In order to measure Canadians’ knowledge of the rights and responsibilities of financial consumers and financial institutions, the Financial Consumer Agency of Canada commissioned a brief survey.
The results suggest that levels of knowledge with respect to various aspects of the relationship between consumers and financial institutions have remained stable or have, in a few areas, improved since 2006. For example, this year higher proportions know that both account holders are responsible for a joint account and that the primary account holder is responsible for all charges on a card when he or she has arranged for a second user on the account. Knowledge has declined this year in two of the areas tested in 2006: Fewer Canadians this year know that banks must provide written statements of all service fees and charges (80% compared to 88% in 2006) and fewer say they would know how to dispute an entry on their credit report (38% vs. 49% in 2006).
While largely consistent with 2006, the results point to areas where public knowledge is particularly low: only one in three (35%) know that a bank cannot refuse to open an account for someone only because the person has filed for bankruptcy, or has no money or a job. Canadians are more likely to think it is true (52%) that they won’t pay interest on a cash advance from a credit card account if the balance is paid in full by the due date (40% correctly say false). Fewer than two in five Canadians correctly say it is false that the penalty for an early mortgage termination is always equal to (or never greater than) three months interest.
The findings show that older respondents and those with lower levels of education and income demonstrate lower levels of knowledge across the survey, while those with higher levels of education and income and middle-aged respondents (35 to 54 years) demonstrate higher levels of knowledge. In an example of this disparity, three in four respondents earning less than $30,000 a year (75%) say they do not know how to dispute an entry on their credit report compared to 51% among those with a university education.
Despite the lack of knowledge demonstrated at several points throughout the survey, the majority of Canadians (63%) believe that they are “clear about their rights if they have a problem with a financial institution.” This includes majorities among older respondents (66%), those with less than a high school education (58%) and those earning less than $30,000 annually (62%). There is a tendency towards over confidence, particularly among those less likely to know what their rights and responsibilities truly are.
Questions were added as part of the September and October, 2011, waves of the Ipsos Reid Express telephone omnibus poll, which resulted in 2,002 interviews among Canadian adults in two separate waves: September 6 to 8 (n=1,000) and October 4 and 6, 2011 (n=1,002). The overall sample of n=2,002 obtains a ±2.2 percentage point margin of error (calculated at a 95% confidence interval). The margins of error are higher within regional and demographic subgroups.
Several questions in the research are tracked with results obtained during a similar 2006 study among n=1,700 Canadians.
The sample obtained is a probability sample generated through random digit dialing as the method of household selection and the birthday method of respondent selection within the household (identifying and interviewing the member of the household who had their birthday last).
The table below indicates the unweighted geographical distribution of the sample, with the associated margins of error (calculated at a 95% confidence interval).
|Margin of Error
Weighting was applied to the sample to ensure that the final data reflects the adult population of Canada by region, age and gender according to the 2006 Census.
The following table provides the call dispositions and response rate calculation for the full sample of n=2,002 as per the MRIA’s empirical method of calculating response rates for telephone surveys.
|Empirical Calculation for Data Collection|
|Total Numbers Attempted||69,620|
|Invalid (NIS, fax/modem, business/non-res.)||32,667|
|Unresolved (U) (Busy, no answer, answering machine)||18,492|
|In-scope - non-responding (IS)||16,301|
|Illness, incapable, deaf||131|
|Qualified respondent break-off||455|
|In-scope - Responding units (R)||2,161|
|No one 18+||32|
|Response Rate = R/(U+IS+R)||6%|
Knowledge of Banking Rights and Responsibilities
Knowledge of Banking Rights and Responsibilities – Demographic and Regional Differences
Views on Dealing with Financial Institutions
Knowledge of Responsibility for Accounts
Knowledge about Credit Reports
Respondents were asked five true/false questions to test their knowledge of consumers’ rights and responsibilities when dealing with financial institutions.
Among the statements tested, respondents most often correctly respond that it is true that “when you open an account, the bank must give you a written statement of all service fees and charges” (80% say true, a decline from 88% in 2006). Two in three correctly say it is false that, “financial institutions permit account holders to share their PIN numbers with other family members, such as a spouse” (67% say false).
For the other statements tested, respondents more often provide either the wrong answer, or say they don’t know. For example, the majority (52%) incorrectly believe it is true that “you won’t pay interest on a cash advance as long as you pay your credit card balance in full by the due date indicated on your statement” (40% correctly say false, consistent with 41% in 2006). When asked whether renegotiating a mortgage means “you will never have to pay a penalty greater than three months interest,” 38% correctly say false.1 About one in three (35%) correctly say it is true that “a bank cannot refuse to open an account for you only because you have filed for bankruptcy, or don’t have any money or a job” (consistent with 36% in 2006).
On average, respondents answered 2.6 questions correctly out of five questions asked. Only 4% of respondents answered all five questions incorrectly, while the remaining respondents (96%) answered at least one question correctly. Over four in five (81%) answered two or more questions correctly, while over half (53%) answered three or more questions correctly. One in five (23%) answered four or more questions correctly, while only 4% answered all five questions correctly.
