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 ActGovernment Orders

March 2nd, 2012 / 10:25 a.m.
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Liberal

Kevin Lamoureux Liberal Winnipeg North, MB

Mr. Speaker, the federal government has a responsibility to take action on the principle that the member is talking about, the need for financial literacy and strong leadership. Whether it is driven by the private sector or the non-profit sector, there is just cause for us to be much more proactive on financial literacy and education for all Canadians. The quicker and the more sincere we are at addressing that issue, the healthier our economy will be in the long term. That could be done through ensuring there is more accountability and transparency. It could be done by a government that is prepared to get all of the stakeholders around the table and take a proactive approach, whether in school divisions, schools, governments, work environments or television ads, whatever it takes to increase the financial literacy of the population.

Financial Literacy Leader ActGovernment Orders

March 2nd, 2012 / 10:25 a.m.
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Green

Elizabeth May Green Saanich—Gulf Islands, BC

Mr. Speaker, I see nothing objectionable in Bill C-28. We need greater financial literacy among Canadians.

I wonder if the bill has been costed. We are considering creating a new office within the federal government. I imagine the bill speaks to the expense accounts of that office and someone with the title financial literacy leader.

Have we examined as a House whether the goals of the bill could be better accomplished through sufficient support to groups like the Consumers' Association of Canada or Democracy Watch? They have done a lot of good work in making Canadians aware of their banking processes.

Financial Literacy Leader ActGovernment Orders

March 2nd, 2012 / 10:25 a.m.
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Liberal

Kevin Lamoureux Liberal Winnipeg North, MB

Mr. Speaker, the government has not provided Parliament with a plan regarding Bill C-28. We do not know how much it is going to cost. In regard to the financial literacy leader, we need to know what sort of resources the government is prepared to allocate to the position.

As my NDP colleague mentioned, we have to be excused for not just buying into everything that the government is trying to sell with this legislation. It is one thing to say here is a bill but it is another thing to put some teeth in it. We are not convinced that there is a solid commitment to having a well financed office that would produce the desired outcome. We recognize how critically important the issue of financial literacy is. It is an important file. Young people need to be more involved in the financial environment. The benefits far outweigh any sort of potential costs that might be incurred in making sure that we do it right and that the federal government plays a leadership role.

Financial Literacy Leader ActGovernment Orders

March 2nd, 2012 / 10:30 a.m.
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NDP

Pierre Jacob NDP Brome—Missisquoi, QC

Mr. Speaker, I would like to thank my colleague for his lovely speech. He said that it is important to educate people about financial matters. I agree that that is a good idea. Education is one thing.

According to my Liberal Party colleague, is the Liberal Party's objective to prioritize average Canadians, to protect average consumers, to offer a better financial security plan for retirement and to level the playing field between average Canadians and big institutions by regulating the industry?

Financial Literacy Leader ActGovernment Orders

March 2nd, 2012 / 10:30 a.m.
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Liberal

Kevin Lamoureux Liberal Winnipeg North, MB

Mr. Speaker, I appreciate the member's comments but I do not necessarily agree with them.

The primary objective is to ensure that Canadians have a better understanding of financial matters. These include mortgage rates, consumer prices and what is happening within the macro and the micro environmental conditions in our communities. That is really what we are looking for. That is best done by a national government working with the different stakeholders and having the resources to do that so the overall quality of education related to financial matters improves.

We have not necessarily seen the required leadership from the government. The government is saying here is the bill, but we are concerned about the lack of commitment to follow through with the bill itself.

Financial Literacy Leader ActGovernment Orders

March 2nd, 2012 / 10:30 a.m.
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NDP

Mike Sullivan NDP York South—Weston, ON

Mr. Speaker, I will be splitting my time with the member for Rivière-des-Mille-Îles.

This is yet another in a series of governing on the back of an envelope from the government side. The government tried to amend Bill C-10, and discovered it could not. It then had to send the bill to the Senate to have some amendments made. Now it will come back to the House.

