Financial Literacy Leader Act

An Act to amend the Financial Consumer Agency of Canada Act

This bill was last introduced in the 41st Parliament, 1st Session, which ended in September 2013.

Sponsor

Jim Flaherty  Conservative

Status

This bill has received Royal Assent and is now law.

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

This enactment amends the Financial Consumer Agency of Canada Act to create the position of Financial Literacy Leader within the Agency. The Leader is to be appointed by the Governor in Council to exercise leadership at the national level to strengthen the financial literacy of Canadians. The amendments also provide for the other powers, duties and functions of the Financial Literacy Leader.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Votes

  • June 20, 2012 Passed That the Bill be now read a second time and referred to the Standing Committee on Finance.
  • June 20, 2012 Passed That this question be now put.

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 4:50 p.m.
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NDP

Tarik Brahmi Saint-Jean, QC

Mr. Speaker, the points of order we heard are very technical but yet very interesting.

First, with your permission, I would like to share my time with the hon. member for Pontiac. It is always an honour to speak in the House about bills, in this case, Bill C-28, the Financial Literacy Leader Act. The incumbent of this position would report to the Commissioner of the Financial Consumer Agency of Canada. Given that I already spoke about this bill at second reading, today, I am going to speak more specifically about the amendments that were tabled by my colleagues when this bill was examined by the Standing Committee on Finance.

I can only express my sincere disappointment that the Conservative members rejected the six amendments that were tabled by my NDP colleagues. It is always sad to see how little the Conservatives are willing to co-operate. Although all six amendments were relevant, two of them were particularly vital: the one pertaining to the bilingualism of the financial literacy leader and the one pertaining to the creation of an advisory council.

The following are comments by the Parliamentary Secretary to the Minister of Finance when my colleague from Sudbury tabled our three amendments during the committee hearing. The third amendment would ensure that the financial literacy leader would be bilingual.

In answer, the Parliamentary Secretary to the Minister of Finance said, “That's a huge priority for this government. This is why we continue to put forward policies that support that”. She also mentioned, “I would also say that in choosing a financial literacy leader, we do want to make sure there is merit that goes with any appointment”.

With both of those comments, there is a blatant contradiction between the fact that she acknowledged that the literacy leader should be bilingual, but on the other hand that the language skills were not mandatory for that position. We have seen that contradiction in many nominations by the Conservative government. It demonstrates that, for the government, language skills and namely the ability to speak French are not part of the merit that is required to get these positions.

For Quebec members of Parliament, this is a real problem because it gives us the impression that the government is always telling us the same thing about bilingualism—that it is going to appoint a person based on merit and then ask that person to learn French. This sends a message that linguistic ability is not among the prerequisites and skills required to be appointed to these positions. As a member of Parliament from Quebec, I find this to be a completely unacceptable message. That is what I had to say about the first amendment.

The second amendment that the hon. member for Sudbury proposed involved the creation of an advisory council in accordance with the second recommendation of the financial literacy task force. This was one of the 30 recommendations this task force made. We see that, in this bill, only one of those recommendations was taken into account, that of creating the position of financial literacy leader.

Once again, this bill leaves much to be desired. In fact, it is really just an empty shell, considering that, out of 30 recommendations, the government acted on only one: the creation of this position.

We often hear the government argue that this bill calls for the creation of a website. The government seems to think that websites have magical powers. That is the answer we always get any time we ask the ministers about the cuts made to public service positions responsible for answering questions from the public. We are often told that people can simply consult the website, because all of the information is there. That is more or less what we have heard from the government members who have spoken on this.

Furthermore, people have a tendency to forget that we can teach financial literacy to Canadians and enhance their knowledge, but there is no point in explaining how to manage their money if they have no money to manage. Sometimes they have no money because the banking system is sucking up such a huge amount of money.

I would like to give some of the figures from Canadian banks, which, as we know, have a virtual monopoly. Let us look at the banks' profits after taxes—not the total business but the profits. The profits of Canadian banks have increased from less than $10 billion—or to be more specific, $9.7 billion—in 2000 to over $25 billion in 2011.

