A Financial Consumer Organization for Canada
The high level of discontent felt by Canadians about bank services is well known. Surveys in 1996 and 1997 by the National Quality Institute of 8,000 Canadians found that banks ranked in the bottom five of 21 industries in terms of customer satisfaction.
A lack of response by financial institutions to customer concerns is, unfortunately, matched by a lack of resources for consumers to advocate their interests.
To correct this imbalance in the marketplace, the CCRC is urging banks and other financial institutions to facilitate the creation of a Financial Consumer Organization (FCO). The FCO will help financial consumers with complaints about the over 500 products and services offered by financial institutions. The FCO will also address problems with service charges, credit card interest rates, mutual funds, privacy, tied-selling, insurance policies, and corporate governance.
The CCRC is calling on federally-regulated banks, trusts and insurance companies to help create the FCO by periodically enclosing a one-page flyer in the envelopes in which they mail their account statements, credit card bills, and insurance premium statements. The flyer will invite customers to pay an annual membership fee of about $20-$30 to join the FCO. The flyer would be sent out at no cost to the financial institutions. This method has been used successfully to help residential utility ratepayers band together in four U.S. states to hold utilities accountable to their interests.
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. With these resources and large membership base, the FCO would be self-sustaining, broad-based, and strong enough to counter the power of financial institutions in the marketplace.
The FCO will be governed by a board elected by, and from amongst, FCO members, with representation from across Canada. The board will hire staff to compare prices of products and services, help financial consumers with complaints, and advocate consumer interests before the government and courts. The FCO will also act as an umbrella group and provide grants for existing groups active on financial services issues.
Industry Minister John Manley publicly stated his support of the FCO proposal in 1996, and pledged that he would push the banks to enclose the flyer if they refused to do so. A survey of 2,000 adult Canadians conducted by Environics Research Groups in 1996 revealed strong support for the creation of an FCO using this method, as follows:
The CCRC is currently approaching financial institutions and financial industry associations to determine whether they will voluntarily enclose the FCO flyer in mailings to their customers. If financial institutions refuse to enclose the FCO flyer in their mailings, the CCRC will hold Minister Manley to his pledge to ensure the creation of an FCO, as most Canadians want.
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Canadian Community Reinvestment Coalition
P.O.Box 1040, Station B,
Ottawa, Canada K1P 5R1
Tel: (613) 789-5753
Fax: (613) 241-4758
Copyright 1997 CCRC