We then had the lawful access bill, the awful access bill, which the government had to withdraw. It had to send the bill to committee so some amendments could be made to please Canadians.

Now we have this bill. It seems to be extremely poorly thought out. It does not actually deal with the recommendations of the task force, except to create a new bureaucracy. Canadians do not need another level of bureaucracy.

According to the bill, a position would be created, with no definition of what the person would do and with a very vague statement of consulting with stakeholders, which have not been defined. Are the stakeholders the big banks? Are they the payday lenders? Are they the big and powerful corporations that want better tax regimes? Who are the stakeholders in this?

The bill does not deal with the bulk of the recommendations that came from the task force. In fact, it only deals with half of one, which is to appoint a leader. The other recommendations suggested that the government spend money on making Canadians better able to deal with their day to day financial pressures. They are such things as integrating financial literacy into the Canada student loans program. That would require an expenditure. This proposed new individual would not have the authority to spend money.

There was the recommendation that government make financial literacy training programs for young Canadians eligible for funding through the youth employment strategy. Again, the bill would not do that. There was the recommendation that the Government of Canada, as part of the renewal of the urban aboriginal strategy, make financial literacy training programs for young aboriginal Canadians eligible for funding. Again, funding is not a part of the bill.

The recommendation to provide relevant financial information and education services for recent newcomers through the newcomers to Canada program, again, would require funding. In Toronto the funding for CIC programs is being cut.

Financial Literacy Leader ActGovernment Orders

March 2nd, 2012 / 10:35 a.m.
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NDP

Mike Sullivan NDP York South—Weston, ON

Mr. Speaker, the task force recommended that, “the Government of Canada, as well as provincial and territorial governments, invest in the capacity of the voluntary sector”. The individual would not have the power to invest anything. It also recommended that, ”the Government of Canada support existing capacity-building initiatives in First Nations communities by offering culturally relevant financial literacy tools, training and resources”. However, there is no funding in the bill for resources. The bill is all about creating a bureaucracy that has absolutely no ability to do anything except perhaps talk to a few people about what they ought to do with financial literacy.

There is no definition in the bill of financial literacy. What is it? Let us talk about some real examples of missing financial literacy in my riding. Would the bill actually fix these things?

A 59-year-old gentleman in my riding was laid-off from his job. As he had paid into the EI system for many years, he tried to collect it. However, EI was not available, not because of his fault or the fault of his employer, but because of the fault of the EI administration. It took 11 months for him to finally get his EI. In that period of time, would financial literacy have helped him collect EI better? I do not think so because it was not forthcoming.

In that 11-month period, he managed to lose his house. Would financial literacy have prevented him from losing his house? No. The big bank, I think it was the Royal Bank, decided he had missed too many payments because he did not get his EI in time. When he did get his EI, but by then it was too late.

We have an example of an individual for whom financial literacy means absolutely nothing because the systems and structures that are in place do not prevent the horrible impacts that the delay of 11 months for EI had on he and his family. He now lives on somebody's couch.

On subprime loans in the U.S., would financial literacy have helped the migrant farm worker making $12,000 a year decide to say no to a quarter-million dollar loan? Would financial literacy have prevented the subprime mortgage crisis in the U.S.? I do not think so.

If I am making $12,000 a year and somebody tells me that I could have a quarter-million dollars to buy a house and live in it for as long as I wanted because the government would back the loan, would I turn that down because there was a financial literacy program? I do not think so. These kinds of things just do not happen.

Would the financial literacy program help eliminate payday lenders? We hope so. However, what of the single mom who is told by the doctor that she has to buy a prescription for her sick daughter and she does not have the money for it because her paycheque does not come in until Thursday? There is no drug plan in any of the three part-time jobs she has to hold down in order to keep her head above water. Would financial literacy prevent her from going to a payday lender? I do not think so. Although she knows it is wrong and stupid to pay 1,000% on a loan, she does not have a choice because the financial structures in our country do not prevent the need for these payday lenders.

According to the member for Newmarket—Aurora yesterday, financial literacy would help Canadians understand some of the complexities of what was going on in financial markets and how they could respond as individuals to the things that were happening. What does that mean?

