Big banks aren't so bad IT is with concern that I read The Unbanked by Brian Bechtel in your Feb. 10 issue. The article does a disservice to readers who need factual information about access to banking services. Mr. Bechtel does not seem to be aware of the banking services available to low-income Canadians. And the suggestion banks have "closed their doors" and raised barriers to discourage low-income customers is completely wrong. Let's look at the facts.
Eight Canadian banks offer low-fee accounts, with monthly fees of $4 or less. Under federal law, you can open a bank account with two pieces of identification: no minimum deposits or minimum balances are required and you don't have to be employed. The fact is that Canada has a highly banked population, a fact confirmed in a study by the Public Interest Advocacy Centre which found that 99 per cent of Canadians have an account with a financial institution and, of the one per cent that didn't, 80 per cent said they didn't want one.
Moreover, the suggestion by Mr. Bechtel that consumers can't cash a government cheque without an account is also incorrect. Anyone can cash a federal government cheque of up to $1,500 for free at a bank as long as they have two pieces of identification (only one piece is needed if it bears a signature and photograph). You do not have to be a customer or even have a bank account.
And while they don't call them payday loans, banks do offer small, short-term loans in the form of overdraft protection, lines of credit and credit cards, with all of Canada's largest banks offering low rate credit cards with interest rates in the range of 10.5 per cent to 12.9 per cent. This type of credit can be accessed when needed and at much lower rates than a payday lender would charge. And it should be noted that ID requirements are stricter at payday loan outlets than they are at banks and you require a bank account to get a payday loan.
Mr. Bechtel also has his facts wrong about a bank's decisions to open and close branches. The decisions about where new branches should be opened and where they will be closed have always been business decisions made by the banks based on customer demand and traffic, not the relative wealth of the neighbourhood. The decision to close a branch is only made after careful study is done. And, when branches have to close, there is a formal process required by law that must be followed in each case and this is monitored by the Financial Consumer Agency of Canada (FCAC). As the FCAC commissioner acknowledges, however, a branch closure is a legitimate business decision. Readers deserve to know about the banking services available to them through the banks. It's unfortunate that articles continue to appear from commentators who clearly don't know the facts. Canada's banks are committed to ensuring all Canadians have access to banking services if they wish. To learn more, visit www.cba.ca/basicbanking or call 1-800-263-0231 for a copy of Serving Canadian Consumers: Access to Basic Banking Services.
Director Public and Community Affairs Canadian Bankers Association Toronto
Every bank I've heard about wants to put a week's hold on any deposited cheques, and a week's hold on anything deposited through the bank machine (which is where most people deposit, since most branches close so early).
How many people do you know making less than $15 an hour can wait around a full week to get their money?
If Canadians are so fully banked, and large banks are a decent alternative, how does the Bankers' Association explain why cheque cashing stores are doing so well?