Twenty-five billion dollars for a population of approximately 35 million represents $700 per person. In other words, on average, a family of four gives $3,000 to Canadian banks. I see that the members opposite find that completely acceptable. They would say that this is a sign that the banking system is well managed. However, for me, it is a sign that we are all being swindled by the banks since they are charging ridiculous interest rates in certain cases, particularly in the case of credit cards.

I would like to remind you of a proposal that was made and has been supported by the NDP for a number of years. We proposed that credit card interest rates be limited to 5% above the Bank of Canada's key lending rate, which has been at 1% since September 2010. Then, instead of having interest rates of 25% or 26% in some cases, an NDP government would legislate to have these rates limited to 6%.

This would allow credit companies to continue to be very profitable and make huge amounts of money while ensuring that people with the worst credit ratings, the most disadvantaged in our society, would not be charged exorbitant credit rates. These people have to borrow money through channels that give them the highest interest rates. Since they do not have a good credit rating, they cannot take out a line of credit, for example, which has a much lower interest rate.

In conclusion, since I have only 30 seconds left, I would like to say that it is with great disappointment that I am going to support this bill at third reading. The main reason for my support is that we cannot oppose the basic principle of at least creating the position of financial literacy leader. I think this bill is an incredible waste of time and energy for Parliament. The bill looks good but it does very little.

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 5 p.m.
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NDP

Mathieu Ravignat Pontiac, QC

Mr. Speaker, I listened carefully to the hon. member's very interesting speech.

He obviously showed that there are a number of problems with financial literacy in Canada and that the measures proposed by the government do not fully address them.

My question for him is very simple: what could we have done to truly contribute to the financial health and literacy of Canadians?

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 5 p.m.
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NDP

Tarik Brahmi Saint-Jean, QC

Mr. Speaker, I noted this regarding one of the amendments proposed by my colleague from Sudbury, who was sitting on the Standing Committee on Finance at the time. He proposed the creation of an advisory committee.

One of his recommendations called for this advisory committee to be made up of stakeholders from different backgrounds who were familiar with the population and who would be able to provide tools and suggestions and could also exercise oversight over the financial literacy leader.

This would allow for some oversight, instead of a single person being in charge of providing a better financial education for Canadians.

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 5 p.m.
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NDP

Pat Martin Winnipeg Centre, MB

Mr. Speaker, I was interested in my colleague's comment that the NDP put forward six what he considered to be reasonable amendments at the committee and not a single one was favoured with a supportive vote by my colleagues in the ruling Conservative Party. In fact, not a single amendment has ever been allowed to any piece of legislation in the 41st Parliament. Even at times when the Conservatives know full well that the amendments have merit, they act and behave as if they have some kind of monopoly on all wisdom, all knowledge and all good ideas. At times the minister has had to get up at report stage and introduce the very same things that they voted down at the committee stage. They must find that embarrassing, to be hoisted with their own petard in that way.

I am interested in the quote by the member for Saint Boniface. Does it not seem to be contradictory that she spoke in favour of the same principle that my colleague put forward in the amendment? Does my colleague have any explanation for such contradictory behaviour by the parliamentary secretary?

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 5:05 p.m.
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NDP

Tarik Brahmi Saint-Jean, QC

Mr. Speaker, absolutely, this is a blatant contradiction. The parliamentary secretary said that it is a huge priority for the government to have bilingual appointments and a few minutes later the very same member voted against that amendment. It is a contradiction that I do not have an explanation for. The only suspicion I have is that Conservatives want the possibility to make appointments of people they know are not bilingual and who will only have to pretend that they will learn French in the future.

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 5:05 p.m.
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NDP

Djaouida Sellah Saint-Bruno—Saint-Hubert, QC

Mr. Speaker, we all know that Canadians' lack of savings and the Conservatives' increasing debt are symptoms of the disparity between the increase in the cost of living and the increase in salaries, rather than symptoms of financial illiteracy.

I would like my colleague to explain how a bill that would create this position will help Canadians if it does not take into consideration the 29 recommendations made by the task force.

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 5:05 p.m.
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NDP

Tarik Brahmi Saint-Jean, QC

Mr. Speaker, the member for Saint-Bruno—Saint-Hubert is absolutely right.

Furthermore, during the committee hearings, the following question was raised: could the agency commissioner appoint someone to carry out exactly the same duties without having the title? The departmental official responded yes, but that a legislative appointment carried more prestige and made the position more official.

