I want to begin by thanking you for inviting me to join you today.
It is my pleasure to talk to you about what we are doing at the Financial Consumer Agency of Canada, and more specifically about how our financial literacy work can help with today's discussion on income security.
First, I would like to explain FCAC's mandate to protect financial consumers. We do this in two ways. First, we are a market conduct regulator, responsible for the supervision of financial institutions such as banks on consumer protection issues. Our second mandate at FCAC is to play a national role in strengthening financial literacy, which we define as having the knowledge, the skills, and the confidence to make responsible financial decisions.
In 2014, the federal government named me as Canada's first financial literacy leader to provide national leadership on this issue and to work with stakeholders toward strengthening the financial literacy of Canadians.
At the FCAC, we believe that financial literacy is a vital life skill. It can play a role in income security for seniors, but also for people of all ages.
I would like to share some research findings on the challenges seniors face. I will then explain how financial literacy can be useful.
In 2009 and again in 2014 we fielded the Canadian financial capability survey, which examined the financial knowledge, skills, and behaviour of Canadians. Our analysis found that debt is a growing issue for seniors. Specifically,19% of retirees in Canada had a mortgage on their primary residence in 2014, up from 16% in 2009. The proportion of retirees with an outstanding credit card balance increased to almost 15% in 2014 from 12% in 2009.
Our research also found that high-interest payday loan use doubled between 2009 and 2014, from 1.9% to 4.3%—still a fairly small number, but it's a worrying trend—and that 13% of these borrowers were seniors.
Bankruptcies among seniors are also on the rise. According to statistics from the Office of the Superintendent of Bankruptcy, 10.9% of personal bankruptcies in Canada last year were filed by seniors age 65 and older, and 6.9% were filed by people age 60 to 64. This means that in 2016 alone, seniors and near seniors filed 18% of personal bankruptcies in Canada.
Another trend to highlight is that we know more seniors today are responsible for saving more for their own future and that they are also living longer, which is a good thing. However, this means that we need to plan and save for a longer retirement and budget for the possibility of higher health care costs.
Finally, I should mention the growing body of research showing that financial literacy is closely connected to physical and mental health. A majority of Canadians ranked money as their number one cause of stress—higher than work, health, or family obligations.
I'll turn to the important role of financial literacy and what it can do to address these issues.
Financial literacy can actually help people feel in control of their money and be more confident when making financial decisions in an increasingly complex financial world. We found through our analysis of the Canadian financial capability survey that when seniors and near seniors feel more confident in their ability to make ends meet and to choose financial products, they are more likely to have planned financially or be planning for their retirement.
Financial literacy is of course not only important for those preparing for retirement, it is essential for people living in their senior years. In the first year of my mandate, we held consultations across the country with organizations and individual Canadians. Based on our findings, we developed and launched, as an early milestone, the seniors financial literacy strategy. I have brought copies here today. It sets out four goals as a foundation for moving forward on financial literacy.
To implement this strategy, FCAC developed specialized content for seniors and near seniors. For example, we have information on planning for and living in retirement that includes how to set up a budget, how to use credit wisely, how to access government benefits, how to protect yourself from fraud and financial abuse, and what to do if you're a victim.
We've also worked closely with our federal government counterparts at ESDC to develop stronger and clearer messages for their online Canadian retirement income calculator.
We also coordinate efforts with others to advance the goals of our seniors strategy. We work with the members of my national steering committee, which is a committee of 15 executives from all sectors, who are helping to implement that strategy.
We also leverage 13 financial literacy networks across Canada that represent more than 500 organizations in the public, private, and non-profit sectors. We provide them with free, unbiased material that can be adapted and delivered directly to seniors in their communities.
Research and consultations with Canadians and organizations confirm the fact that financial literacy is a key skill for everyone in today's society.
In 2015, we launched the National Strategy for Financial Literacy—Count Me In, Canada, which has three broad goals, to encourage people of all ages to: manage their money and debt wisely; plan and save for the future; and prevent and protect themselves from fraud and financial abuse.
Many initiatives are under way to help all Canadians reach these goals. Financial literacy is now taught in all educational jurisdictions across Canada, and I'm pleased to report that our 15-year-olds ranked second among the 15 countries that recently completed an international research survey.
FCAC and our partners are now working at getting financial literacy into the workplace to reach our Canadian adults. We currently have pilot programs under way, but there are some challenges for FCAC and other organizations that are trying to boost financial literacy among seniors.
First, we in government need to work better to integrate financial literacy into our programs. One good initiative is FCAC's work with the CRA's community volunteer income tax program, which helps low-income people complete their income taxes to access benefits.
We are disseminating some brochures to help people better understand their banking rights, like the right to cash a government cheque for free, and for those people who receive the GIS, they have a right to no-cost accounts at eight financial institutions.
Second, there are many valuable organizations in communities that help seniors, but more support is needed for these organizations.
One example of a grants and contributions program that is very effective is ESDC's new horizons for seniors program. It has helped to fund many programs in communities to help with the issue of financial abuse and fraud among seniors.
Financial literacy is a vital life skill. It helps people acquire the necessary knowledge, skills and confidence to make financial decisions that are tailored to their needs.
Momentum is building, and my goal is to ensure that seniors are supported no matter where they are.
Thank you very much.