Introducing FCAC and Financial Literacy Month
Welcome. Each November we promote Financial Literacy Month organizations like IIROC use it as an opportunity to raise awareness about the importance of helping Canadians improve their financial knowledge and their financial well-being but just as importantly it is a topic that deserves attention. Throughout the entire year, everyday life requires financial literacy skills. That’s why as a public interest regulator, we’ve been working collaboratively with the Financial Consumer Agency of Canada and other nonprofit agencies together we are developing sharing and communicating resources that will help Canadians make sound and informed financial decisions as they navigate through their different life stages. Today we are pleased to have Jane Rooney, Canada’s first Financial Literacy Leader joining us. She will, among other things, discuss the work she has led in developing a national strategy for financial literacy and the importance of partnerships like ours. Jane, we are absolutely delighted to have you here with us. I’d like to begin by having you share some background that led to the creation of your role and the development of the National Strategy for Financial Literacy. Thank you very much for inviting me, Lucy, to participate in this webcast. The Financial Consumer Agency of Canada where I work focuses on consumer protection and we are responsible for regulatory oversight of federal financial institutions. We supervise and monitor these institutions with regard to consumer issues. In 2014, the federal government appointed me as Canada’s first Financial Literacy Leader, the government added my role within the agency after receiving recommendations from the task force on financial literacy. The government felt there was a need to improve Canadians’ financial literacy because of growing consumer debt. The fact that consumers weren’t saving as they used to and the increasing complexity of financial services and the emergence of new services and products that can be difficult to understand when I took on the role across the country to talk to Canadians about the importance of financial literacy and to get a range of views on how to help people enhance their knowledge, their skills, and their confidence in dealing with money matters. That’s how we define financial literacy having the knowledge skills and confidence to make responsible financial decisions based on our consultations and research. We developed the National Strategy for Financial Literacy – Count Me In Canada. Our strategy sets out goals to help Canadians better manage their finances and make appropriate decisions as their needs and their circumstances change. Jane how financially literate are Canadians and what does your research tell us about this? We just received some very positive results from the Organisation for Economic Co-operation and Development, OECD. I was at a symposium recently in New Zealand where OECD’s international network on financial education, of which I’m a member, released a study that placed Canada third overall in an international financial literacy ranking of 29 countries. The survey measured financial knowledge attitudes and behavior. It was the first time Canada was included in the study. France came first followed by Finland and, interestingly, Norway tied Canada for third-place. It showed some areas for improvement and some gaps, though Canadians’ confidence needs a boost and there were gender differences in Canada. Results showed more than 70% of men scored high on financial knowledge compared to only 50% of women. More specifically, women scored lower than men on questions related to compound interest and inflation. We also know from our own research that there is some room for improvement. Every five years, Statistics Canada carries out a Canadian Financial Capability Survey for FCAC. Our latest numbers from 2014 show that less than half of Canadians, in fact only 46%, have household budgets. Yet among those who do have a budget, 93% of those stick to it most of the time. Retirees, those 55 and older, who are still working with a budget, are twice as likely to know how much they need to save for retirement as their peers without a budget, 31% of canadians are struggling to make their financial commitments while 42% of those 35 to 44 years of age are struggling to keep up with bills and most people, 60% in fact, don’t know how much they need to maintain their desired standard of living. In retirement, we identified other trends from the survey including increasing levels of household debt among retirees. From 2009, when we did the first survey, to 2014, the percentage of retirees over 65 with mortgages and outstanding credit card balances had increased payday loan use is also rising and many Canadians lack access to emergency savings. There’s also an explosion of FinTechs. In the auto market, long-term loans are a huge trend and a concern as they draw consumers who are attracted to low monthly payments. Yet consumers are paying interest for a longer period of time. So where do we start given the gaps and financial literacy? Budgets are the first step. And they can protect consumers from financial surprises and unexpected expenses. They help people prioritize their expenses and they’re particularly effective when used by people under financial stress. Can you tell us a little bit more now about the goals of the national strategy and what you’re trying to achieve? The strategy has three goals to help Canadians. The first goal is to help people manage money and debt wisely. The second is to help them plan and save for their financial future and the third is to prevent and protect against fraud and financial abuse. I’m very proud to say that our national strategy has been nominated as a finalist in the Global Inclusion Awards by an organization called Child and Youth Finance International. So Jane, let’s switch gears a little bit now and can you tell us a little bit more about the specific demographics that you’re trying to reach? Yes we target groups with outreach activities and those target audiences are youth, people with low incomes, indigenous peoples, and our seniors population. FCAC has a life stage approach to its content on its website but it’s also presented by topic so that anyone can find the information they need.