Financial Consumers’ Rights and Responsibilities – 2016

POR Number 024-16

Executive Summary

Financial Consumers’ Rights and Responsibilities Survey - 2016

FCAC-POR-024-16

February 2017

Prepared for: Financial Consumer Agency of Canada

Email: por@fcac-acfc.gc.ca

Contract Number: 5R000-160515/001/CY

Contract Date : 2016-07-20

Prepared by: Ipsos Public Affairs Canada

Executive Summary

A. Background

In support of its 2016–2017 Business Plan, which includes the priority to promote public awareness of consumers’ financial rights and responsibilities, the Financial Consumer Agency of Canada (FCAC) sought to obtain data from consumers to evaluate their knowledge of their rights and responsibilities with respect to making informed financial decisions.

A measurement of the current financial literacy of Canadians on a range of specific measures will allow FCAC to assess the effectiveness of its consumer education and financial literacy initiatives and ensure it provides consumers with appropriate information to educate them about their rights and responsibilities, and enable them to make informed decisions and manage their financial affairs confidently.

The contract value for the research was $76,112.42, including HST.

B. Research objectives

The research objectives included the following:

• to measure the extent to which Canadians are aware of their financial rights and responsibilities; and
• To provide comparable data that could be benchmarked against data collected in previous years (2011 and 2006, as required).

This research provides insight into the Canadian general public’s awareness and knowledge of their rights and responsibilities with respect to making informed financial decisions.

C. Methodology

Ipsos conducted an 11-minute telephone survey among a nationwide sample of n=2,000 Canadian adults between July 28 and August 11, 2016. The sample was a probability sample generated by random digit dialing (RDD). Canadians were selected from households at random, first, by asking for the youngest person in the household (aged 18+), and if that person was not available or unwilling to participate, by identifying and interviewing the member of the household who had their birthday last (the “birthday method”).

Eight hundred (n=800) surveys were completed of a cellphone sample to boost representation of younger Canadians and Canadians who may no longer have landlines accessible through RDD. The cellphone sample included Canadians with a landline and a cellphone, but who identify their cellphone as their primary telephone for personal calls. Wireless samples were selected on a provincial level (as it is not practical to accurately select by market given the mobile nature of the technology) from a database containing all possible numbers in 1000-blocks of area codes and exchanges dedicated to wireless numbers.

D. Reading this report

This report provides a summary of the findings of the 2016 study and includes comparisons, where possible^{Footnote 1} ,  with the studies conducted in 2011 and 2006. Differences between subgroups and year-over-year changes are noted when they are deemed to be statistically significant through T-testing. In addition, the report identifies changes of five percentage points or less that were not deemed significant through T-testing as a possible trend. Ipsos Public Affairs conducted the 2011 and 2016 waves of the research. The 2006 study was conducted by another supplier.

E. Key findings

Knowledge of banking rights and responsibilities

• When asked whether a series of six statements about consumer rights and responsibilities when dealing with financial institutions were true or false, 61% answered half or more of the questions correctly, and 37% answered one or two questions correctly.
• Regarding the statements tested, Canadians most commonly answered correctly (85%) that it is true that “When you open an account, the bank must give you a written statement of all service fees and charges” (compared with 80% in 2011 and 88% in 2006).
• Half of Canadians (51%) continued to believe incorrectly 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” (compared with 52% in 2011 and 49% in 2006).
• Only one third (33%) of Canadians were aware that it is false that “If you deposit a cheque at a branch with a bank teller, the bank does not have to give you access to any of your funds immediately.”
• Seven in ten (68%) Canadians correctly stated that “The card-holder only” is responsible if any funds are lost after a card and PIN are found in a lost wallet, down from 2011 (72%).

Views on dealing with financial institutions

• In line with the 2011 results, nine in ten Canadians (93% compared with 92% in 2011) agreed either strongly (72%) or somewhat (21%) that “Financial institutions have a legal duty to provide clear information to consumers.”
• Overall agreement with the statement “You are very clear about your rights if you have a problem with a financial institution” has increased since 2011 (69% compared with 63% in 2011). The 2016 results show an increase in strong agreement among those with less than a high school education (29% compared with 21% in 2011); however, there was a decrease among those with a post-secondary education (27% compared with 21%).

Knowledge of responsibility for joint accounts

• In the case of jointly held accounts, nine in ten Canadians (87%) correctly stated that “Both persons are responsible for the entire account,” which is consistent with 2011 (86%) and significantly higher than in 2006 (73%).
• When asked how responsible a primary credit card holder who has arranged for a second person to use the card is when that person incurs a debt, three quarters (74%) of Canadians correctly stated that the primary card holder is “entirely responsible for any debt the other person incurs on the card.”

Knowledge about credit reports

• Consistent with the 2011 results (10%), around one in ten Canadians (8%) correctly stated that they can obtain a credit report for “No cost by mail but some costs by the Internet”; however, this percentage has increased since 2006 (5%). A third of Canadians (33%) incorrectly stated that there are “Some costs both by mail and the Internet” for a credit report.
• Canadians were asked whether they would know “how to dispute an entry on [their] credit report,” with four in ten (43%) stating that they would, up from 2011 (38%).

Knowledge about credit card rights and responsibilities

• When given three possible responses, a strong majority (94%) correctly selected “contacting the financial institution that issued your credit card” to complete the sentence: “You can cancel your credit card by ….”
• Three quarters (75%) of Canadians correctly answered that it is false that “A bank can issue you a credit card without your prior approval”; however, one in five (19%) thought this to be true.
• Seven in ten Canadians (71%) correctly answered false to the statement “There is no time limit for reporting fraudulent transactions on your credit card to your financial institution.”

Knowledge about prepaid card rights and responsibilities

Close to two thirds of Canadians (65%) correctly stated that it is true that “All fees associated with a prepaid card must be listed on the packaging of the prepaid card.” One in 10 (9%) incorrectly believed this to be false.