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 chair.


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 mandate:

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 for questions.

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 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 some time.

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 population segments.

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 separately?

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 new technology.

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 authority?


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 year?


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 those resources.

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 appropriate.

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 made.

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 grassroots.

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 complicated.

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 puzzle.

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 recent efforts.

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 products.

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 multi-faceted.

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 products.

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 proceed.

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 begin.

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 as well.

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 presentations.

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 12.

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 have been.

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 several witnesses.

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 Canadians.

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 well.

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 statement.

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 on Canadians.

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 of Canadians.

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 direction.

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 crime.

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 empowerment.

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 literacy empowerment.

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 time.

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 recommendation.

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 people?


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 with you.


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 holistic strategy.

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 aspiration.

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.

(The committee adjourned.)