As modern society evolves toward open data movements in government, healthcare, and banking, it is important to note that North American society was not built on the foundation of the right to know of the citizen.
American sociologist Michael Schudson has exposed how consumer rights movements were largely based on the demands of environmental activists, consumer rights advocates and investigative journalists between the 1950s and 1970s. Schudson describes this tendency to modern transparency in his book, “The Rise of the Right to Know: Politics and the Culture of Transparency, 1945-1975”.
Schudson’s book campaigned for greater openness in several areas such as truthful communication in health care and transparency at all levels of business and government. Today, in a time of constant information and uncertainty amid COVID-19, it is important to revisit this idea of consumer rights, especially around consumer debt.
Most find it difficult to open up about their finances and may lack the courage to ask for help.
Generally speaking, consumer rights ensure that people get accurate and unbiased information and that they are not abused. Moreover, being informed about individual rights increases economic well-being and the health of society by strengthening the demand for openness and encouraging industries to make ethical progress.
In the area of consumer debt, access to unbiased and confidential options is essential. Most find it difficult to open up about their finances and may lack the courage to ask for help. Despite a recent drop in the household debt-to-income ratio and a decline in consumer insolvency, Canada is a heavily indebted country — and that won’t change any time soon.
In a recent survey by Credit Counseling Canada, Canadians revealed the problems they face when applying for financial assistance. The biggest challenge was lack of attention to financial well-being and education (72%), followed by lack of transparency around fees (70%), conflicts of interest, and lack of transparency around fees. motivations of the organization (69%).
The survey also focused on what motivates people to get out of debt. It’s one of the oldest tropes of recovery, and a statement that’s been repeated for decades: you have to hit rock bottom before you can change course. Surprisingly, nearly four in 10 Canadians wouldn’t know where to turn when they hit rock bottom.
Significant work needs to be done to increase awareness of consumer rights in debt and debt relief. Canada is taking steps in the right direction. The Financial Consumer Agency of Canada recently renewed its Consumer Protection Advisory Committee, with the aim of strengthening financial literacy and ensuring that appropriate regulations are in place. Nevertheless, more can be done.
Canada should look to models in the UK, Australia and New Zealand – which together have invested more than $115 million in financial relief services to complement their COVID-19 relief packages. Although Canada reacted quickly to deal with the immediate emergency, there is no long-term strategy to strengthen the financial well-being of Canadians beyond the crisis. These countries put the interests of indebted consumers first and developed a progressive framework of sustainable options, including the essential non-profit credit counseling service.
Protecting the right to impartial, safe and comprehensive debt relief requires the action of several actors. Governments, local community foundations, and charitable foundations can come together to support the financial literacy goals of nonprofit credit counselors. Funding can also be used to help change the economics of debt repayment by incentivizing banks and credit unions to innovate, and community centers and organizations can provide space and resources for debt education. consumers. Meanwhile, Canadians can look to Canada’s nonprofit Certified Credit Counselors as a good place to start.
There is no panacea for the consumer debt problem in Canada. A cross-sector and collaborative approach that includes the not-for-profit credit counseling sector is essential.
The way forward is clear: a dual commitment to economic transparency and a phased approach to consumer debt. An egalitarian society progresses when consumers have better access to information and a set of protected rights. As we navigate the second wave of the pandemic, we must strive to enshrine and elevate these rights.
Michelle Pommells, CEO
Credit Counseling Canada