Survey of Canadians views (Direct Marketing) – Conclusions in English

Business Usage of Consumer Information for Direct Marketing: What the Public Thinks

Study Conclusions
This study sheds light on how the general public defines and views issues around obtaining their consent.
Overall, the findings reinforce the importance of obtaining meaningful consent from consumers to the collection, use or disclosure of individual consumer information for secondary marketing purposes, whether internal, among affiliates, or involving third parties. In broad terms, this study points to six conclusions that hopefully will provide guidance to policy makers facing the challenges of implementing aspects of Bill C-6.

Businesses cannot assume anything about consumer consent to secondary marketing. Attitudes vary widely among Canadians. While many do not mind, and in some cases even like, such practices, a significant proportion are not comfortable with companies using their personal information for the purpose of secondary marketing (38 per cent). An even higher proportion of people (48 per cent) object to the sharing of this information with affiliates. Moreover, most Canadians are unaware of the extent to which companies collect, use and disclose their personal information for commercial purposes. For example, 54 per cent of those participating in loyalty programs are unaware of the fact that such programs commonly collect and use their purchasing information for marketing purposes. Clearly, consumers cannot consent to practices of which they are unaware.
Canadians express high levels of concern about unsolicited direct marketing, and particularly about telemarketing. Close to three in four Canadians (74 per cent) are at least moderately concerned about the amount of uninvited personalized marketing material they receive. Telemarketing is a particular sore point, with a clear majority (61 per cent) reporting a preference toward stopping all telemarketing calls to their household even if it means that they miss out on a really good opportunity.

EKOS RESEARCH ASSOCIATES

Canadians want control over the collection, use and disclosure of their personal information by businesses for marketing purposes. A sizeable majority (82 per cent) of Canadians report that businesses should obtain their permission before using their information for further marketing purposes. Obtaining consent is considered even more important when the information is to be shared with an affiliate. More than eight in ten (84 per cent) Canadians feel that it is important that telephone companies obtain their consent before information can be shared within their corporate family, this number increases to 87 per cent for banks.
A clear majority of Canadians do not want businesses to assume their consent to further marketing. Overall, 69 per cent of Canadians do not consider opt-out approaches to be acceptable. Rather, they want to be asked explicitly for their consent if a company wants to use their personal information for marketing purposes. A preference for the opt-in approaches to consent was clearly evident in focus group testing.
Despite a preference for opt-in approach, opt-out approaches to consent for marketing purposes are considered acceptable in certain circumstances. However, acceptance is highly conditional. Opt-out approaches are considered acceptable only if the opt-out provision is brought to the customer’s attention, is clearly worded, provides sufficient detail, and is easy to execute. More than four in five respondents (82 per cent) consider it highly important that the opportunity to opt-out is brought to their attention, with a sizeable 88 per cent reporting that the opt-out process should be clear and easy for them to execute.
In practice, however, examples of the way that businesses have used the opt-out approach fall short of consumer desires/demands, pointing to a need for improvements. Focus group testing of various business forms, which included opt-out provisions, indicated high levels of concern about the failure of businesses to bring this information to the attention of consumers. Lack of sufficient clarity and/or detail about the business practices in question, inconspicuousness of the opt-out opportunity, and potential difficulties in exercising the opt-out were examples of problematic approaches.

Turbulence ahead for Canadian air travel

Turbluence ahead for Canadian air travel, based on US experience
Deregulation itself will not bring about competition without sufficient safeguards

In Canada, the barometer for how a competitive market should work is almost always the United States. When Canadian industries are forced to cut jobs, raise prices, or behave in a consumer-unfriendly manner, the usual rejoinder to public criticism is that the same thing is happening south of the border. The standard Canadian assumption is that the free market cauldron of the United States winnows out inefficiency, high prices, and poor customer service. Canadian utilities who have dined on this questionable folk wisdom for years have now been joined at the table by Air Canada, whose CEO has discovered the escape valve of selectively citing U.S. airline pricing statistics as proof positive of the controlling hand of the market rather than his own airline’s financial dictates.
While more than two decades have passed since Congress deregulated the airline industry, the results for airline competition in the United States are decidedly mixed. While the cost of air travel on an industry-wide basis has dropped an inflation-adjusted average of 37%, major airlines still keep prices high in many markets , while quality remains indifferent.
Public dissatisfaction is being increasingly translated into political action. By mid-1999, six consumer rights bills – one in the Senate and five in the House of Representatives had been introduced to protect passengers from arbitrary airline practices and shoddy treatment. While these Bills were not enacted following airline promises to improve service, proposed new airline mergers and reported declines in on-time performance have spurred the call in 2001 for the passage of similar measures. And though the deregulation reforms were meant to enhance choice, since 1978 the number of large airlines has shrunk to ten from thirty. With further choice-limiting mergers on the horizon, U.S. politicians are struggling to determine how the consumer interest is being served by the current airline market and regulatory structure.

The fortress hub model – remarkably effective in establishing dominant American airlines despite deregulation – appears headed for Canada

The evolution of a consumer-friendly competitive market in the US was frustrated for many reasons. First of all, lower air travel costs stimulated an overall growth in the volume of air traffic even though airports and their infrastructure could not handle the load. In 2000, the FAA noted a 42.3% increase in delays associated with volume of aircraft – 14% of all aviation delays. The high demand for air travel has had a corrosive effect upon airline performance and customer service.
The customer market has also been slow to respond to service variables other than price. Air carriers, therefore, have frequently compromised on service quality standards and, occasionally, on safety, to offer low rates. (Low prices are not an excuse for lousy service, however; Southwest Airlines, is a discount airline that consistently obtains high marks for customer service.)
In addition, airline reservations systems and general industry ticket restrictions conspire to opportunistically price travel for the maximum price, independent of cost parameters, as well as to impede customers from shopping for the best fare. At the same time, airlines have squeezed travel agents who try to provide customers with the lowest cost air fare by cutting travel agent commissions in an effort to force them to charge user fees and reduce travel agency customers.
Perhaps most importantly, the airlines have developed patterns of operation which, in effect, limit the number of competitors there will be in any air travel market for a city pair. The industry structure – the hub and spoke network – confers market power on the airline or airlines that control the huge airports acting as fortress hubs. While the hub structure achieves greater operating efficiencies and economies of scale, it also makes it extremely difficult for competitors to enter the market. Hub incumbents use marketing practices including reservation system manipulation, codesharing, travel agent deals, or market segmentation policies to ensure maximum traffic at the hub where their reputation and their ability to offer a broader range of options tends to prevail. Access to facilities for competitors is often impeded through a number of strategies that preclude or raise the cost of market entry. These include denial of gate space, extraction of excess profits on facilities, and the suffocation of potential new entrant market share through over-scheduling of competing routes.
The fortress hub model has been remarkably effective in establishing patterns of market dominance. In 1998, attorneys general from 25 US states filed a brief with the US Department of Transportation which identified 15 airports at which a dominant airline had a market share in excess of 70%. Six of the ten busiest airports in the US were on the list. These airports handle one third of all passengers boarding planes in America.

