Finance Committee on July 7th, 2020

[Frank Lofranco]

Thank you, Commissioner, and thank you to the committee for having me here today.

I should note that I've been kicked from the meeting a couple of times due to Internet problems, but I'm glad I'm connected for this part of the meeting since this question was directed my way.

Since the onset of the pandemic, the FCAC supervision branch has been in constant contact with the regulated entities and six banks in particular, the D-SIBs, on a daily basis initially. That communication continues.

At front and centre, we are seized with the requirement for disclosure. A lot of information that came out initially was confusing because entities were trying to adjust to the environment, as we were. However, as the weeks have gone by, we have taken the time to interact with those entities, going so far as to look at their training materials, review their scripts and look at what has been posted on the website to reassure ourselves that disclosures have been made in a way that's appropriate and fair, and to—

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Sorry, please continue.

[Frank Lofranco]

The remaining issue now is to track the reaction of consumers in relation to these programs and track complaints in particular. I think that's part of your question as well.

We will be getting information on COVID-related complaints toward the fall period, but in the meantime we have continued to remain accessible to all consumers should they have any complaints or concerns they want to register with us.

[The Chair, Liberal, Wayne Easter]

We're over our time, but do you have an important supplementary question, Pat?

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

I have a really quick comment. Five million consumers are filing at least one complaint with a bank every year, and I find that to be an extraordinarily high number. That was quite revealing, actually, in your presentation.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

We'll now go to Mr. Sorbara. I think Mr. Fraser is here, but his Internet is wobbly.

Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair.

Good afternoon, everyone.

I'm looking at the Financial Consumer Agency of Canada's 2020-21 business plan. You have put forward a number of responsibilities and fulfillment priorities, one of them being a renewal of the national strategy for financial literacy, which expired in 2019.

First, with COVID-19, how much, or what, has been disrupted in the business plan, if you've been analyzing it?

Second, we know that financial literacy is a very important aspect of everyone's life in Canada. Here in the province of Ontario, financial literacy will be brought in at the beginning of a child's education. It will be in the curriculum, so we know how important it is.

How much work has been done on the renewal of the financial literacy strategy and what can we see of that? Also, how much has COVID-19 impacted the organization?

[Judith Robertson]

Thank you very much.

I'll take the first one first. The answer is that of course it's impacted, but my last discussion around this subject with my executive team is that we have not adjusted our business plan. That's where I'm saying that I'm feeling super great about how it's going, but we also, I think, need to be realistic that as this goes on we may have a harder time doing the hiring and so on that we need to do. For the moment, we're in great shape.

As far as the national strategy goes, we are on track. We have been consulting with our stakeholders. We had a summative evaluation that we are responding to about the last financial literacy one, and we have a bit of a draft that is being circulated internally. We expect to do public consultations on that in August. We're quite excited about the project.

It is our anticipation that we will be able to release it in November in time for the 10th anniversary of the financial literacy month.

[The Chair, Liberal, Wayne Easter]

Just to interrupt for a second, Francesco, I want to give Mr. Cumming a heads-up. He's next on the question list. I neglected to do that.

Go ahead, Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair.

As a follow-up, I've gone quickly to the FCAC website, and I want to say thank you to your team for having the website updated. There are some great resources for Canadians from coast to coast to coast to look at, especially during this extraordinary period of time.

Our government has put in place a number of measures, including the Canada emergency response benefit and the wage subsidy, and my seniors, over 20,000 of them, this week will be receiving a $300 old age security tax-free one-time payment. If they're collecting the supplement or the allowance, there's an additional $200. That's on top of the GST/HST credit they received, which was another several hundred dollars. We are assisting Canadians to weather this time. We don't want to have people having to choose between paying bills and putting food on their table. We don't want to have people facing that financial hardship due to this extraordinary and unique period of time.

Largely, our government has been applauded for the number of measures that we've taken. I look forward to continuing as we move out of the recovery to work with all agencies and to see what all agencies have put up on their websites. One question is, do you folks at FCAC measure the number of times that Canadians have visited the website and looked at the information to help themselves and to ensure that they know what they need to do to weather this storm as well?

[Judith Robertson]

If I understand the question correctly, it's do we monitor our traffic to our web pages...?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Yes.

[Judith Robertson]

Yes, we do. We are also active on social media, and we monitor the response on that as well—the pickup and so on. Honestly, it's an area of quite strong interest to us to try to evaluate the effectiveness of what we're doing and ensure that we're devoting our resources in the right places.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Yes, of course.

If I can just finish up, Chair, on the strategic plan and the number of FTEs, there's a big ramp-up in terms of hires. I would think that this came from the last session of Parliament, when we did a study on the Financial Consumer Agency and came out with a number of recommendations to strengthen rules to make sure that Canadians are protected when they go to a bank, a financial institution—or to a credit union, for that matter, if they're federally regulated. We came out with a great report, actually. It was really very good to work on it with the current chair.

