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Financial Literacy Matters | By Peter Nares
The Great Recession of 2008 detonated an explosion of interest in financial literacy in most industrialized countries, including Canada. However, the force of the explosion in our country, at least at the federal level, has waned considerably since then.It has been more than three years – and two successive federal budgets – since the Government of Canada committed to improving the financial literacy of Canadians, 18 months since the Task Force on Financial Literacy filed its report with the government, and almost a year since the government announced that it would appoint a leader to implement the Task Force’s recommendations. The government’s promises, particularly to appoint a financial literacy leader to create and champion a national strategy, are contingent on the passage of Bill C-28 – legislation which was initially defeated and now sits, once again, before the House of Commons Finance Committee.The time the Committee is taking to pass the Bill enabling action on the Task Force’s recommendations is frustrating when one considers that the issues that drove the government to create the Task Force in the first place have not improved. These include rising personal debt loads, declining savings rates, poor consumer decision making, people living paycheque-to-paycheque, and a complex, hard to navigate financial products/services market.To the contrary, what concerned me in 2000 when I started working on this issue, worries me even more now, some 12 years later.Since 2008, the personal debt-to-income ratio has risen from $1.40 to $1.63. Canadians still aren’t saving enough for their retirement. Education and housing costs have continued to soar. No new initiatives (other than reducing the mortgage amortization period from 30 to 25 years) have been put in place to simplify products and services, and cheque cashing companies now have new partners in the emergence of so called ‘debt relief’ agencies, some of which demand up-front payments to try and negotiate a debt reduction solution that may not be in the best interests of the consumer. In addition, organizations like the Ombudsman for Banking Services and Investments (OBSI) that protect consumer financial interests are in danger of closing.The only real sign of systemic progress since the Task Force filed its report in 2010 is that hundreds of voluntary organizations, in some cases in partnership with the banks, are growing their capacity to provide financial literacy services to their clients.New financial literacy services have sprung up across the country. Hundreds of community groups have been, or have expressed an interest in being, trained to deliver financial literacy to their low-income clients. Newcomer agencies are integrating financial literacy into their settlement programs and banks are looking at loaning their employees to community groups to help them. This multi-sector, on the ground energy and interest is real and represents a real opportunity to begin building an effective and accessible system of financial literacy supports across the country for low-income people – an opportunity that should not be wasted.This opportunity will only be realized on a large scale, however, when the federal government, through the Financial Consumer Agency of Canada, is in a position to announce a financial literacy leader. For this, the Finance Committee and House of Commons must pass Bill C-28 – soon.Whoever the new leader is%
ABOUT THE AUTHOR
Peter Nares, an internationally-known social entrepreneur, was awarded an Ashoka Senior Fellowship in 2008 for his innovative work in socioeconomic development in Canada. As the founder and former executive director of SEDI he recommended the creation of the federal task force on financial literacy.
The CCFL Blog provides a platform for timely discussions and commentary on policy, practice, research and news relevant to the field of financial literacy for low income and vulnerable groups. Contributors include guest experts, community leaders and CCFL staff. The views expressed on this blog are those of the individual contributors, and do not necessarily represent the views of the CCFL.
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