Airport	Airline	Dominant Firm Market Share
Atlanta	Delta	79%
Charlotte	US Airways	90%
Cincinnati	Delta	90%
Dallas Ft. Worth	American	70%
Denver	United	70%
Detroit	Northwest	79%
Houston Intl	Continental	79%
Memphis	Northwest	79%
Minneapolis	Northwest	82%
Pittsburgh	US Airways	89%
Salt Lake City	Delta	72%

The concentration of one or two dominant airlines at fortress hubs subverts the operation of a competitive market. In 1995, the US Consumers Association cited evidence that suggested that at least three competitors for a city pair market is required as a key threshold for airline competition to be established. Other commentators believe it takes even more competition than that. Whatever the number, the effect of additional competition on airline prices tends to be dramatic. For example, when a low-cost carrier such as Southwest is introduced into a market, the fare impact is usually in the range of 35 to 40 percent.

“Competition, like exercise, is universally agreed to be good – for other people.” – George Stigler, Nobel Prize economist

The hub market dominance model is particularly costly for consumers. The 1998 multistate brief referenced earlier showed a fourfold increase in fare prices between a hub airport with a monopoly airline and a nearby competitive airport where the flights were to the same destination. Similar observations were obtained for airline fare prices before and after a competitor was driven from a market by hub incumbents.
Incredibly, air fares ranged anywhere from 600 – 1,100% higher following a US competitor’s retreat. Lawyer Mark Cooper wrote an article for the American Bar Association’s “Air and Space Lawyer” in Spring 1999 containing examples of prices rising from $122 and $70 before a was competitor is driven from the market to $843 and $800 respectively afterwards. Canadians are seeing the same thing now with Air Canada charging $99 to fly Halifax to Ottawa to compete with CanJet but $359 to fly from Ottawa from St. John’s where Canjet doesn’t fly. If the competition packs up, Air Canada’s prices would likely go up 300-400%.
When the complex computer ticket pricing systems of the major U.S. carriers are folded into this mix, US air travellers are frequently being denied the benefits of having a transparent customer choice-driven competitive market. Major consumers organizations such as Consumers Union have called for legislation such as the passage of the Airline Passenger Fair Treatment Act to ensure customers better service and to give them the legal tools to deal with what Consumers Union terms the industry’s “greedy pricing policies and practices.”
George Stigler, the Nobel Prize economist once observed that competition, like exercise, is universally agreed to be good – for other people. The behaviour of the major US airlines since deregulation confirms his observation. Deregulation itself will not bring about competition unless sufficient safeguards are put in place and enforced. Such safeguards are necessary to prevent abuse of market power and to protect market entrants from predatory and anti-competitive policies. In Canada, where we have one airline controlling over 80% of the domestic market share, setting prices and quality standards with minimal interference, these lessons are slow to be learned by our public policy makers.
Michael Janigan is Executive Director and General Counsel of the Public Interest Advocacy Centre (PIAC), an Ottawa based NGO providing legal representation and research on behalf ordinary consumers of important public services. They’re on the Web at www.piac.ca

The airline ticket pricing game

Airlines – especially Air Canada – far from transparent about average fares, lowest fares and the games they play to boost ticket revenue

By: Michael Janigan
Perhaps no other aspect of air travel is so filled with inaccurate and misleading information as the market place for best prices for airline tickets. It is a problem that extends beyond national borders. Consumers Union, publisher of Consumers Reports said in a September 2000 media release that “when consumers are quoted prices for tickets, they often presume that these fares represent the best prices among all of the available flights. But that’s not always the case. Sometimes the seller may omit certain fares or certain carriers. When a consumer can’t find the cheapest prices the market has to offer, it raises disturbing questions about the sellers’ motives and biases.”
The same organization has urged that the U.S. Department of Transportation establish a Truth in Airfares Order that would require commercial passenger carriers to disclose directly to consumers the most recently available average fare and lowest fare charged by the carrier for the route and class quoted to the inquiring party.

With each reduction in Air Canada’s passenger capacity, average ticket prices go up

In Canada the lack of transparency is even more problematic due to the presence of a market-dominant airline. Public outcry about the merger of Air Canada and Canadian Airlines centred upon a prediction of diminished seat sales by the merged airline. Post merger, Air Canada, has attempted to mollify critics by pointing to its numerous advertised seat sales and its announcements of fare reductions as proof of their competitive commitments. However, a closer look at the consumer value of these claims is warranted.
On December 14, 2000, Air Canada announcing fare reductions in 600 markets across Canada. However, this good news story evaporated when the fine print was examined. The reductions were only to one class of fares. There are about 10 to 15 different fare classes, each with its own price. For example, there is a seat sale class, a 7- or 14-day advance booking class, full fare class, and so on. Each seat is given a fare class with an associated price. Most of the seats are higher priced with a minority in the lower priced classes. As each seat is booked, the pricing of all other seats change on the basis of a computer-driven program. Once the lower-priced seats are gone, seats in the more expensive fare classes are all that remain. This means that reductions in the number of lower-priced seats can lead to higher overall fares. By reason of the higher load, the remaining passengers have no choice but to take a seat in a more expensive fare class. With this in mind, it should be remembered that the December reductions had taken place after Air Canada announced on February 10, 2000 that it would cut capacity on domestic routes by 15% in the summer of 2000.