As an ordinary Canadian consumer, I have to respond to something going on in Greece and the financial markets in Europe and Tokyo? Maybe 1% of Canadians do, but I do not think that 1% have a need for financial literacy training. Canadians depend on the government to look out for them on these kinds of things. They depend on the government to pay attention to what goes on in those financial markets and act accordingly.

The government should not be considering financial literacy as a way for ordinary consumers to somehow find a way to protect themselves from these financial markets. Maybe the answer is to put all of our RRSP money in our mattresses and then we would not lose half of it when those financial markets go down.

I do not think there is going to be a financial literacy course anywhere in our country that is going to tell people to put their money in their mattresses because those financial literacy courses are going to be conducted by the big banks, whose job it is to ensure that people are investing in them, and the take 2% or 3% of people's money to keep their profits up.

Financial literacy for Canadians is knowing a bunch of things about their own financial health, such as knowing, for example, that being in a union means better wages, benefits and retirement security. Will that be part of the financial training? I doubt it. It is knowing that the tax credits for children's arts programs and other things, which are non-refundable, do not help most of the people in my riding. They are too poor to afford the children's arts program in the first place and they do not pay enough taxes to use that credit. It is knowing that non-refundable tax credits for transit passes are not of any benefit to the poor, but they are the people who use transit passes. The non-refundable tax credit does nothing for them.

It is knowing that indiscriminate tax cuts to rich and powerful corporations do not trickle down to the indefensible individuals in my riding. It does not create jobs for them. The jobs have disappeared. There were 400,000 manufacturing jobs that disappeared in Ontario alone since the government took office and those jobs were family supporting and created employment in a way that people could afford to have families, mortgages and live above the poverty line. Those jobs have disappeared under the government and have not been replaced.

Financial literacy is knowing which side of the House is good for ordinary Canadians. Financial literacy is knowing that we are.

Financial Literacy Leader ActGovernment Orders

March 2nd, 2012 / 10:40 a.m.
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Conservative

James Rajotte Conservative Edmonton—Leduc, AB

Mr. Speaker, my colleague talked about the establishment of a new bureaucracy. We are not going to recreate the existing Financial Consumer Agency of Canada. It will be the agency that works with the financial literacy leader if the bill passes.

Is he aware that there will be co-operation between an existing agency, not a newly-created agency, and the financial literacy leader if the bill passes?

Financial Literacy Leader ActGovernment Orders

March 2nd, 2012 / 10:40 a.m.
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NDP

Mike Sullivan NDP York South—Weston, ON

Mr. Speaker, yes, I am quite aware that this position is incorporated, in part, in another agency. I was not suggesting that the government was creating another agency. I said that it was creating another level of bureaucracy, without any definition of what that bureaucrat would do or how the individual would accomplish tasks. He or she would have a salary, an office and staff. The person may require French-language training if the individual does not have the required bilingualism.

It is not creating another agency, I agree, but it is creating a position with very little to do.

Financial Literacy Leader ActGovernment Orders

March 2nd, 2012 / 10:40 a.m.
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NDP

Dennis Bevington NDP Western Arctic, NT

Mr. Speaker, I heard the presentation yesterday by the Conservative member for Saint Boniface, who mentioned a number of different things that would be accomplished within the financial literacy leader's role. I understand the nature of what is going ahead and yet, when I read the bill, I see nothing that indicates any surety that these things are going to become part of the financial information and direction that the government provides to corporations that lend money to Canadians or engage in financial transactions with Canadians.

How can we agree to this position when the government seems intransigent on the needs of consumers? How can we expect anything good to come out of the bill?

Financial Literacy Leader ActGovernment Orders

March 2nd, 2012 / 10:45 a.m.
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NDP

Mike Sullivan NDP York South—Weston, ON

Mr. Speaker, we want good things to come from the government, but the bill does not do it. The bill does not deal with the fact that credit card interest rates are one of the biggest scourges in this land. There are credit card interest rates of 30% and 40%, yet the prime rate is around 1.5% or 2%. The rest of it is pure profit. There are systems in our country that actually pick on the poor and vulnerable. Nothing in the bill would deal with those issues.