I was just wondering, in terms of the FTE count and being able to bring in human capital, how is that process going?

[Judith Robertson]

We do have a targeted plan for recruiting. We have a great recruiting story, so we're actually quite able to attract people. It's difficult in these times, as you can imagine, a difficult situation in which to attract.

We are at about 160 people, as I say. Our plan is to grow to about 200 people over the next year. We're confident that we will get there and that we will have the resources we need.

[The Chair, Liberal, Wayne Easter]

Okay. Thanks to all of you.

Mr. Cumming is next, followed by Mr. McLeod.

James.

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you, Mr. Chair, and thank you to all the witnesses today.

Ms. Robertson, I want to come back to some very distressing numbers on the risk of bankruptcy, on people being able to pay their bills pre-COVID and the notion of deferrals.

The deferrals are, for the most part, exactly what they are. They're deferrals. If people have been out of work and they've been struggling before COVID, and now they're post COVID, whether it be a deferral on mortgages, or interest payments on mortgages, or utility bills, or on property taxes, which many communities have done, how concerned are you that the insolvency numbers will skyrocket? I just see that we're going to hit a fiscal cliff this fall, and I'd like your opinion on that.

[Judith Robertson]

Of course, it's difficult to predict, and in our role we have no specific ability to make predictions of that nature. I think it's fair to reflect that everyone was concerned about the level of indebtedness of Canadian consumers before this shock to the economy, and the uncertainty it has created definitely contributes to the difficulties consumers have been facing.

[James Cumming, Conservative, Edmonton Centre, AB]

I'm quite curious about the piece that you have under financial literacy. If I read this right, the agency has increased its funding significantly, by something like 40%, between 2014-15 and 2018-19, and there's another planned increase of 65% by 2022-23.

Can you tell us where those funds are targeted? Is it predominantly around financial literacy?

[Judith Robertson]

Yes, the percentage increases have been high, but our total budget for the last fiscal year was less than $35 million, and our total spend for the last fiscal year was less than $40 million, and we are staying within our anticipated budget for this fiscal year. We're trying to be responsible stewards of our resources.

As for the division of our spend, we don't specify financial literacy per se, but we have two principal divisions, our supervision and enforcement division and our research, policy and education division, and we use tools from both sides to increase the information for and financial education of consumers.

[James Cumming, Conservative, Edmonton Centre, AB]

Given what we know about consumers and the increase in debt and their debt load, and given that we have this financial literacy program, how will you measure success? If we're going to spend taxpayers' dollars to try to improve the situation, how will you measure success? I'm wondering how coordinated your efforts are with the provinces, because I know for sure that most of the provinces have something of the same kind in place. Is there duplication of services?

[Judith Robertson]

First, I offer a point of clarification. Our funding is principally from the sectors we regulate, so our only amount of taxpayer funding is the $5 million annual allocation. The rest of our expenses are covered by the industry.

Second, as far as how we measure success is concerned, this is where our research comes in. We have benchmarks, we measure changes and we are using experimentation to see if behaviours are changing, and I can give you a couple of examples on those if you're interested.

As for our relationship with the provincial regulators, this is an area of great interest to me. We have very fruitful relationships with provincial regulators, and we do share resources and find areas of overlap where we can rationalize resources, but we also find areas where we can amplify each other's methods, so we're very active in that area.

[James Cumming, Conservative, Edmonton Centre, AB]

Great. We could have a great conversation about the industy. You say that the industry is paying. Well, ultimately they're building it into their pricing, so I would tell you that the taxpayers still pay. It's still a cost to them.

My last question is this. It just strikes me that much of what we're doing with financial literacy is reactive to the situation we're currently in or what it was pre-COVID. How much of an emphasis will your group put on trying to intervene earlier and assisting provinces and other sectors with being in front of the curve so that when people get out into the working world, they will realize that debt isn't necessarily a good thing?

[Judith Robertson]

We couldn't agree more that moving ahead of the problem, as opposed to trying to fix it, is the right way to go.

I have just a couple of things to add.

First, one of our targeted areas is youth, students—again trying to make sure that good financial habits are built early.

Second, I'll highlight two of our, I would say, more experimental resources. One is something we call a “budget planner”, which was released last fall. It had great reception. It's basically a very simple budgeting tool that people can use totally free. It helps people get into the habit of planning and building a resilient financial future.

The third one is a pilot program we're running now based on a program in the U.S. called “refund to savings”, which is trying to nudge taxpayers who are getting a refund to put that refund directly into a savings vehicle. Research shows that once it's in a savings vehicle, as opposed to someone's regular account, it tends to stay there. It's a bit of a “free money” way to build that emergency cushion.

These are the kinds of things we're quite excited about.

[The Chair, Liberal, Wayne Easter]

Thank you all.

We'll go to Mr. McLeod, and then to Mr. Ste-Marie.

Mr. McLeod.