National Council of Welfare

Conseil national du bien-être social



             Canada's banks and other financial institutions should stop
making excuses and get serious about providing services to poor
people, says a report by the National Council of Welfare published
today. The Canadian Bankers Association and the head offices of its
member banks have promised repeatedly to make it easy for people to
open accounts or cash cheques, but their commitments are routinely
ignored by branch banks, says the report, Banking and Poor People:
Talk Is Cheap. The basic problem is that too many bank employees at too many
branches refuse to accept the types of identification presented by
poor people - contrary to the policies laid down by their own head
offices. "Survey after survey has shown widespread ignorance and
disregard for head office policies on identification. Most of the
survey results are unequivocal. Breaches of policy are the rule
rather than the exception." The bankers association is taking more aggressive measures
to bring wayward branches into line with inserts about opening
accounts and cashing cheques that are being mailed with federal
government cheques this summer and fall. -2- Recipients are being urged to show the inserts to any bank
staff members who seem unaware of their employer's stated policies.
The inserts are issued under the authority of the federal Minister
of Finance and include toll-free numbers to call to complain about
breaches in policy. The National Council of Welfare says deviations from head
office policy simply should not be tolerated. The report also calls for financial institutions to start
offering "no-frills accounts" that would guarantee consumers 16
basic transactions a month for a fee of $2. It urges the federal
government to impose a moratorium on branch bank closings to ensure
that access to service does not deteriorate further, and it
recommends that an independent consumer advocate's office be
created to resolve consumer complaints. The Council stops just short of calling for an outright ban on
bank mergers. It recommends that no mergers be approved unless the
federal government is "absolutely convinced" that they are in the
public interest. "The National Council of Welfare can see no public good
arising from the banks' current obsession with mergers, but it
does fear that poor people, poor communities, bank employees and
even bank stockholders could feel the pinch if the merger plans
are not blocked by the federal government," the report says. One reason for not allowing the mergers proposed earlier this
year would be to curb the financial and political clout of Canada's
largest financial institutions. "It is disturbing to hear financial analysts already raising
questions about the ability of the federal government - the symbol
of our democratic ideals as a nation - to block mergers of
federally chartered financial institutions. If the Royal Bank
of Canada and the Bank of Montreal are already beyond the control
of the government which issued their charters, imagine what the
mega-banks of tomorrow might do." -3- One chapter of the report deals exclusively with ways to
make financial institutions accountable to the public for their
decisions on loans and credit. It proposes that all financial
institutions publish detailed information on housing and consumer
loans and loans and lines of credit to small and medium-sized
businesses. The information for personal loans should include
applications, approvals and rejections, and should be available
in each census tract by the sex and income class of applicants.
The information on business loans should be available by census
tract and the type and size of businesses. The purpose of these sweeping disclosure requirements is
to answer definitively the question of whether banks and other
institutions do a good job of serving the needs of low-income
people and businesses in low-income neighbourhoods. "If financial institutions are as good as the industry claims,
this kind of information would be proof positive. If they really
do not measure up to their rhetoric, the information would warn
consumers and governments alike that remedial action needs to be
taken." Similar disclosure requirements have been in force in the
United States for many years under the Community Reinvestment Act
and the Home Mortgage Disclosure Act. The National Council of Welfare is a citizens' advisory group
to the Minister of Human Resources Development. ---------------------------------------- For further information, contact: National Council of Welfare 1010 Somerset Street West, 2nd Floor Ottawa K1A 0J9 (613) 957-2961

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