Consumers should not bet on a reduction in fares when fuel prices drop

It is also intriguing to monitor the pricing game at Air Canada in light of the prevailing government theory that all its fares are set as if a competitive market existed. The National Post on October 28, 2000, in its article, “Average Ticket Prices up” reported that Air Canada’s fares had increased 9% over the previous year. This increase was measured by the cost of a one-way fare. Part of this increase took place by reason of a 3% fare increase announced in late 1999 and ascribed to increased fuel costs. Interestingly enough, prices were not raised on competitive international routes. But, what is most puzzling is that in a speech on May 16, 2000 at the annual shareholders meeting, Air Canada’s President and CEO Robert Milton said that in 1999 “fuel expenses declined by five percent.”
The same rationale of rising fuel costs was revisited by Air Canada at the end of last year for another round of fare increases. On this occasion, Jet A1 fuel had gone up 6% in 2000 but was expected to drop again in 2001. However, consumers should not bet on a reduction in fares when fuel prices drop. Like any business with monopoly power, Air Canada has the ability to set fares in a largely non-competitive domestic markets to meet rising costs and inflated shareholder expectations. It can also use the revenue to potentially cross-subsidize its more competitive operations. And as we have described earlier, the Canadian Transportation Agency is effectively hamstrung in its ability to set reasonable air fares even if it had the political or regulatory will to do so.
Michael Janigan is Executive Director and General Counsel of the Public Interest Advocacy Centre (PIAC), an Ottawa based NGO providing legal representation and research on behalf ordinary consumers of important public services. They’re on the Web at www.piac.ca

Permanent holding pattern for Canadian air travellers

Despite advantages and perks, Air Canada fails to deliver dependable service and reasonable prices to air travellers

Most air travelers have a collection of airline horror stories which are recounted with a “can you top this” flair to fellow passengers whenever contretemps occur en route. There can be little doubt that the shock value and volume of these stories were vastly enriched by the performance of Air Canada in 2000.
In December, Air Canada punctuated what had been the “annus horribilis” for weary Canadian travelers by announcing plans to cut 3,500 jobs and raise domestic fares an additional 6%. While Air Canada’s president Robert Milton continues to burble about the success of his 180 day commitment to increased customer service, increasing skepticism abounds whether the Canadian domestic airline market will ever be consumer friendly. In a four-part series of articles, we will try to give the frequently-overlooked consumer perspective on the current crisis in airline travel in Canada.

Air Canada was more interested in benefits for shareholders than for the ticket-paying client public so it threatened the collapse of its Canadian Airlines rescue plan if it did not get its way

In order to understand how we got here, a brief review of recent airline history is required. By the summer of 1999, Canadian Airlines had stumbled through a decade of mostly consistent losses and had shown little success in attracting market share in profitable eastern markets dominated by Air Canada. Canadian Airlines ownership was desperate to rescue their investors and bring about an end to its losing battle with Air Canada. This was not how the brave new world of deregulated airline service was supposed to evolve when it was launched in the 1980s by the Mulroney government. Market forces were to unleash a raft of new airlines to compete with the newly-privatized Air Canada.
It didn’t happen. In fact, by the time that the merger wars between Air Canada and the Gerry Schwartz- owned ONEX Inc. commenced in the fall of 1999, most major Canadian airline markets were served by a duopoly that was only intermittently competitive. The duopoly, however, had been successful in squeezing out competitors such as Greyhound and Vista Jet in eastern airline markets in the 1990s. The result was that by 1999, fares for major routes had increased almost 50% since the collapse of the competition in mid-decade.
When Air Canada finally emerged victorious from its takeover struggles with ONEX, the federal government was faced with the dilemma that it now had a deregulated merged air carrier with market dominance, controlling over 80% of the domestic airline market in Canada. There were few easy escape routes for the government or the Minister. After years of deregulation and cutbacks, Transport Canada lacked the information, expertise, and most importantly, the will to impose public interest regulation on the fares and quality of service of the new monopoly. Air Canada, clearly wishing to direct the efficiency benefits of the merger to their shareholders, rather than the ticket-paying client public, chafed under any suggestion of regulation of financial return and threatened the complete collapse of its Canadian Airlines rescue plan if it did not get its way. Critics of the entire merger process, including the federal Commissioner of Competition, and the House of Commons Standing Committee on Transport, argued that international competition for Air Canada on domestic routes was the only way to protect consumers.

Air Canada rationalized the operations of two merged carriers with the finesse and sensitivity of Idi Amin, resulting in over-booking, flights canceled without explanation, lost baggage, and frequent delays

In the end, the government imposed some makeshift solutions and tried to scuttle crabwise away from the problem. It refused to regulate airfares on monopoly routes but left the Canadian Transportation Agency the option of rolling back fares upon complaints based upon the Canadian historical record of fares (which given the pre-existing duopoly was hardly an onerous test for Air Canada). It gave the Commissioner of Competition new powers to intervene to deal with predatory pricing by Air Canada and made Air Canada enter into undertakings to allow sharing of essential facilities with new market entrants. Finally, it appointed a Complaints Commissioner and an Independent Observer to report on the airline industry within a two-year time frame.
Air Canada, meanwhile, went about the business of rationalizing the operations of the two carriers with the finesse and sensitivity of Idi Amin. Its efforts to maximize load on all routes led to over-booking, flights canceled without explanation, lost baggage, and frequent delays. Changes to longstanding carriage arrangements at Toronto’s Pearson airport exacerbated the confusion. At the same time, minimal or non-existent customer service fueled a national sense of exploitation by Canadian customers left without an airline option.

Robert Milton told Air Canada investors in November the merger had earned $700 million. Customers are still waiting to see their share.

By the end of the summer of 2000, Air Canada was moving to smother the flames of customer disenchantment with Milton’s 180-day service commitment. At the same time, the company crowed in the financial pages about increases in operating income achived by cost-cutting measures that helped to cause the service problems. Air Canada’s December announcements seem to put such even those limited commitments in doubt. While Milton told investors in November that the merger had generated $700 million worth of annual benefits for Air Canada, customers are still waiting to see their share.
The federal government placed most of its consumer protection eggs in the basket of increased Canadian-based competition to Air Canada. However, there were no controls placed upon the ability of Air Canada to subsidize price cuts in competitive air route markets with fares charged on monopoly routes. This was unlike standard regulatory practice in place in such industries as telecommunications or energy to encourage market entry where there is a player with market dominance. While the government assured Canadians that Air Canada was under an obligation to charge reasonable fares on all routes, the airline’s actions in immediately reducing fares by over fifty percent in markets where competition emerged seemed to mock the claims of the government that Canadians were not overpaying on monopoly routes.
Air Canada’s determination to fight the loss of market share to new competitors with deep discounts was so transparent that the Competition Commissioner was compelled to issue an interim order restraining Air Canada’s price cuts on routes serviced by CanJet pending a full investigation. The order was sustained despite two judicial appeals by Air Canada. And while Air Canada’s current and erstwhile competitors are hopeful that they can survive in their own market niche, the December announcement of substantial fare hikes by the main player leaves no doubt who still has carte blanche in the domestic air travel market.
Michael Janigan is Executive Director and General Counsel of the Public Interest Advocacy Centre (PIAC), an Ottawa based NGO providing legal representation and research on behalf ordinary consumers of important public services. They’re on the Web at www.piac.ca/

PIAC Applauds New Financial Sector Legislation

Consumer Group Applauds New Financial Sector Legislation, But Warns that Further Measures are Needed to Protect Consumers

Last year, consumers organizations called on the government to implement a Consumer Charter for Financial Service Reform. “The new legislation is a good step foward in implementing the Consumer Charter,” said Angie Barrados, Researcher, Public Interest Advocacy Centre. “We are pleased to see that most of the elements of the Consumer Charter are included in the legislation.”
However, the legislation does not deal with emerging consumer problems, such as the proliferation of unregulated “white-label” ATMs. Also, the details of many important consumer measures are not clear because they are to be implemented through regulations and MOUs.
This is how the government’s new legislation compares to the Consumer Charter for Financial Service Reform:

Creation of a Consumer Protection Bureau A

“Setting up the Financial Consumer Agency of Canada (FCAC) is an important step forward. This is the first time that there will be real oversight of banks’ consumer protection commitments,” said Barrados. “As the new Agency is being set up, we will be watching carefully to ensure that it is given enough resources and a wide enough mandate to be an effective watchdog for consumer interests.”

