Finance Committee on April 20th, 2026

[Maude Pugliese]

Actually, economically speaking, it's interesting to note that I did the study in 2022, just before inflation hit and mortgage rates went up. I did the same study again in 2023 with a smaller sample. We saw a marked increase in debt difficulties, even in the category of people who said they had gone into debt simply to buy a house or a car. These are indeed environmental effects that can have an impact.

That said, I still believe that excessive debt issues are very much related to the context in which people take on debt at the outset. It often happens in an emergency or when there are no other options. That's often when people are likely to turn to debt products that are ultimately more expensive than what they can afford based on their income.

[Jean-Denis Garon, Bloc, Mirabel, QC]

That leads me to my second question. At the end of your opening remarks, you were very graciously cut off by the chair, but I know you were going to talk about the fact that some low-income households also need credit. There are times when people need it, and what the market often has to offer these individuals, who are considered very high risk, are products with very high interest rates. They may not be aware of the other products available to them, or it may take them longer to go to the bank to get a line of credit. So they don't tend to do that.

I would like you to tell us about the need for credit for low-income people. What tools are there? Are they underutilized? What tools could be developed?

[Maude Pugliese]

There are few tools and they're very fragmented.

There are some initiatives at the community level. For example, there are credit unions, but very few of them. That's the point I wanted to make: There are legitimate credit needs out there. Currently, supply is really dominated by players in the alternative sector. We know, for example, that different parts of government—

[Jean-Denis Garon, Bloc, Mirabel, QC]

Can you give me an example of a player in the alternative sector? Give me the worst example you've ever seen.

[Maude Pugliese]

Payday loans are an example. There are online loans people take out that not only have interest rates, but also all kinds of administrative fees that are not currently considered interest rates. They're charging very high fees.

Are there ways to provide more support for initiatives in credit unions, for example, knowing that the Canadian government provides a lot of support to the mortgage sector?

[Jean-Denis Garon, Bloc, Mirabel, QC]

The banks would simply tell you that these people are high risk, and that the interest rates charged solely depend on risk. What would you say to those bankers who would tell you that, ultimately, the market simply can't offer what you're asking for?

[Maude Pugliese]

I get that. Arguably, that's not necessarily the banks' role per se. The idea is to look into co-operatives.

Also, should we be asking more of the banking sector? These are interesting and innovative questions to ask ourselves right now on this topic. For example, do banks have a duty to serve the public, as they do in other countries, particularly in France?

[Jean-Denis Garon, Bloc, Mirabel, QC]

I'd like you to tell me about the importance of the social safety net.

Earlier, a witness here in the room told us that we save less than Americans. That’s true, but Americans have to insure themselves against all sorts of things that might happen to them, whereas that’s not necessarily the case here. That’s not the only reason. I started by mentioning the employment insurance program, which leaves nearly one in two workers out in the cold.

What role does the social safety net play in preventing the excessive debt that can result from potentially unexpected life events?

[Maude Pugliese]

I think this can be a major issue for three types of situations, as I mentioned. There’s job loss, but there’s also disability. Once you become disabled and are receiving welfare, even saving money can reduce your welfare benefits. So this is really a problem.

There is also the arrival of children, which is increasingly having an impact. I wanted to highlight that. In this regard, child care networks play a role. It is more often women who take leave, but when that leave ends—

[The Chair, Liberal, Karina Gould]

Thank you, Ms. Pugliese. We have to stop there.

Thank you, Mr. Garon.

[Maude Pugliese]

Okay. Thank you very much.

[The Chair, Liberal, Karina Gould]

Ms. Cobena, go ahead for five minutes, please.

[Sandra Cobena, Conservative, Newmarket—Aurora, ON]

Thank you, Chair.

My question is for Mr. Hoyes. You mentioned in your opening statement that you're seeing that Canadians have higher levels of debt for a longer period of time. Can you expand on that? What do you think is driving that?

[Douglas Hoyes]

I think what's driving it are the ins and the outs. Incomes have not risen as fast as expenses have, so how do you bridge the gap? You get credit. You have the ability to borrow more and more. There are many different.... As I said, we layer. It used to be that you'd get a bank loan. Well, now you can get a bank loan, and then you can get a credit card, then finance company loans and then payday loans. When you layer all those things on top, you end up with more debt. It's not just a higher dollar number, but the number of creditors you have is also larger. That's obviously what puts people into more and more trouble.

[Sandra Cobena, Conservative, Newmarket—Aurora, ON]

You mentioned the statistics, that an average amount of debt is $67,000, and an average number of creditors is 10 per Canadian. Is that right?

[Douglas Hoyes]

Yes, that's correct. That would be something like three or four credit cards, and then a bank loan, perhaps some CRA debt, a finance company loan and then, perhaps...well, one to five payday loans.

[Sandra Cobena, Conservative, Newmarket—Aurora, ON]

You deal, of course, with Canadians who have been driven to insolvencies. You also mentioned that the number of insolvencies we're seeing today is actually a modest number. Can you talk about that?

[Douglas Hoyes]

That's correct, because there's a big lag effect. If you lose your job today and your income stops, you don't go bankrupt tomorrow. You refinance. You delay payments. It takes a long time, so the problems that are percolating under the surface are going to create higher insolvency numbers over the next one to two years.

[Sandra Cobena, Conservative, Newmarket—Aurora, ON]

It's interesting, because we had Statistics Canada here at the committee, talking about food, housing and transportation being more than Canadians' income by roughly 104%, and Canadians being about $200 away from not being able to meet their financial obligations. Is that something you see as well? Do you see that Canadians are going into debt because they're struggling to cover their basic expenses?

[Douglas Hoyes]

Yes, and the expenses you mentioned...well, those are the expenses that pretty much everybody has. My typical client, last year, had a take-home pay of just over $3,400 a month. If you live in Toronto and you're paying $2,100 or $2,200 a month just in rent, it's not hard to see that there's just too big a gap, and that gap gets filled with borrowing.

[Sandra Cobena, Conservative, Newmarket—Aurora, ON]

It's interesting, because, just the other day, the Prime Minister said that affordability has not been this good in the last 10 years, yet Canadians are going into debt to pay day-to-day expenses. You mentioned that it is, in fact, a structural problem. Can you talk about that?

[Douglas Hoyes]

Yes, we talk about financial literacy, but if my income is $3,400 and my expenses are $3,600, I don't know what more someone can do other than increase their income or reduce their expenses. That's why I say it's a structural problem, and it's not an easy thing to solve.

[Sandra Cobena, Conservative, Newmarket—Aurora, ON]

Would you agree, then, that the Prime Minister was wrong when he said that affordability is the best it has been in the last 10 years?

[Douglas Hoyes]

I don't have historical comparisons. All I can tell you is that my clients are coming to me, saying, “My expenses are higher than my income. I can't make a go of it.”

[Sandra Cobena, Conservative, Newmarket—Aurora, ON]

There was an MNP report that showed that 59% of Canadians are actually struggling with housing pressures. Have you noticed these constraints or concerns in your own line of work?