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 5:05 p.m.
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NDP

Mathieu Ravignat Pontiac, QC

Mr. Speaker, first we must define the problem.

Let us define the issue here. This may seem like an anodyne bill, but in fact at its core it has a very essential contribution to make. It is really a question of fundamental literacy. We can talk about literacy in general terms with regard to reading a book or a document, but literacy goes fundamentally deeper than that. Literacy eventually is also an issue of justice.

I found a particular quote from Globe and Mail finance columnist, Rob Carrick, which is quite revealing about this particular bill. He says, “it's disappointing to see banks, advice firms, investment dealers and mutual fund companies treated solely like part of the solution to the lack of financial literacy in Canada, and not part of the problem as well—

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 5:10 p.m.
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NDP

Mathieu Ravignat Pontiac, QC

Mr. Speaker, I will repeat the quote that I was attempting to read by the finance columnist from The Globe and Mail, Rob Carrick. He wrote something that I think is quite revealing. He said:

...it's disappointing to see banks, advice firms, investment dealers and mutual fund companies treated solely like part of the solution to the lack of financial literacy in Canada, and not part of the problem as well.

We need to recognize that financial institutions and banks in this country have an extremely powerful role to play with regard to persuasion over Canadians. It is that persuasion that could be used rightly or wrongly to affect the financial lives of Canadians.

As well, members should keep in mind the glaring statistic that 26% of Canadians struggle with even the most basic numeracy and 56% do not have high enough levels of numeracy to demonstrate the skills and knowledge associated with the ability to function well in Canadian society. Keeping that fact in mind, we should all be worried. We should also be worried about the high level of domestic debt. This problem needs to be addressed.

HRSDC reveals that the relevant statistics for financial literacy are 20% and 48%. If we compare that with the United States, Canada has one of the highest levels of annual costs for equity funds, which is 2.31% compared to 0.94% in the U.S. It is no wonder banks want more customers.

The highest earning 11% of Canadians contribute more to RRSPs than the bottom 89% of tax filers combined. Canadian taxpayers subsidized those RRSPs to the tune of $7.3 billion in annual net tax expenditures.

To continue with some interesting statistics, 30% of Canadian families lack any retirement savings outside of the Canadian pension plan. Also, as I mentioned before, Canadian household debt is at 150% of income and 25% of Canadians increased their debt load over the past year. In the last quarter, the CPP outperformed the markets by a margin of 10 to 1.

Why am I referring to all of these statistics? It is because what we are discussing with the bill is the relationship of power between the average Canadian citizen's knowledge of the financial system and that of the banks in this country. If we do not empower Canadian citizens with the ability to understand the financial system and what financial institutions impose on them, then we are on a slippery slope.

The measure proposed by Bill C-28 is a good one. However, from our perspective, it is not enough.

For example, we are concerned that there is no explicit requirement that the incumbent of this position be bilingual. And yet, we live in a country with two official languages.

We believe that the person responsible for improving financial literacy throughout Canada must be able to communicate in both French and English. The minister of state has assured us that the incumbent will be bilingual, but the Conservatives are refusing to put this in the legislation. That worries us.

The conclusions of the task force on financial literacy clearly state that the financial literacy leader must be kept apprised of the situation by an advisory council consisting of representatives of the industry, unions, educators, government and voluntary organizations from across Canada. This provision is included in this bill and will prevent the participation of a number of partners following implementation of financial literacy. The Financial Consumer Agency of Canada and the government have said that an advisory council will be established, but that this does not require legislation. This is confusing.

At committee stage, we proposed some amendments in order to address some of the shortcomings. We proposed that the requirement of bilingualism be added—we did ask for that—that a definition of financial literacy be added and that more responsibility be given to the incumbent of the position to be created.

However, the Conservatives rejected our amendments. Stakeholders told us that creating this position is better than the status quo. The government has at least agreed to create this position. In light of the fact that the expenses related to this position were approved in the 2012 budget, we support the bill. We will nevertheless continue to push the government to go further. Even though it has taken a small step in the right direction, there is still a long way to go.

How could we improve the situation? Financial literacy is an important aspect of consumer protection. The fact that many Canadians do not have savings and the rise in consumer debt are symptoms of the discrepancy between the rise in the cost of living and salaries, not financial illiteracy.