Guaranteed Access to Financial Services for Vulnerable Consumers B+

“This legislation contains important steps toward universal access to basic financial services, such as the low cost account and the rules on opening bank accounts. These measures are to be implemented through regulations and MOUs, so we can not give the government an “A” until the details are negotiated. Also, we are disappointed that there has not been any action on cheque hold policies,” said Barrados.

Support for Independent Research, Oversight and Advocacy Incomplete

“The government gets an “incomplete” here because we have not seen a clear commitment to ensuring a public voice in on-going consumer protection in the banking sector. For instance, we would like to see a consumer advisory committee to the FCAC,” said Barrados.

Ensure Bank Branch Closures are Handled Responsibly in the Public Interest B-

“Since the whole reform process has started, the closure of branches in rural areas and poor urban areas has accelerated, with at least 400 actual or planned closures since 1998,” said Barrados. “Banks will now have to give notice of closures to communities and convene consulations in some cases, which is important, but there are no measures to ensure continued access to financial services for communities that lose their branch.”

Improved Disclosure and Transparency in Financial Services A

“We have high hopes of the FCA in ensuring that financial services agreements, contracts, service fee billings and marketing documents are available in understandable language and standardized formats,” said Barrados.
h3.Complaints and Dispute Resolution Process A
“We are pleased with the provision for a new Canadian Banking Ombusdman,” said Barrados.

Public Accountability Statements A-

“The Public Accountability Statements are a good step foward, but we will have to wait and see what information they will actually contain,” said Barrados
For more information:
Angie Barrados
Researcher
Public Interest Advocacy Centre
613-562-4002 ext. 25 or email: barrados@web.net
Also, see our website at www.piac.ca for more information.

Consumers Benefit Through New Federal Banking Policies and Regulation

Hotwire Article
For years, PIAC and other public interest groups in Canada have advocated greater consumer rights and protection in the financial services sector in Canada. These efforts have met with considerable success with the announcement by the Minister of Finance on June 25 of a new policy and regulatory framework for Canada’s banking system. Key benefits for consumers include:

legislation guaranteeing consumers access to banking services and a low-cost account. More than 600,000 adult Canadians currently do not have access to a bank account, largely because banks would not provide service to these low income individuals;
a new independent regulatory agency that will ensure that banks adhere to consumer protection policies and to provide consumer awareness and education about banking services;
the establishment of an independent ombudsman office that will mediate problems and complaints between individual customers and their bank;
incentives for the development of more community and national banking services to increase competition in services and choice for consumers.
new restrictions that prevent banks from requiring customers to buy a second product in order to buy the product or service they want. This ‘tied selling’ strategy will now be prevented through an amendment to the Banking Act.

Traditionally regulation has protected large institutional investors and ensured banks’ dominance of the market place. This is the first time that consumer protection legislation has been introduced to the market.
Earlier this year, PIAC, in a coalition with the consumer groups Action Réseau Consommateur, the National Anti-Poverty Organization and Option Consommateurs, issued a Consumer Charter for Financial Services Reform. The provisions of the Charter were:

1. Creation of a Consumer Protection Bureau.

An independent regulatory agency should be established. The agency’s members should include consumer representatives. The agency’s mandate should include consumer protection rules, regulation and compliance, as well as industry auditing and consumer education initiatives.

2. Federal Legislation Guaranteeing Access to Financial Services.

Legislation is required to ensure that: all Canadian have access to a bank account; minimum standards be created for a minimum level of final services; no fee and no minimum balance bank accounts be available; federal government cheques can be cashed at any bank branch.

3. Support for Research, Industry Oversight and Advocacy for Consumer Organizations.

Adequate funding should be provided by the Federal government to maintain and extend the expertise of consumer organizations in representing the needs of Canadians in the areas of policy, regulation and consumer awareness.

4. Ensure that Bank Closures are Handled Responsibly in the Public Interest.

A federal consumer protection bureau should be mandated to ensure that banks are accountable to the communities and neighborhoods where branches are located. Legislation should ensure that when a branch closes that the bank assists in establishing an alternative financial institution that is acceptable to the community.

5. Improve Disclosure and Transparency.

A new consumer protection agency should have the authority to establish regulation and penalties to ensure that: agreements, contracts, service fee billings and marketing documents are available in understandable language and standardized forms; disclosure is mandatory on fees and commissions to third parties; and unilateral amendments to financial services consumer contracts are prohibited. Mandatory disclosure of service fees should also be required.
PIAC’s input is reflected in the policy changes for the financial sector which I announced on June 25, 1999.
The Department looks forward to working with PIAC during the process of developing legislation on these matters.
The Hon. Paul Martin, letter, July 19, 1999.
We were pleased to see that many of these issues were addressed in the proposed new financial services policy. PIAC will continue to push to have the unresolved matters addressed by the Department of Finance and the new regulatory agency over the next few years. As the proposed legislation is passed and the new consumer protection agencies are established, consumers should begin seeing a fairer set of rules and practices in their everyday dealing with banks.
While many of the changes proposed by Minister Paul Martin on June 25 are important steps in balancing consumer rights with those of the banks, there are still a number of issues that have not been fully addressed. One area is bank branch closures. Many Canadians, both in rural areas and in some neighborhoods in cities, are seeing their local bank branch close. Often these branches provide the only banking service in their area. The new bank policy will require banks to justify a branch closure to communities, and will require some consultation with the community to mitigate the affects of the cessation of service. However, the problem of ensuring that some form of banking service will still exist in a community has not been addressed. Other areas of concern include: the lack of clear rules on how long a bank can ‘hold’ a cheque before the funds are made available to a customer; the need to improve physical access to branches for disabled Canadians; and increasing difficulty of receiving “in-person” service from a teller as opposed to the increasing use of banking machines.

