Appearance before the Standing Committee on Public Accounts (December 1, 2020): Questions and answers – Canada Student Loans Program audit

Background

On July 8, 2020, the Office of the Auditor General tabled in Parliament the findings of its audit of the Canada Student Loans program administered by ESDC. Both FCAC and CRA are mentioned in the report.

The report includes one recommendation that involves FCAC, which is as follows:

Recommendation: As soon as possible, Employment and Social Development Canada, in collaboration with the FCAC, should:

• Make available on the web portal of the National Student Loans Service Centre all the financial information needed by loan recipients in the Canada Student Loans Program 
• Consult stakeholders about the costs and benefits of mandatory training for student loan applicants before loans are provided and for student loan recipients who abandon or complete their studies

The Agency’s response: Agree, the FCAC will support ESDC by providing access to educational materials for inclusion on the web portal. The agency will also support the department with advice related to mandatory training for students receiving direct loans from the Canada Student Loans Program.

Key messages

• Strengthening the financial literacy of Canadians is a key pillar of FCAC’s consumer protection mandate. One of the Agency’s goal is to help Canadians develop the knowledge, skills and confidence to make informed financial decisions.
• FCAC and ESDC have always had a positive relationship and share a mutual commitment to providing the timely and relevant financial literacy information to support youth and young adults.
• FCAC has been collaborating ESDC to promote financial education for post-secondary students with a focus on providing education materials for students in the National Student Loans Service Centre (NSLSC) web portal
• As we move forward, FCAC will continue to work in collaboration with ESDC to provide youth and young adults important information as they reach important life milestones.
• FCAC provides Canadians, including students, with unbiased and fact-based tools and resources to help them make informed financial decisions and manage their financial futures.

If pressed on the delay to implement financial literacy materials in the web portal

• FCAC can confirm that throughout its collaboration with ESDC, there was always recognition of the value of financial literacy for youth and young adults and a willingness to include financial education material into the student loan program

Questions and answers

1. Does FCAC have an action plan to address the recommendations from the audit?

An action plan from FCAC was never requested as the audit focused Canada Student Loans program.

FCAC’s role was to support ESDC by providing educational materials for the web portal and sharing expertise in financial literacy.

FCAC will continue to collaborate with ESDC to provide advice on how training can be offered to student loans applicants, and on how to provide youth and young adults timely and relevant financial literacy information as they reach important life milestones, including post-secondary education.

2. The OAG’s news release mentions repeated requests from FCAC to include financial education into the program, why was it so difficult?

FCAC and ESDC share a mutual commitment to providing the timely and relevant information to support youth and young adults and have always had a constructive relationship.

FCAC can confirm that throughout its collaboration with ESDC, there was always recognition of the value of financial literacy for youth and young adults and a willingness to include financial education material into the student loan program.

FCAC has been collaborating ESDC to promote financial education for post-secondary students with a focus on providing education materials for students in the National Student Loans Service Centre (NSLSC) web portal.

As we move forward, FCAC will continue to work in collaboration with ESDC to provide youth and young adults important information as they reach important life milestones.

3. What kind of information was included on the portal? / Is there any additional information that ESDC should include in their portal?

FCAC provides Canadians, including students, with unbiased and fact-based tools and resources to help them make informed financial decisions and manage their financial futures.

ESDC included links to a variety of FCAC’s online information including: Budget Planner, Financial Basics (a financial workshop to help young adults learn about budgeting, saving, credit, investing, fraud prevention and financial planning), FCAC’s Credit Card comparison tool, information on how credit cards work and their rights and responsibilities when getting a credit card. In addition, ESDC included links on paying back loans and setting up an emergency fund.

FCAC will continue to collaborate with ESDC to provide youth and young adults timely and relevant information as they reach important life milestones.

4. What steps is FCAC taking to address the findings in the report?

FCAC has already worked with ESDC to include educational materials for students in their National Student Loans Service Centre (NSLSC) web portal.

FCAC will continue to work with ESDC to support the implementation of the report’s recommendation that by providing access to educational materials for inclusion on the web portal and advice related to mandatory training for students receiving direct loans from the Canada Student Loans program.

In addition to our broader work to strengthen the financial literacy of Canadians, FCAC will continue to provide youth and young adults important financial information as they reach new life milestones.

5. What is the status of the multi-phase financial literacy plan?

This question is best direct to ESDC as they are the lead on the multi-phase financial literacy plan.

However, I do understand that the virtual repayment counsellor was launched on the National Student Loans Service Centre (NSLSC) web portal in November 2019. I am also pleased that FCAC’s financial literacy materials were also included in the web portal.

