. He served on the board of a bank while he was co-pastor of
Ebenezer Baptist Church, and they had discussions about the role of free
enterprise and capitalism. As well dressed as Dr. King, Jr. was — and he was
a PhD — he did not pay for that, his dad did. His dad put him through
school, paid for his PhD, bailed him out of jail and paid the taxes on the
Nobel Peace Prize money that he gave away. I am going to Norway this week to
give a speech there.
People do not realize that, under civil rights, you cannot grow anything
without financial acumen and stability. These things can live together. It
is not an either-or conversation. However, it will require visionary leaders
like you to keep the train on the tracks, to keep the entrepreneurs growing,
to keep the family stable and to keep Canadians safe. God Bless you.
The Deputy Chair: Thank you to the senators and to the witnesses.
I think we will benefit. Yes, there is a bill, but at the same time, what
was said will be on the record. The new leader will be able to take
advantage of all of that information. Thank you so much.