Consumers Finally to Get a Say in Some Basic Cable TV Prices

On July 7, the CRTC issued a decision (Public Notice CRTC 1999-108) whereby cable companies will now be required to obtain approval from CRTC before increasing their basic monthly fee when the fee increase is the result of adding a specialty service to the basic package. Specialty services are those channels which generally offer a special theme such as news, sports, or music, etc.. Consumers have long complained to the CRTC about the cable companies arbitrarily adding channels and raising rates in basic service. The CRTC proposed to amend the Broadcasting Distribution Regulations earlier this year (Public Notice CRTC 1999-56) and asked for public comment. In its submission to the CRTC, PIAC supported the proposed amendments and argued that public participation in CRTC decision making should involve all channels which are included in the basic package, including specialty channels.
Under the new rules, cable subscribers will have to be notified about proposed price increases and will have 30 days to voice their concerns to the CRTC. The cable companies will also be required to file information with the CRTC to justify why a specialty channel should be added to basic service. With these changes, the CRTC will be able to suspend or disallow a proposed fee increase if it determines that such an increase is not justified. This is a good victory for consumers. In spite of the hype about competition, most Canadians do not have a choice of who provides their cable service, and where choice does exist, e.g., satellite tv, it is not a comparable option because it can be more expensive than the traditional wire-line cable service.

New Report: “Consumer Issues in Electronic Commerce”

Five years ago, almost no one imagined that consumer activity would shift to a new electronic medium at the rate that it is doing. Electronic commerce has been used by businesses for many years, but only recently has it caught the attention and interest of individual consumers. People can order books, reserve airline tickets, or transfer funds between bank accounts at any time of the day or night, as long as they have a working computer, modem, and Internet service provider.
But is it all a bed of roses for consumers? PIAC’s new report, “Consumer Issues in Electronic Commerce” examines the implications of buying online, and highlights the risks and potential problems of this new medium.
In particular, electronic commerce provides new opportunities for abuse both by the deliberately dishonest and by the careless or cavalier. How do you judge the reliability and integrity of online merchants? As a now famous cartoon put it, “the great thing about the Internet is that no one knows you’re a dog.” Unscrupulous merchants can disguise their identity, and hide behind sophisticated websites that mislead consumers into a false sense of security.
Previously marginal problems such as pyramid selling become far more serious on the Internet, where millions of consumers worldwide can be accessed at very little cost. Consumers are more vulnerable than ever to false and misleading claims, insecure handling of sensitive data, hidden privacy invasions, and lack of effective cross-border enforcement mechanisms. The need for effective consumer protection laws and mechanisms is therefore greater than ever before.

TIPS FOR E-COMMERCE CUSTOMERS

Online consumers should:

look for information confirming the vendor’s identity, location, and reliability before making online purchases;
confirm any claims to membership in a quality assurance program such as BBB (eg. confirm with the program that the organization is indeed a member in good standing – this should be possible by clicking on the program logo);
navigate carefully through retail websites, so as to avoid unintentional transactions;
read all contractual information presented online before agreeing to purchase, and be sure to obtain a copy of the contract for your own records;
take reasonable precautions to keep your credit card and/or PIN number confidential;
be comfortable with the security features employed by the vendor to safeguard the confidentiality of financial information exchanged (NEVER send confidential information by e-mail!);
make sure the vendor’s privacy policy meets your needs for privacy protection;
look for the vendor’s policy regarding complaints, returns, cancellations, warranties, etc. before transacting; and
be aware of potential difficulties obtaining redress across borders, in the event of a dispute.

The report can be obtained from PIAC (piac@web.net, or tel: (613)562-4002 x.60, or fax: (613) 562-0007) for a price of $20 plus postage. For French versions contact Action Réseau (actionrc@total.net, tel: (514) 521-6820,fax: (514) 521-0736).

Legislated Privacy Protection Still in Limbo

In our May 1999 Hotwire, we highlighted the problem of personal information abuse in the private sector and the need for legislated rules establishing the right of individuals to control over their personal data.
Bill C-54, the federal government’s proposed legislation to protect personal information in the context of commercial activities, was introduced last fall, but never made it through Parliament before the summer break. The government, however, has promised to push the Bill forward when Parliament reconvenes in the fall, and to fulfil its commitment to passing privacy legislation by the year 2000. We intend to hold the government to its promise.
However, the Bill is still in rough waters. Some business groups and government agencies have expressed opposition to the legislation. The Ontario Ministry of Health is lobbying to have personal health information exempted from the Bill, so that it would be completely unprotected under the federal regime. The insurance industry doesn’t like having to get individual consent to share personal information among themselves for the purpose of detecting fraud. Bankers (and others) don’t want to be subject to spot-audits of their privacy practices.
If you want legislated protection of your personal information in the private sector, make sure that your M.P. knows! Tell our legislators how important it is that they pass effective data protection legislation without any further delay. More background information is available on the PIAC website at http://www.piac.ca

