10b Tanguay Credit and Debt

Practices and Ethicof Budget Counselling

Charles TanguayUnion des consommateurs (Québec)

CI World Congress 2007Sydney

October 31 2007

Practices and Ethic of Budget Counselling

Presentation - Who are we?Presentation - Who are we?

CI World Congress, Sydney, October 31 2007

• Federation of 11 consumer groups from Québec;Federation of 11 consumer groups from Québec;• 10 Co-operative Associations for Family Economics 10 Co-operative Associations for Family Economics (ACEF);(ACEF);• Created during the 60’s specifically around the issue of Created during the 60’s specifically around the issue of credit and problematic indebtedness;credit and problematic indebtedness;• Philosophy of empowering consumers who face debt Philosophy of empowering consumers who face debt problems without judging them, considering they are not problems without judging them, considering they are not solely responsible of their situation.solely responsible of their situation.


Situation in Canada - overviewSituation in Canada - overview


• debts / available revenue: 70% to 115% debts / available revenue: 70% to 115% • saving rate near zerosaving rate near zero• explosion of the number of credit cardsexplosion of the number of credit cards• increasing insolvency problemsincreasing insolvency problems




• households are more and more tight financially households are more and more tight financially • credit is offered for many goods on salecredit is offered for many goods on sale• «Buy now, Pay later...»«Buy now, Pay later...»





• banks say: no worries - increase assets balance the banks say: no worries - increase assets balance the increase of debtsincrease of debts• ...but, what if interest rates go up?...but, what if interest rates go up?• «Insolvancy vultures» are turning around«Insolvancy vultures» are turning around


Different services for people in debtDifferent services for people in debt


Credit Counselling scandal in the USA

«Some credit counselling organizations have been accused of using aggressive and abusive marketing practices, misusing their non-profit status, charging consumers excessive fees, and paying excessively high salary to executives.»

- US Senate


Different services for people in debtDifferent services for people in debt


Canada - no regulation on credit counselling services

• trustees• «financial redressers»• non profit organizations

- Credit Counselling Services- ACEF


Different approachesDifferent approaches


«Creditors friendly» : Consumers must be responsible and pay their debts

Social worker approach:co-responsibility - the consumer do not control all factors; creditors, merchants, publicity also share responsibility - paying debts comes after paying basic needs


Different approachesDifferent approaches


Who is paying for the service?

Credit Counselling: debt poolling with $ return (%) from creditors

ACEF:Charity organization and governmental grants - no tie with creditors


Budget counselling in the ACEFsBudget counselling in the ACEFs


Free service

Multi-disciplinary skills • budget and personnal finance• regulations on credit• solutions to insolvency - bankruptcy, consolidation, etc• fiscality - additional sources of income• psycho-social interventions• consumers protection laws and others


Prevention work done by the ACEFsPrevention work done by the ACEFs


• budget lessons• budgeting and personnal finance tools• budgeting and personnal finance software• campaigns on rational uses of credit• lobby for better regulations


Food for thoughtsFood for thoughts

Easy access to creditEasy access to creditCSR of creditorCSR of creditorCosts for the society: bankruptcies, health, ...Costs for the society: bankruptcies, health, ...

Do we need a regulatory frame on credit offers and Do we need a regulatory frame on credit offers and publicity such as the ones for alcohol, tobacco and publicity such as the ones for alcohol, tobacco and gambling ?gambling ?



How the credit counselling services How the credit counselling services look like in your country ?look like in your country ?



MerciMerciThank youThank you

GraciasGracias

[email protected]@consommateur.qc.ca


Economy & Finance

10b Tanguay Credit and Debt