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Consumer rights and debt is an increasingly important topic. As modern societies move toward open data movements in government, health care and banking, it’s important to note that North American society wasn’t built on a bedrock of a citizen’s right to know.

Sociologist Michael Schudson reveals how consumer rights movements between the 1950s and 1970s were based mainly on environmental activists’ demands, consumer advocates and investigative journalists.  Schudson outlines this drive toward modern transparency in his book, “The Rise of the Right to Know: Politics and the Culture of Transparency, 1945-1975.”

Schudson’s book campaigns for greater openness across several domains such as truthful communication in health care and transparency at all business and government levels. Today, in an era of constant information and the uncertainty amid COVID-19, it’s important to revisit this idea of consumer rights, specifically around consumer debt.

Most find it hard to open up about their finances and lack the courage to ask for help

Broadly, consumer rights ensure people obtain accurate and unbiased information and that they are not mistreated. Additionally, being informed on individual rights increases economic welfare. It also improves societal health by bolstering demand for openness and encouraging industries to make ethical progress.

In the consumer debt space, access to non-judgmental, confidential options is essential. Most find it hard to open up about their finances and lack the courage to ask for help. Despite a recent drop in consumer insolvencies, Canada is a heavily indebted nation. Unfortunately, that is not going to change anytime soon.

In a recent Credit Counselling Canada survey, Canadians revealed the issues they face when seeking debt assistance. The greatest challenge was a lack of focus on financial wellness and education (72 per cent). Next, a lack of transparency around fees (70 per cent). Then, concern about conflict of interest and a lack of transparency around an organization’s motives (69 per cent).

The survey also shows motivates people to get out of debt. It’s one of the oldest tropes in recovery, and a claim that’s been repeated for decades. You’ve got to hit rock bottom before you can change course. Strikingly, nearly four in 10 Canadians would have no idea where to turn when facing rock bottom.

More work needed to build awareness

Major work is needed to increase awareness of consumer rights around 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, seeking to strengthen financial literacy and ensure appropriate regulations are in place. Nevertheless, more can be done.

Canada should look towards models in the U.K., Australia and New Zealand. Together these countries have invested upwards of $115 million in financial help services to supplement their COVID-19 relief packages. Although Canada has responded swiftly to address the immediate emergency, there is no long-term strategy to build Canadians’ financial well-being beyond the crisis. These countries have put the interest of indebted consumers first.  Moreover, they have developed a progressive framework of sustainable options, including the critical service of non-profit credit counselling.

Protecting the right to unbiased, safe and holistic debt relief requires action from several players. Governments, local community foundations and charitable foundations can band together to support the financial literacy goals of non-profit credit counselling. Funding can also help shift the economics of debt repayment through incentives for banks and credit unions to innovate.  Meanwhile, community centers and organizations can provide space and resources for consumer debt education. Finally, Canadians can seek out Canada’s non-profit, certified credit counsellors as a smart place to start.

It takes a collaborative approach

There is no panacea for Canada’s consumer debt problem. A cross-sector, collaborative approach that includes the non-profit, credit counselling sector is essential.

There is a clear path ahead.  One that involves a dual commitment to economic transparency and a progressive consumer debt approach. Egalitarian society advances when consumers have greater access to information and a protected set of rights. As we make our way through the second wave of the pandemic, we must strive to enshrine and elevate those rights.  Learn about Credit Counselling Canada’s bill of rights for Canadians in debt.

CEO of Credit Counselling Canada

 

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