Bill C-54: The Government Moves to Protect Privacy in the Private Sector

Article for “Community Law Matters”
by Philippa Lawson, Counsel, Public Interest Advocacy Centre, Ottawa
It may have taken a desire to position Canada in the forefront of global electronic commerce, but the federal government should nevertheless be congratulated for finally moving to protect Canadians’ personal information from unauthorized commercial use. Bill C-54, the Personal Information Protection and Electronic Documents Act, was introduced on October 1st, 1998, to coincide with Ottawa’s hosting of an OECD Ministerial conference on electronic commerce. The Bill has passed second reading, and is now being debated in Committee.
First, some background: for some time now, Canadians have been protected from government misuse of their personal information through federal and provincial legislation applicable to public bodies (e.g., the B.C. Freedom of Information and Protection of Privacy Act). However, with the exception of Quebec,(1) no jurisdiction in Canada has legislated protections against misuse of personal information by private sector actors.(2)
Yet, public concern over unauthorized collection, use and disclosure of personal information by commercial entities has been growing, as Canadians find themselves bombarded by direct marketing, discover that their confidential information has been published, and, in the case of low income consumers, find themselves subjected to invasive and degrading practices (e.g., thumbprinting) in order to transact business.
As new abuses are uncovered daily, people are demanding more control over their personal information. At the same time, the federal government recognizes that electronic commerce will not succeed without the trust and confidence of consumers. Such trust requires legislative intervention; market forces have proven themselves incapable of addressing privacy concerns to the satisfaction of consumers.
Enter Bill C-54, “An Act to support and promote electronic commerce by protecting personal information this is collected, used or disclosed in certain circumstances…” Part I of the Bill sets out privacy rights, and is based on a voluntary code of practice which was developed by a multi-stakeholder group under the aegis of the Canadian Standards Association (CSA), and adopted two years ago by the Standards Council of Canada. In fact, the CSA Model Privacy Code is simply replicated, word for word in a Schedule to the Bill. Compliance with this Schedule is mandatory.
The CSA Code’s ten principles contain the core rights and obligations of the legislation. Most importantly, they require the individual’s knowledge and consent to any collection, use or disclosure of his or her personal information. “Personal information” is defined as “information about an identifiable individual that is recorded in any form”. Consent need not always be express, at least with respect to non-sensitive information. (What constitutes “sensitive” information, however, is left to a case-by-case analysis.) Exceptions to the rule of informed consent are specified in the body of the statute, and include collection, use and disclosure for purely domestic purposes, as well as for journalistic, artistic or literary purposes.
Individuals have the right to access their personal information in the possession of organizations at minimal or no cost, and to do so in alternative formats where necessary.
Complaints regarding non-compliance with the Act are made to the federal Privacy Commissioner, who has broad investigatory and audit powers. The Commissioner is provided with powers to publicize and coerce, but not to make binding orders. Instead, complainants (or the Commissioner himself) must go to the Federal Court for binding remedies, which include corrective practice orders, publication orders, and damages (including damages for humiliation).
The Bill is limited in application to “organizations” (defined broadly as associations, partnerships, persons and trade unions) which collect, use or disclose personal information “in the course of commercial activities”, and to federal employers in respect of employee information. While the term “commercial” is not defined, there will clearly be many non-commercial uses of personal information which do not fall into the scope of this legislation.
Perhaps the most controversial aspect of this Bill is its jurisdictional scope: while limited initially to inter-provincial data flows, it automatically extends to intra-provincial data flows after three years. At the same time, however, Cabinet can issue an exemption order where satisfied that substantially similar provincial legislation will apply. In other words, the federal government is giving the provinces three years to enact their own legislation, but will use the federal trade and commerce power to extend protections to all commercial activities after that time. Some provinces have expressed serious opposition to this perceived intrusion on their jurisdiction.
The Bill has received support from many quarters, including the B.C. and federal Privacy Commissioners. It is viewed by privacy advocates as a significant but incomplete step forward. Criticisms focus on deficiencies in the CSA Code (e.g., no limit on the purposes for which information can be collected); some overly broad exceptions to the rule of informed consent; and lack of an accessible regime for enforcement and remedies. It has been pointed out that organizations can choose not to comply, knowing that only the most determined and financially able individuals will pursue them in court. Hence, some parties advocate the establishment of a more accessible tribunal, instead of relying on the Federal Court for binding orders.
This legislation promises to help Canadians recover control over the use of their personal information in the private sector. It is an important development, that will hopefully spawn similar initiatives in B.C. and other provinces. The Bill, and proceedings of the Industry Committee, can be accessed from the Parliamentary website at http://www.parl.gc.ca. PIAC’s commentary on the Bill can be accessed from the PIAC website at http://www.piac.ca
1. Bill 68: An Act respecting the protection of personal information in the private sector, passed and assented to June 15, 1993.
2. B.C.’s Privacy Act does create a statutory tort of privacy invasion, but this legal tool seems to have been rarely invoked: see Ian Lawson, Privacy and Free Enterprise, 2nd ed. (PIAC, 1997), pp.72-78.

Protection of Personal Health Information

PROTECTION OF PERSONAL HEALTH INFORMATION:BILL C-6 AND THE HEALTH CARE SYSTEM

Philippa Lawson
Counsel, Public Interest Advocacy Centre, Ottawa, Ontario
There has been a great deal of polemic surrounding the federal government’s Bill C-6 and its application to the health care system. Let’s get a few things straight.
First, the Bill applies only to “information about an identifiable individual”. Thus, irreversibly anonymized information is not covered. Second, it applies only in the context of commercial activities, and explicitly permits the disclosure to governments of personal information where “requested for the purpose of administering any law of Canada or a province”. Third, it applies initially only to the federally regulated sphere of activity, and allows provinces three years within which to legislate “substantially similar” standards in the health care sector.
A number of concerns have been raised about the Bill’s impact on health care. Some have argued that the Bill “would require the express, informed consent to the collection, use and/or disclosure of personal health information at each step in the delivery of integrated health services”. This is not true. The Bill would not require explicit consent where the individual would reasonably expect such collection, use or disclosure as part of the transaction. Thus, for example, pharmacists can assume implicit consent to the disclosure of patient information to the prescribing physician, or to the patient’s insurance company, for the purpose of delivering the service requested. But they must obtain explicit consent of patients to any secondary uses of their personal information, such as its sale to drug manufacturers for marketing purposes.
It has also been argued that the Bill requires the unrealistic separation of commercial and non-commercial health activities, and that it will lead to a “two-tiered” system under which privacy is better protected in the private sector than in the public sector. While it is true that the Bill applies only to commercial activities, and that health care activities cannot be neatly divided into commercial and non-commercial categories, this does not mean that the two need to be separated, or that non-commercial activities will be subject to a lower standard.
First, Bill C-6 sets out a set of reasonable principles of fair information practice, which should be adopted by all health care organizations, public and private, in any case. Second, the Bill requires that organizations subject to it use contractual or other means to ensure that third parties with whom they share personal information provide a comparable level of protection. Thus, health care organizations not subject to the Bill will be required to comply with it whenever they collaborate with organizations subject to the Bill in the delivery of health care.
The real debate over Bill C-6 and health care is about the appropriateness of informed consent as the principle upon which to base rules for the sharing of personal health information. With some notable exceptions (physicians, dentists, and nurses), many of those involved in health research and administration, as well as primary care, seem to oppose this principle, preferring a regime based upon “consistent use”, or the “best interests of the patient”, as determined by someone other than the patient. This is the heart of the controversy now playing out before the Senate.
According to the Health Minister’s Advisory Council on Health Infostructure, “informed consent should be the basis for sharing [personal health] information” (p.11), and “patients should be able to exercise control over what portion of their electronic record is seen by other professionals and providers” (p.3-6). This reflects the position taken by citizens’ groups, who are calling for quick passage of Bill C-6 and no exemption for health information. As the groups point out, “Canadians deserve to know and to control who has access to their personal health records and for what purposes such access is granted”. If patients fear that their personal information may be shared with others without their consent, they will be reluctant to seek care and will withhold critical information from their doctors. The quality of care will decline, and health costs will rise.
Bill C-6 represents a challenge to all those involved in the delivery of health care in Canada. It sets a new standard for the sharing of personal health information now that we have entered a new age of information technology with all the opportunities it presents for misuse of personal health information. It’s a standard that gives control back to the patient, recognizing that times have changed and that the paternalistic model of “provider knows best” is no longer appropriate when it comes to the sharing of medical records. Let’s get on with it, before abusive information practices become any further entrenched.
For more information, see http://www.piac.ca . See also http://www.nationalcpr.org

Consumer Groups Respond to Air Merger (1999)

PRESS RELEASE

Consumer Groups Respond to Air Merger:
Demand Passenger Rights and Regulation on Safety,
Pricing, and Quality of Service!