Too many Canadians are living paycheque to paycheque. This situation proves that the government is not taking a leadership role and that it is incapable of addressing issues that are truly important to Canadians. The government has never implemented strict laws and regulations to protect consumers. This bill falls far short of providing any real help to consumers.

We believe that the best way to support consumers is to establish a single-window consumer protection department or agency that would handle all consumer issues. If the government really wants to protect consumers, then it should move forward with credit card regulations, for instance, and implement important regulations that would cap interest rates and eliminate the excessive fees paid by consumers.

We in the NDP have a better plan in mind for financial security for retirement. We need to strengthen the Canada and Quebec guaranteed pension plans by gradually doubling benefits in an affordable manner to a maximum of $1,920 a month, thereby providing Canadians with an adequate level of guaranteed income during their retirement.

However, the government and politicians basically need to ensure that Canadians are educated and have access to financial training, as well as ensure that Canadians are protected, particularly from the banks, credit card companies and other financial institutions such as insurance companies, and the power they can hold over Canadians' lives. To that end, those institutions need to be properly controlled through legislation that focuses on the common good.

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 5:15 p.m.
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NDP

Jonathan Tremblay Montmorency—Charlevoix—Haute-Côte-Nord, QC

Mr. Speaker, my colleague made an excellent speech on what specific impact this will have on the public.

However, something has been bothering me since I have been listening to my colleagues debate this bill. There is unfortunately no mention of bilingualism in the hiring criteria for the financial literacy leader.

I have to wonder: do French and English use the same terms to talk about financial literacy?

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 5:15 p.m.
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NDP

Mathieu Ravignat Pontiac, QC

Mr. Speaker, we can all agree that this is a rather complex field of study. It is clear that the vocabulary is not the same in the two languages. I am bilingual and have lived in Ottawa my whole life—or at least much of my life—and I find it rather difficult to compare the French and English terminology when it comes to financial matters.

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 5:20 p.m.
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NDP

Djaouida Sellah Saint-Bruno—Saint-Hubert, QC

Mr. Speaker, I listened carefully to my brilliant colleague's speech on this bill.

We all know that this bill does not contain a strategy to ease the debt burden on Canadians. This bill only legalizes the position. Of the 30 recommendations made by the task force, the Conservatives acted on only one, which was to legalize the creation of this position.

I would like my colleague to expand on his idea. How does he think this could help Canadian families with their debt load, knowing that some are living paycheque to paycheque?

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 5:20 p.m.
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NDP

Mathieu Ravignat Pontiac, QC

Mr. Speaker, my colleague is quite right.

First, it does not contain a definition of financial literacy. We should first define financial literacy. Furthermore, there is no accountability measure, and no initiatives to increase financial literacy.

Furthermore, the recommendation to create an advisory council composed of union representatives, among others, was not retained. In my opinion, the suggestions we made in committee would improve this bill and help protect Canadians.

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 5:20 p.m.
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NDP

Libby Davies Vancouver East, BC

Mr. Speaker, one of the concerns about the bill overall is, as the member has pointed out, that it is very far removed from consumer protection.

One of the things I have always been concerned about over the years because of the riding I represent is protection, particularly for low income people who, in the first place, have difficulty accessing regular services at financial institutions. The protection they have is very minimal.

I just wonder if the member could comment on whether he has had any similar experiences in his own riding where people who are on fixed or very low incomes have a very difficult time with financial institutions and they absolutely need protection.

Financial Literacy Leader Act
Government Orders

November 28th, 2012 / 5:20 p.m.
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NDP

Mathieu Ravignat Pontiac, QC

Absolutely, Mr. Speaker, that has definitely been the experience in my riding.

Most statisticians would say that there is a relationship between the level of education, poverty and literacy, so we are talking about compounding situations. If our literacy AND education is low, it is perhaps more difficult to understand the financial system.

My hon. colleague is completely right that statistics are worrying. We are talking about 30% of families that lack any retirement savings. The average Canadian household debt is 150% of income and Canadians' debt load has increased by 25%. We know that a lot of those Canadians are either working poor or poor. It is truly unfortunate. We would hope that we would have a more compassionate government that would address this issue.