The bill, apparently, would simply create an office. Without any of the other things in the recommendations, it will not accomplish what we want it to accomplish.

Financial Literacy Leader ActGovernment Orders

March 2nd, 2012 / 10:45 a.m.
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NDP

Laurin Liu NDP Rivière-des-Mille-Îles, QC

Mr. Speaker, I am pleased to have this opportunity to speak to Bill C-28, An Act to amend the Financial Consumer Agency of Canada Act, which would create the position of financial literacy leader to strengthen Canadians' financial literacy. This initiative was inspired by a report from the task force created by the Conservative government and chaired by bankers, including Donald Stewart of Sun Life Financial and Jacques Ménard of BMO Nesbitt Burns.

I went through the literacy report that was released in February 2011. To my great surprise, it contained not a word about credit card companies' quasi-usurious interest rates, not a word about financial institutions' lack of transparency concerning their fees, not a word about the questionable practices of banks that demand exorbitant fees when people try to pay off their mortgages early. Do not expect to find a mea culpa in this report from bankers who have sold highly speculative toxic financial products for years and continue to do so. Honestly, I was very disappointed.

The Conservatives keep telling us that consumers get themselves into debt because they do not know how to read a credit contract. But the government is ignoring the fact that annual interest rates on credit cards are often around 20%.

I would like to quote from the evidence given by a few individuals who expressed concern about this bill. First of all, Ken Georgetti of the Canadian Labour Congress said, “Canadians need better government policy rather than lectures on how to save money.... This report heaps blame on 'uninformed' individuals, and completely ignores the predatory behaviour of financial institutions.”

Jim Stanford of the CAW said,“Many financial literacy programs devolve into admonishments for individuals to save more. This is misplaced....”

Lauren Willis, a professor at Loyola Law School in the United States, also denounced the government's approach. She said, “When consumers find themselves in dire financial straits, the regulation through education model blames them for their plight, shaming them and deflecting calls for effective market regulation.”

The ministers of this government like to rise here in the House of Commons and tell us that it is up to Canadians to save and plan for their futures. Those same ministers then turn around and slash social programs like the ones designed to ensure a decent retirement for our seniors.

For instance, instead of strengthening the public pension system, they created a pooled registered pension plan, which will only encourage investors further to choose risky private funds and stock markets.

We also know that the Prime Minister told the bankers in Davos that he was going to make cuts to the old age security program and that one way he was going to do so was by increasing the eligibility age from 65 to 67.

Last week, I held a public consultation in the town of Boisbriand in my riding. I can tell you that people are very worried about the fact that the government refuses to take responsibility where the financial security of our seniors is concerned.

It is not up to the public to pay for the Conservatives' F-35s. It is not up to the public to pay for the tax credits that are given to corporations.

With the creation of pooled registered pension plans, the dismantling of old age security and the reinforcement of tools for small investor autonomy, the Conservatives' message is very clear: the government, as they see it, does not need to look after the financial security of seniors and retirees. That approach makes no sense.

For Barrie McKenna of the Globe and Mail, “Looking to financial literacy to fill the void is like asking ordinary Canadians to be their own brain surgeons and airline pilots. The dizzying array of financial products, mixed with chaotic and increasingly irrational financial markets, makes the job of do-it-yourself financial planning almost impossible—no matter how literate you are”.

The other problem is that households with a high debt load often do not have the means to use these individual retirement planning mechanisms. Some 30% of Canadian families do not have any retirement savings outside the Canada pension plan.

As Jim Stanford of the CAW clearly observed, personal savings will never be a significant source of financial security for most Canadians since they are unable to save as a result of their low incomes.

