Appearance before the Standing Committee on Finance (July 7, 2020): COVID-19 impact on consumers and consumer debt

Issue

Since the onset of the COVID-19 pandemic, measures by all levels of government have been taken to contain the spread of the virus. These measures include many closures, from schools to businesses, which have had a negative impact on the Canadian economy. Vulnerable consumers are faced with challenges such as meeting their financial obligations, accessing banking services due to temporary branch closures, possible increases in financial scams/frauds and cybersecurity risks as more consumers are banking online. 

Background

Consumers who have been negatively impacted by the COVID-19 pandemic and are experiencing financial hardship can access educational resources on FCAC’s website. These resources focus on budgeting, credit, savings and debt management. FCAC’s interactive tools and calculators also provide consumers much needed assistance to maintain their financial health during the crisis.

Data/Quick facts

• The Government of Canada has temporarily increased the cheque-cashing limit for the Canada Emergency Response Benefit (CERB) and the Canada Student Emergency Benefit (CESB) to $2,000.
• FCAC quickly updated its online consumer information about the potential option for mortgage and credit card payment deferrals and the implications of these options to their financial health.
• FCAC has also created awareness on potential fraud during a period of uncertainty and provided tips for consumers on their website to assist in preventing financial scams and fraud.

Key messages

• An increasing number of Canadians have enrolled in online banking amid messaging from health officials to stay home whenever possible.
• As more consumers shift toward online and mobile banking, privacy and fraud risk may increase.
• Canadians are accruing more debt by deferring mortgages, HELOCs, loans, etc. so FCAC has developed online material to guide Canadians on managing their finances in uncertain times.
• There is a concern that consumers hit by the financial implications of COVID-19 will be unable to resume payments on their loans and mortgages once the payment deferral period established as part of banks’ relief measures ends in September.