Regionally, respondents from Alberta were most likely to provide correct answers (2.8 answers correct on average), while those from Saskatchewan and Manitoba (2.3) were least likely to do so. By age, 35 to 54 year old respondents (2.8) were most likely to provide correct answers, while those 55 and older (2.3) were least likely to do so.
By education and income level, respondents with less than a high school education (2.2 answers correct on average) and those earning less than $30,000 annually (2.4) answer fewer questions correctly, while those with a university degree (2.8) and those earning $60,000 or more (2.8) answer more questions correctly.
Over nine in ten respondents (92%) agree that “financial institutions have a legal duty to provide clear information to consumers.” Only 7% of respondents disagree with this statement. This result is consistent with 2006 (when 94% agreed).
Three in five respondents (63%) agree (while one in four, 24%, strongly agree) with the statement, “You are very clear about your rights if you have a problem with a financial institution.”Just over one in three (35%) disagree, including 12% who strongly disagree. This result is also consistent with 2006 (when 66% agreed).
Ontarians and those with higher levels of education and income are more likely to strongly agree that financial institutions have a duty to provide clear information to consumers.
Respondents from Ontario (34%) and those 55 and older (28%) are more likely to strongly agree that they are clear on their rights in the event that they have a problem with a financial institution; respondents from Quebec (15%) and Alberta (17%) are notably less likely to say this.
Respondents were asked who is responsible if a wallet is stolen, along with a debit card, and the PIN for the debit card is found written down in the wallet. Nearly three in four (72%) correctly say the card holder, alone, would be responsible for the loss. This is consistent with 2006 (when 68% said it would be the card holder alone).
Respondents were asked who is responsible for a joint chequing or savings account if two people open one. Over four in five (86%) correctly say that both persons are responsible (an increase from 73% who said this in 2006).
In a situation where a primary holder of a credit card arranges for a second person to use the credit card, respondents were asked who is responsible for the debt incurred by an authorized user on the card. Nearly three in four respondents (72%) correctly say the primary account holder is solely responsible (an increase from 63% who said this in 2006).
Respondents were asked if they know the costs for obtaining a copy of their credit report. Three in ten respondents (31%) say there are some costs, whether the credit report is obtained by mail or the internet. One in five (18%) say there are no costs, whether the report is obtained by mail or on the internet. One in four respondents (23%) say they don’t know. Only 10% of respondents answered correctly, stating that there are no costs to obtain a credit report by mail, but some costs via the Internet.
Respondents from Atlantic Canada, older respondents, and those with lower levels of education and income are more likely to say they don’t know.
Respondents were asked whether or not they know how to dispute an entry on their credit report. Nearly two in five (38%) say they do know how to do so (a decrease from 49% measured in 2006), while three in five (60%) say they do not.
Respondents from B.C., those 35 to 54 years of age, and those with higher levels of education and income are more likely to say they know how to dispute an entry on a credit report. Those from Quebec and those with lower levels of education and income are more likely to say they do not.
|Question||Correct Answer||2011 Result||2006 Result|
|Question 1: A bank cannot refuse to open an account for you only because you have filed for bankruptcy, or don't have any money or a job.||True||35% true/
|Question 2: When you open an account, the bank must give you a written statement of all service fees and charges.||True||80% true/
|Question 3: You won't pay interest on a cash advance as long as you pay your credit card balance in full by the due date indicated on your statement.||False||52% true/
|Question 4: Financial institutions permit account holders to share their PIN with other family members, such as a spouse.||False||24% true/
|Question 5_September 2011: If you want to pay off or renegotiate your mortgage before the maturity date, you will always have to pay a penalty equal to three months' interest.||False||38% true/
|Question 5_October 2011: If you want to pay off or renegotiate your mortgage before the maturity date, you will never have to pay a penalty greater than three months' interest.||False||29% true/
|Question 7: Financial institutions have a legal duty to provide clear information to consumers.||No correct answer||92% agree||94% agree|
|Question 8: You are very clear about your rights if you have a problem with a financial institution.||No correct answer||63% agree||66% agree|
|Question 9: Some people keep their PIN on a piece of paper in their wallet, along with their debit card. If the wallet is stolen and the card and PIN are used to take money from an account, who is liable for the money lost?||Card-holder only||72% card-holder only||68% card-holder only|
|Question 10: If two people open a joint savings or chequing account, which ONE of the following most accurately describes who is responsible for that account?||Both persons are responsible for the entire account||86% both persons responsible||73% both persons responsible|
|Question 11: What if you, as the primary holder of a credit card, arrange for a second person to be able to use your credit card, which ONE of the following most accurately describes your responsibility for debt incurred by that person on the card?||You are entirely responsible for any debt the other person incurs on the card||72% you are entirely responsible||63% you are entirely responsible|
|Question 12: Do you happen to know the cost of obtaining a copy of your credit report?||No cost by mail but some costs by internet||10% no costs by mail, some by internet||N/A|
|Question 13: Would you know how to dispute an entry on your credit report?||No correct answer||38% yes||49% yes|
1. A slightly different version of this statement was asked during the September fieldwork, “If you want to pay off or renegotiate your mortgage before the maturity date you will always have to pay a penalty equal to three months’ interest.” On this basis, an even lower proportion of respondents, 34%, gave the correct answer (false).