A number of national consumer organizations have formed a new coalition called the Canadian Association of Airline Passengers (CAAP) to respond to the pending restructuring of the Canadian airline industry and to advocate policy and regulatory requirements which are fundamental to protect passengers’ rights.
CAAP has agreed on the text of an Airline Passenger Bill of Rights to be given to government, to the airlines and to ONEX. “If airline passengers in Canada had a nickel for every time the government, ONEX, Canadian or Air Canada used the word “consumer” in the last several weeks, we could all fly for free for the next two years”, said Andrew Reddick, one of the spokespersons for CAAP. He continued, “it’s time for consumers to be heard and the airline passenger Bill of Rights is the bottom line for consumers. As a matter of economic and social policy, the federal government has a responsibility beyond the immediate issue of mergers of billion dollar airlines, to publicly commit to address the outstanding needs of the public.”
Airline passengers will be better served if the discussion of options for the industry is not limited to bids aimed at maximizing short term profits. “Canadians have heard enough from the self-interested corporations vying for control of the airlines,” said Peter Bleyer, Executive Director of the Council of Canadians also a CAAP member. “It’s time we heard what the federal government intends to do to protect the national public interest. In the absence of coherent public policy on airline transportation, the corporate foxes appear to be in charge of the hen house.”
cartoon2
Cartoon by Rick Cousins, Deep River

Irrespective of whether the proposed merger goes through, a monopoly develops, or a competitive market is re-created by the federal government, CAAP maintains that there are a number of long standing consumer protection issues related to health and safety, service quality, pricing, regulation and public participation in decision making which must be addressed. “The current circumstances of restructuring and change create an opportunity for the government of Canada to address these rights and needs of the public,” stated Harry Gow, also a spokesperson for CAAP. He continued, “CAAP is asking that the federal government and the Minister of Transport commit to guaranteeing that, no matter how the current ONEX, Air Canada, Canadian debacle is resolved, over the next several months a process will be started to implement the Consumer Protection Bill of Rights over the next year. As a matter of sound economic policy, social policy and fairness, the interests and the rights of the Canadian travelling public must be addressed. The lives of passengers and the economic and social well being of our country demand it”, he concluded.
Michael Murphy of the Air Passenger Safety Group added, “Transport Canada says that safety is their number one priority, yet no where in any of the various proposals have we seen any mention of safety from Transport or the airlines.” CAAP observes that safety is not automatic but takes concerted and relentless effort from everyone in the air transportation system. It is unwise to expect the workers, who are at the greatest risk during these changing times, to ensure that the air transportation system remains safe. Murphy stated, “the last time this happened, we had a major crash at Dryden, Ontario on March 10, 1989, with the loss of two dozen lives. We nearly had a repeat at Fredericton in 1997. If the captains of the industry are not foremost concerned with aviation safety, then who is?” For an example of this complacency, CAAP notes that Transport Canada’s regulations for rescue and fire fighting at Canada’s 270 airports which host scheduled air service have been lowered and no longer meet basic international standards and recommended practices.

cartoon3
Cartoon by Rick Cousins, Deep River

CAAP has forwarded copies of the Air Passenger Protection Bill of Rights to ONEX, Canadian Airlines, Air Canada and the federal government.
The CAAP is composed of the following groups:
Air Passenger Safety Group, Ottawa (contact: Michael Murphy 613-799-2689)
The Council of Canadians , Ottawa (contact: Peter Bleyer 613-233-2773, ext. 223)
Options Consommateurs, Montreal. (contact: Jacques St. Amand, 514-598-7288)
Public Interest Advocacy Centre , Ottawa (contact: Michael Janigan 613-562-4002 ext. 26 Or Andrew Reddick ext. 22)
Transport 2000 Canada (contact: Harry Gow 613-562-5800, ext. 1808)

Future of the Canadian Financial Services Sector

Public Interest Advocacy Centre Comment on The Taskforce on the Future of the Canadian Financial Services Sector Report

A. General

Overall, PIAC strongly supports the consumer-oriented recommendations of the Taskforce. While we may recommend some modest changes Taskforce’s recommendations, we view the Taskforce recommendations as setting out a positive blueprint for consumers in the financial services sector. The Taskforce’s recommendations on consumer matters are particularly important in light of its other recommendations such as allowing banks to sell insurance and lease cars, and allowing major mergers to proceed under certain conditions.
The Taskforce’s recommendations should be viewed as a package. It will be very disappointing if the recommendations that are worrisome for consumers (such as banks retailing insurance) are implemented, while the consumer protection measures are not. The Taskforce report suggests that government and industry should take a new, more positive attitude towards consumer protection. PIAC hopes that the major players will take this message to heart.

B. Implementation of Taskforce Report

B1. Consumer Advisory Committee

We recommend that a consumer advisory committee be set up immediately to advise the Minister of Finance on the government response to the Taskforce, and on the early implementation of key measures. The new involvement of consumers in decision-making about the financial services sector, recommended by the Taskforce, should be begin right away. Without consumer input, the government response risks being out of touch with the needs and values of consumers.
The government should not depend on the reports of the House and Senate standing committees that held hearings about the Taskforce report in the Fall. The hearings were dominated by industry interests, jockeying for position in the context of potential further deregulation of the sector. For the consumer interest to be adequately represented, the government should consult and involve consumers and consumer representatives directly in its current work. Early and substantial involvement of consumer representatives increases the chances that the government response will be publicly acceptable.
An advisory committee would offer the advantage of a structured method of providing consumer input, and if officials were willing to work with the committee, would be much more relevant and provide greater value than ad hoc meetings. The committee could provide a forum for discussion among industry, government and consumers, and would further mutual understanding. It would be wise to start fostering a collaborative approach now, in anticipation of the extensive work that must be done over the next few years.

B2. Early Implementation of Key Measures

Consumers have been waiting a long time for improvements in consumer protection in the banking industry. It is widely accepted that some consumer protection improvements are needed in the sector. The government should start now in implementing key measures contained in Taskforce recommendations, rather than waiting an additional three to six months while the government response is being prepared.
Some candidates for early implementation are:

Access to Financial Services: Consumers have been calling for action on this issue for over a decade. The Taskforce recommendations should be implemented immediately.
Disclosure: As with the access issue, it has been clear for over a decade that some action on this issue is required. We recommend setting up the proposed Working Group immediately.
Consumer Protection Bureau: The institutional arrangements for implementing the Taskforce recommendations should be set up soon to avoid a long delay between the government response, and actual implementation of recommendations.
Strengthening Consumer Organizations: It is only fair to hold discussions on this topic with consumer organizations prior to the government response. Any measures in this area will likely take several years to implement. It is important that consumer organizations have adequate resources to participate in the reforms of the sector that will take place over the next few years.