It is all well and good to encourage personal saving, but it is this government that caused Canadians to lose well-paid jobs, particularly in the manufacturing sector, and replaced them with unstable jobs. It is under this government that Canadians' quality of life has declined. Single mothers who struggle to put something away for retirement are not to blame. Students in debt who cannot count on secure employment when they graduate are not to blame. And the seniors whom the government is asking to work two more years even though it knows that many of them not capable of doing so are certainly not to blame.

The New Democrats have a better plan for financial security at retirement. We are proposing that the government strengthen the guaranteed pension plans in Canada and Quebec and gradually double benefits in an affordable manner, thereby giving Canadians an acceptable level of guaranteed income during retirement. These are the general circumstances surrounding Bill C-28.

In the time I have remaining, I would like to address two other issues: the bill adds a useless bureaucratic institution and it does not require the candidate to be bilingual.

Given that Canada's current consumer protection regime is extremely fragile, I fail to see how adding a new layer of bureaucracy will help consumers. Without any real political direction, guidance on how to increase financial literacy or accountability mechanism, there is no reason to believe that the financial literacy leader will have the tools needed to carry out his mission. As the hon. member mentioned, this bill does not even include a definition of financial literacy.

At a time when the Conservatives are preparing to cut government programs by 10%, it does not make any sense to create another bureaucratic structure responsible for protecting consumers. If the government really wants to invest in protecting consumers, why does it not simply support the Financial Consumer Agency of Canada, Option consommateurs or the Réseau de protection du consommateur du Québec?

I am thinking of an organization in my riding, the Lower Laurentians ACEF, which does an excellent job of teaching budgeting on a low income. This organization really helps the people in my riding. As an aside, I cannot help but criticize the fact that the bill does not explicitly state that the financial literacy leader must be bilingual. The past actions of this government betray its insensitivity towards French. Members will recall that this government did not hesitate to appoint judges and an auditor general who do not know French.

In the circumstances, it is understandable that the official opposition will try to amend the bill to ensure that bilingualism is one of the job requirements. Yes, financial literacy is very important, but this is not the type of debate that we should be having right now in the House of Commons. Furthermore, creating the position of financial literacy leader is a false solution. This new bureaucratic creature does nothing to allay the growing financial concerns of small investors.

We believe that the best way to support consumers is to create a department or agency that would be a one-stop shop for all consumer protection issues. This organization would cut down on bureaucracy because it would consist of structures that already exist, but are scattered throughout government.

I will now take questions from my hon. colleagues.

Financial Literacy Leader ActGovernment Orders

March 2nd, 2012 / 10:55 a.m.
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NDP

Pierre Jacob NDP Brome—Missisquoi, QC

Mr. Speaker, I would like to thank my colleague for her brilliant speech.

I realize that the Conservatives' bill is intended to help well-connected insiders rather than average people. With that in mind, I would like my colleague to explain why the NDP believes it is so important to help Canadian families deal with the current economic situation and to leave nobody behind, including young people, adults and seniors.

Financial Literacy Leader ActGovernment Orders

March 2nd, 2012 / 10:55 a.m.
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NDP

Laurin Liu NDP Rivière-des-Mille-Îles, QC

Mr. Speaker, I thank my colleague for his question.

The NDP is worried about the fact that Canadians do not save enough money. That being said, our primary concern should be the disparity between the rising cost of living and wages. The Conservative government has presided over job losses in the manufacturing sector. Well-paid jobs that enabled people to support their families have been replaced by unstable, poorly paid jobs. We think that is the debate we should be having in the House.

Financial literacy is certainly important, but the real challenge Canadians are facing is the fact that the cost of living is going up, but wages are not keeping pace.

Financial Literacy Leader ActGovernment Orders

March 2nd, 2012 / 10:55 a.m.
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Liberal

Kevin Lamoureux Liberal Winnipeg North, MB

Mr. Speaker, with respect to financial literacy, most Canadians think about interest rates, consumer debt, banking fees, things of that nature. It will take a group effort by stakeholders, including consumer advocacy groups and different levels of government, the federal government in particular. We recognize the federal government has a leadership role in ensuring overall improved consumer financial literacy.

Would the member agree that the federal government's role is one of leadership on this file?