We don’t just have a financial literacy problem in Canada, we have a debt literacy problem. Household debt in Canada continues to skyrocket, reaching a “gravity-defying” $2 trillion in December 2016.
While it’s true that we carry significant mortgage debt (it increased 5.9% last year), my biggest concern is that consumer debt increased roughly 3.4% from a year earlier.
Consumer debt includes credit card debt, personal lines of credit, and car loans. It is debt we incurred to buy consumer goods. I don’t care how low interest rates are right now, Canadians have a debt problem.
The federal government is also concerned with how Canadians are managing their money. They are so concerned that they created a special National Steering Committee on Financial Literacy. Part of this committee’s mandate is to empower Canadians to “manage money and debt wisely”. Members of the committee are to include representation from “the public, private, and non-profit sectors”.
Licensed Insolvency Trustees are appointed and regulated by the federal government to help people deal with debt. According to the Office of the Superintendent of Bankruptcy:
Licensed Insolvency Trustees (LITs) are federally regulated professionals who provide advice and services to individuals and businesses with debt problems. LITs help people make informed choices to deal with their financial difficulties.
So the federal government says that Licensed Insolvency Trustees are experts in debt management. I agree. As a Licensed Insolvency Trustee our firm meets with thousands of individuals every year who are dealing with overwhelming debt. We listen to their stories, ask questions to better understand their situation, and provide them with advice about their options. This may, or may not, include a consumer proposal or bankruptcy, but our role is to provide advice to help them find the best solution for their circumstances.
Here’s what we know:
- The Government of Canada agrees that Licensed Insolvency Trustees are the most qualified professionals to help Canadians deal with debt.
- Licensed Insolvency Trustees meet with thousands of people every year who are struggling with debt.
- The Government of Canada has created a committee specifically to improve the financial literacy of Canadians part of who’s mandate is to help Canadians manage debt wisely.
Would you not expect that at least one Licensed Insolvency Trustee would be on the committee? There’s not.
The National Steering Committee on Financial Literacy just announced their committee members. They include representatives from the banks, credit unions, investment advisers and the life insurance industry. There is one credit counsellor, but not a single Licensed Insolvency Trustee is on the committee.
It’s surprising that, on a government financial literacy committee whose mandate is to help Canadians manage debt, the lenders are represented, but the professionals that the federal government acknowledges are debt management experts, are not.
Why is that?
I don’t know.
I applied to be on the committee.
As a Licensed Insolvency Trustee I meet with people every day who are experiencing severe financial problems. In addition to that, our firm conducts an in-depth study every two years where we collect information to better understand why the average person files insolvency. We call this average insolvent person Joe Debtor. This report is released to the public to help others understand what causes people to become insolvent and eventually file bankruptcy or a consumer proposal. This insight would be useful in helping Canadians make wise debt decisions.
Unfortunately, not everyone agrees.
I received an email effectively saying thanks, but no thanks.
Thank you for your application for membership on the National Steering Committee (NSC) on Financial Literacy and also for your patience during the selection process. Over 120 applications were received from individuals representing a broad range of public, private and non-profit organizations from across Canada. We carefully considered all applicants.
I want to acknowledge your