C. Comment on Specific Taskforce Recommendations

C1. Mergers (Taskforce Recommendations 46 to 52)

PIAC agrees with these recommendations. The government should make a commitment to ensure that any future merger proposals are subject to a public interest review. The Commons Committee on Finance also agreed with these recommendations.

C2. Empowering Consumers (Taskforce Recommendations 53 to 56)

PIAC agrees with these recommendations. Recommendations 53 to 56 should be the principles underlying the consumer protection initiatives implemented as a result of the Taskforce. The Commons Committee recommended that the government act quickly to put into place an enhanced consumer protection regime, and that a consumer protection bureau be established to undertake this task. We agree with the Commons Committee. However, our recommendation is that the bureau be established under the mandate of Industry Canada, rather than the Department of Finance.
There are two main reasons for recommending that Industry Canada be responsible for setting up the consumer protection bureau. The first is that Industry Canada, through the Office of Consumer Affairs, has the mandate to deal with consumer issues, and a good track record in implementing consumer-friendly measures in banking (such as the bank fee and credit card interest calculator). The second is that OSFI and Department of Finance would have trouble fitting consumer issues into their present mandates. Also, neither the Office nor the Department is experienced in implementing consumer protection and empowerment measures.
The new consumer protection bureau should be an independent regulatory agency, since it would be charged with overall responsibility for consumer protection rules/regulations in the financial services sector. Its mandate should include the development of rules/regulations, as well as compliance measures and programs. As well, it should be asked to undertake consumer education activities. The consumer protection bureau’s mandate should specify that it is to carry out it activities with the full involvement of stakeholders.
We disagree with the Commons Committee that there be no direct government funding for consumer organizations. Like the Taskforce, we strongly believe that funding for consumer organizations gives good value to Canadian consumers. We note, however, that there are options other than direct funding which should be considered by government and the industry. One option is the Consumer Utility Board (CUB) model, which was the subject of a PIAC report entitled CUBs for Canada? Another option is an industry-sponsored fund or foundation.
Government and industry must recognize that consumer organizations represent the Canadian consumer to decision-makers and the industry, and, as such, perform an important watchdog and advocacy role. Recent improvements to banks’ rules on opening accounts for low-income people, for instance, are directly attributable to consumer organizations activities over several years.

C3. Disclosure and Transparency (Taskforce Recommendations 57 to 63)

We agree with these recommendations. It is important that there be independent oversight of contracts and marketing documents, and that best practices be established. We would like to see the Working Group set up as soon as possible.
We agree with Commons Committee that responsibility for initiative not be given to OSFI, and recommend instead that the responsibility be given to the new consumer protection bureau.
We do not agree with the Commons Committee reservations about disclosure of fees and commissions to third parties and prohibition on unilateral amendment to financial services consumer contracts. We recommend that the original Taskforce recommendations be implemented.

C4. Privacy (Taskforce Recommendations 65 to 69)

We agree with these recommendations. In particular, we note that the Taskforce has recommended that the privacy regime be legally binding, which is crucial if consumers’ privacy is to be protected. We agree with the Commons Committee that OSFI should not be given responsibility for auditing the privacy regime, and recommend that the Privacy Commissioner be involved instead.

C5. Coercive Tied Selling (Taskforce Recommendations 70 to 75)

We agree with these recommendations. The Taskforce’s’ proposed changes to section 459.1 of the Bank Act should have been made prior to its proclamation in September. PIAC recently published a report on tied selling in the banking sector entitled Unfit To Be Tied: A Study of Improvements to the Tied Selling Provisions of the Bank Act that provides an in-depth discussion of the issue and our public opinion research on it. A copy of the executive summary of this study is appended to this document.

C6. Redress (Taskforce Recommendations 76 to 80)

We agree with these recommendations. It is important that the ombudsman be independent. We agree that the federal and provincial governments should make a special effort to cooperate so that the ombudsman could act for both provincially and federally regulated financial institutions. We recommend that the ombudsman be responsible for consumer redress only, not for the new consumer protection bureau as suggested by the Commons Committee. Instead, as explained above, we recommend that the new consumer protection bureau be formed under the mandate of Industry Canada.

C7. Proficiency Standards (Taskforce Recommendations 81 to 86)

We agree wth these recommendations. The recent report Investment Funds in Canada and Consumer Protection by Glorianne Stromberg (commissioned by the Office of Consumer Affairs) supports the need for proficiency standards. This is a major issue which should be a priority.

C8. Access (Taskforce Recommendations 88 to 92)

We agree with these recommendations. The access issue has been a high priority for consumer organizations for over 10 years, yet progress has been slow. The Taskforce’s recommendations on this matter should be implemented immediately.
We do not agree with the Commons committee’s comments on the dangers of abuse of issuing identification cards. In our opinion, this initiative, if implemented properly, would solve some privacy issues for low-income people dealing with banks. Also, it is important not to overstate the risk of fraud. Low income people should not be penalized because of the overall risk of fraud involved in all banking transactions.

C9. Branch Services Access (Taskforce Recommendation 93)

Banking services are essential in modern society, yet they are not fully accessible to all. We therefore recommend a stronger approach to this issue than the Taskforce. Federal and provincial governments should work together to develop a strategy to make sure that banking services are accessible to Canadians living in rural and remote areas, as well as in low-income neighbourboods. Options such as providing banking service through Canada Post should be carefully considered. Beginning immediately, branch closures should be monitored by government.

C10. Micro-Credit (Taskforce Recommendations 94 to 97)

We agree with these recommendations. The government should promote micro-credit initiatives.

C11. Partnerships with the Voluntary Sector (Taskforce Recommendation 98)

We agree with this recommendation. The government should promote these partnerships.

C12. Community Accountability Statements (Taskforce Recommendation 99)

We agree with this recommendation, and we disagree with the Standing Committee’s reservations about it. We note that the requirement for a community accountability statement is significantly less onerous that the requirements under the American Community Reinvestment Act (CRA). The CRA applies to both foreign and domestic banks operating in the United States. Generally, the CRA has had positive results in the United States, ensuring that small business financing, personal loans and mortgages are accessible to all. Also, the CRA monitors branch closures. We would like to see further consideration of a CRA for Canada, or CRA-like provisions for monitoring financial sector performance.