MEDIA RELEASE

COALITION CALLS ON FINANCIAL INSTITUTIONS TO HELP CREATE FINANCIAL CONSUMER GROUP

TORONTO - Today, as Canada's big banks are again reporting record annual profits, the Canadian Community Reinvestment Coalition (CCRC) released its fourth position paper, calling on banks and other financial institutions to facilitate the creation of a Financial Consumer Organization (FCO). The CCRC sees the creation of an FCO as necessary to help financial consumers with problems with service fees, credit card interest rates, deposit insurance, privacy, tied-selling, mutual funds, insurance policies, and corporate governance.

As the position paper details, the FCO would be created by federally-regulated banks, trusts and insurance companies periodically enclosing a one-page flyer in the envelopes in which they mail out their monthly statements, credit card bills, and insurance premium statements. The flyer would invite customers to pay an annual membership fee ($20-30) to join the FCO. This mechanism has been used very successfully to help residential utility ratepayers band together in four states in the U.S. to hold utilities accountable to their interests. The flyer would be sent out at no cost to the financial institutions.

If only 3 to 5 percent of financial consumers signed up (the same response rate as the U.S. groups), the FCO would have between 600,000 and one million members and an annual budget from membership fees of between $12 million and $20 million. The FCO would be governed democratically by the members, would provide many services to consumers, and would also act as an umbrella group and provide grants for existing groups that work on financial services issues.

In April 1996, Industry Minister John Manley publicly stated his support of the FCO proposal, and pledged that he would push the banks to enclose the flyer if they refused to do so voluntarily. A survey of 2,000 adult Canadians conducted by Environics Research Group last year found that there is strong support for the creation of an FCO using this method, as follows:

• 51% agreed that a financial consumer organization is needed in Canada;
• 43% said that they would likely join such an organization if they received a flyer along with financial institution mailings, at an average $28 annual membership fee; and
• 64% said that, if the financial institutions refuse to enclose the flyer voluntarily, the government should require the financial institutions to enclose the flyer.

"Our proposed Financial Consumer Organization would be a self-sustaining, broad-based organization that will provide needed help to financial consumers and encourage competition in the marketplace," said Duff Conacher, Chairperson of the CCRC, "It can be created at little or no cost to government or financial institutions. If financial institutions refuse to facilitate the creation of a financial consumer organization, we will hold Minister Manley to his pledge to ensure the creation of the organization, as most Canadians want."