The Report of the Task Force on Financial Literacy is all that one would have expected from one co chaired by the CEO of Sun Life Financial and the Chairman ofÂ BMO Nesbitt Burns.
There is hardly a whisper of criticism of financial institutions and the myriad fees, charges and interest rates they extract from ordinary Canadians. You will not discover from this report that the management expense fees charged on retail equity mutual funds in Canada are among the highest in the world. Or that the banks charge extortionate interest rates on credit card debt compared to other forms of consumer borrowing. Or that providers of payday loans prey on low income workers. Or that the annuities needed to turn RRSP savings into a secure lifetime retirement income are an extraordinarily expensive product.
There is barely a hint of an argument that financial institutions and advisers face an inherent conflict of interest unless they play a clearly specified fiduciary role similar to that of employer sponsors of workplace pension plans.Â Most financial advisers, for example, personally benefit if they advise clients to buy high load funds and those employed by financial institutions can earn more by frequent trading of client assets. And so on.
There is no call for stronger regulation of financial institutions to protect Canadians. Instead,Â there are calls for the financial sector, the educational system, governments, employersÂ and others to provide simpler, clearer information to individuals so that they can make more “responsible” decisions.
Remarkably, there is very little said on the precise meaning and content of “financial literacy.”
Growing debt is, apparently,Â entirely attributable to individuals wanting to consume more than they earn. No reference is made to stagnant real wages for the many, and the huge shift of income to the very affluent.
The report fails to mention the many submissions from labour and other organizations arguing that expansion of the very low cost Canada Pension Plan is the superior choice to individualized retirement savings options such as RRSPs and the “Pooled Registered Pension Plans” proposed by Finance Minister Flaherty.
It does, however, support “nudging” individuals into the arms of the banks and insurance companies though automatic enrollment into retirement savings plans, and built in escalation of contributions.
To summarize, the report puts the blame for poor outcomes on “uninformed” individuals, and completely ignores the reality of financial institutions profiting from poor choices.