FCAC will continue to work with ESDC to enhance the content that has already been included in the portal.

6. What is the status of the consultation of stakeholders about the costs and benefits of mandatory training for student loan applicants?

To clarify, the Auditor General’s recommendation was directed for ESDC. In their response, ESDC committed to consult with provincial and territorial student aid programs as well as external stakeholders. This question is best directed to ESDC.

7. What works is currently being done to implement the recommendations in the report?

There is a positive and ongoing collaborative relationship between FCAC and ESDC that includes ongoing dialogue between officials about the financial literacy of students and youth adults.

As a first step, education materials have been included in the National Student Loans Service Centre (NSLSC) web portal.

As a second step, FCAC will continue to work with ESDC to enhance the content that has already been included in the portal.

8. What are FCAC’s next steps in helping youth gain the financial education skills they need to make better financial decisions?

FCAC works with its many stakeholders across the country including other federal partners (ESDC being one of them) and many public, private and not-for-profit organizations to develop, implement and promote financial literacy initiatives for Canadians, including youth.

FCAC will also continue to strengthen the financial literacy of youth and post-secondary students through its ongoing communications activities and by leveraging its stakeholder networks.

Here are a few examples FCAC’s initiatives targeting youth:

• FCAC provides Canadians, including students, with unbiased and fact-based tools and resources to help them make informed financial decisions and manage their financial futures. FCAC offers student dedicated web pages on budgeting for student life, paying back student debt and student lines of credit.
• This past Financial Literacy Month, FCAC organized a money management webinar in collaboration with the Canadian Bankers Association that targeted students, recent graduates and young adults interested in learning more about managing their money.
• FCAC has worked with the Canadian Association of Student Financial Aid Administrators (CASFAA) to:
  • share information about its educational resources
  • present at and attend their national conferences to showcase our educational materials at booths and during workshops
  • contribute articles to their newsletter
• FCAC has also collaborated with both CASFAA, and Colleges and Institutes Canada (CICan) to develop or pilot educational materials for post-secondary students. FCAC piloted its educational programs, Financial Basics and Your Financial Toolkit, to make sure the programs met the needs of post-secondary student. Based on information gathered during the pilots, FCAC develop tailored modules for student that are now available on Canada.ca/money.
• FCAC has worked with the provinces to include financial literacy in school curriculums.
• In addition, FCAC communicates regularly with the Financial Literacy Youth Network and many other organizations who work directly with or are led by Canadian youth.

9. What is the status of youth financial literacy in Canada?

Our research show that when it comes to financial literacy, Canadian youth are doing well.

Our research also found that youth are confident in performing tasks with which they had experience, such as planning their spending, banking online and paying goods and services with a mobile device. In other words, they learn by doing.

However, there still some opportunities for youth to learn about different financial products and services that may be available to them as they enter new life phases such as post-secondary education.

In addition, FCAC will also continue to strengthen the financial literacy of youth and post-secondary students through its ongoing communications activities, collaboration with other government departments and by leveraging its stakeholder networks.

10. Why is financial literacy for youth important?

It is important for youth to develop good financial habits early. One of our most important research findings is that behaviour matters. This is true independent of income.

Therefore, equipping youth with a combination of knowledge and skills, while promoting behaviours necessary to make sound financial decisions will ultimately contribute to individual financial well-being.

When we strengthen the financial literacy of youth, we help them gain confidence in managing their finances and enable them to make informed financial decisions that lead to better outcomes in their lives.

11. What has FCAC been doing to support Canadians during the COVID-19 pandemic?

From the outset of the pandemic, FCAC has been working closely with our stakeholders, regulatory counterparts, and government partners.

In particular, there has been high levels of coordination between members of the Financial Institutions Supervisory Committee, which include the Department of Finance, the Bank of Canada, the Canada Deposit Insurance Corporation, and the Office of the Superintendent of Financial Institutions. We are sharing information and ideas to better understand how Canadians and communities have been impacted and collaborate on solutions.

The Financial Consumer Agency of Canada’s mandate and role is to protect financial consumers by enhancing the financial literacy of Canadians and ensuring that regulated entities comply with their legislative obligations, codes of conduct and public commitments.

For our part, FCAC is:

• Supporting consumers by providing unbiased, fact-based information to help them make informed financial decisions. With a dedicated webpage….
• Regularly communicating its expectation to regulated entities ensure that consumers continue to have access to financial services at a reasonable cost and with the safety and security they have come to expect
• Monitored and reported on the implementation of relief measures announced by regulated entities as public commitments
• Undertaking research to better understand trends and issues Canadians have faced when managing their finances during the COVID-19 pandemic