| It’s another chilly afternoon in Calgary and Phil Bilodeau, 32, is looking for work.
Originally from Quebec City and travelling the country for the past four years, Bilodeau picks up roofing jobs and temporary work when he can. He doesn’t yearn for a white picket fence and three squares a day, and because of that carefree spirit, Bilodeau says he hasn’t had a bank account for more than 10 years. Now he believes he can’t get one.
"I don’t make enough money right now," he says. "I don’t have a stable job right now."
Legally, all that is required to open a bank account in Canada, as set out in the Bank Act, is two pieces of identification, which can include a birth certificate, social insurance number, Canadian passport, health insurance card or driver’s licence issued in Canada. Failing that, you can still open a bank account with one piece of ID and someone who is willing to vouch for you.
Yet according to Duff Conacher of Democracy Watch (based in Ottawa) hundreds of thousands of Canadians have quit going to banks. He suspects that even though the laws have been changed to make it easier for low-income Canadians to access banks, many are still being turned away illegally.
"You can’t be required to carry a minimum balance and you can’t be required to be employed," he says. "But they’re not made to feel welcome if they’re not dressed or coiffed like the wealthy people the banks want to deal with."
To test those assertions, I set out to open an account at two local financial institutions. Dressed in a sweatshirt and shorts and armed with two pieces of identification, I first enter the downtown branch of TD Canada Trust. At first everything seems to be going well until the bank employee, assuming I’m unemployed (because I don’t want to deposit any money or set up an automatic deposit from work), needs to put a code into the bank’s database before she is allowed to issue me an access card for the bank’s network of automatic teller machines. She explains there are four options: retired, homemaker, student or unemployed. Explaining to her that none of those labels apply to me, the staff member suggests she retrieve the bank manager to help me. The TD Canada Trust bank manager enters the cubicle-office and says he doesn’t know what the codes are for, but they "may be for marketing reasons." Despite that I’m told I’m not getting the card. When I ask if the bank has someone I can speak to about the situation, the manager says he can "pass my concerns on for me." With further prodding, he finally produces a brochure titled, "If you have a problem or concern..." which explains how I can contact the TD Ombudsman in Toronto. So, I can open a bank account, but can’t have a card to access bank machines.
Then I head just down the block to what I hope will be the more accommodating premises of First Calgary Savings – a local credit union. The receptionist there explains that to open an account with them, I need two pieces of identification as well as $25 for shares, and I will be required to have a credit check completed. The receptionist tells me First Calgary Savings is allowed to ask for $25 and the credit check – in addition to two pieces of identification – because they’re not regulated by Canada’s Bank Act. (Note: In fact credit unions in Alberta are regulated by the provincial body of the Credit Union Deposit Guarantee Corporation.)
To help consumers respond to such situations and in an effort to improve access to banks, Conacher’s organization formed the Canadian Community Reinvestment Coalition. The CCRC lobbied the federal government to create a body that would protect consumers. The government’s response was to create the Financial Consumer Agency of Canada, which is an arm of the federal government. Headed up by William Knight, its inaugural commissioner, who is the past president and CEO of Credit Union Central of Canada, the FCAC has a mandate to offer consumer protection and consumer education.
Under that mandate, the FCAC conducted a "mystery shopping" exercise at 1,653 branches across the country (including 173 in Alberta) between March and June of 2003. The FCAC checked out a variety of concerns, such as whether banks disclosed their service fees or posted a notice if a branch was to be closed. However, what they failed to do was have their 250 mystery shoppers attempt to open new bank accounts.
That doesn’t surprise Conacher, who says the FCAC is a "place for people to call," but not much more. "Consumers are on their own," he says.
Instead of the FCAC, Conacher believes an independent financial consumer organization, staffed by lawyers, consumer rights activists and consumer lobbyists, should be formed to act as a consumer rights body. He argues that a consumer-driven organization could counter the influence of the more than 100 lobbyists that he says represent the country’s financial institutions "wining and dining" anyone who can help Canadian banks continue to prosper.
"All the federal government has to do is have the banks put a pamphlet in with the bank statements, maybe once or twice a year," Conacher says. "The pamphlet would ask people to join a financial consumer organization."
He estimates that even if only two per cent of the more than 20 million Canadians with bank accounts were willing to pay $30 per year to support the idea, that would translate into an independent body of 400,000 people and a $12 million annual budget – effectively, it would unleash an organization that would keep a close watch over how Canada’s banks treat consumers.
It’s the kind of idea Edmonton activist Sheryle Carlson is all too happy to support. Fed up with Canada’s banks, the full-time political science student at the University of Alberta and part-time filmmaker is now in the process of making a documentary about changes that she believes need to be made to Canada’s banking system.
"The banking industry is servicing a widening gap between the rich and poor," says Carlson. "I think it’s a God damned conspiracy."
Rather than a profit-driven system where huge corporations compete for an even bigger piece of the pie, Carlson thinks consumers and government need to look at money in another way.
"I believe there are a lot of changes that can be made," she says. "In the U.S., banks have to reinvest money back into the community. Canada doesn’t have that. It’s a debt-based system. It’s important to note that money is a public resource."
Cash may be a public resource, but profit is what drives Canada’s banking system. In the first business quarter in 2005, Canada’s so-called "big five" banks saw first-quarter profits rise by millions of dollars: Bank of Montreal – $602 million; TD – $630 million; CIBC – $707 million; Scotiabank – $704 million; and the Royal Bank – $979 million.
Analysts say this situation is likely to continue for the rest of 2005 with banks enjoying higher revenues due to cost-cutting measures, record profits from credit card debt and a generally healthy economy.
Meanwhile, Phil Bilodeau is still walking Calgary’s streets, hoping to find work. And if he does land a job, he might find out he’s still not welcome at Calgary’s banks and credit unions.
Savings Circle
For the first time ever in Calgary, a Savings Circle program is being launched. Dedicated to helping low-income Calgarians learn more about personal finance – and make a major purchase in the process – the program is being delivered by MCC Employment with funding provided by the United Way.
"We will be working with people in low-income situations who are moving toward a purchase of an asset," says Andrea Shaw, financial literacy facilitator at MCC.
Shaw says each member of the group will save between $5 and $40 per month to a maximum of $250. At the end of a six-month period (which includes the initial 10-week group and a three-month follow-up), the savings will be matched at a three-to-one ratio.
"If someone saves $250, they will then receive $750," says Shaw.
The $1,000 total would then be dedicated to the purchase of a practical item that would help the person or family in their day-to-day life.
"They might buy a washing machine or some furniture," says Shaw.
The former teacher turned financial facilitator says the first 10 weeks of the group will focus on helping members learn more about personal finance, including: opening a bank account, budgeting, accessing credit and repairing a poor credit rating.
Future Saving Circles are also being planned for September 2005. For more information contact Shaw at 272-9310, ext. 244. |
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