Citizen Association Campaign

Advocating the creation of citizen watchdog groups for all business and government sectors using an innovative pamphlet method that has given millions of people in the U.S. an easy way to join strong watchdog groups over big businesses

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The Opportunity

In mid-December 1994, federal Industry Minister John Manley stated in an interview: “If I could fix one thing, it would be to see that we have a more vital consumer advocacy function generated by real participation.”

However, in the mid-1990s governments across Canada cut funding to consumer advocacy groups.  Several consumer groups in Canada reduced staff and offices as a result of these cuts, and some disappeared.

Democracy Watch and the nation-wide Corporate Responsibility Coalition it coordinates have proposed a solution to this situation.  This solution will create strong, independent, broad-based consumer watchdog groups to monitor the investment industry, banks, cable-TV and telephone companies, and airlines, without requiring significant government funding, using an innovative method that has worked well in some U.S. states.

According to a national survey of Canadians, 64% of Canadians support the creation of these groups using the pamphlet method.

Shareholder Rights – Governments (both federal and provincial) and regulatory agencies (such as the Ontario Securities Commission) have so far responded in a typical way to the scandalous behaviour by dozens of companies and the investment industry generally — they have done as little as possible while hoping that investors will be fooled into thinking that they are protected from further abuses.

Yes, there has been report after report proposing solutions to the problems (the Crawford Report, the Osborne Report, a Senate Committee Report, and the Ontario Finance and Economic Affairs Committee Report) — lots of words on lots of paper.  To their credit the Ontario Finance and Economic Affairs Committee recommended that this method be carefully considered by the Ontario government.

Banking – In an article in the Ottawa Citizen (April 18, 1996, p. B3), then-federal Industry Minister John Manley, when asked about Democracy Watch’s proposal for the creation of a Financial Consumer Organization (FCO) in Canada using the Citizen Utility Board method (see description below), stated that “Provided consumers groups themselves could show solidarity in terms of what they’d like and how they’d like to do it . . . I’d be willing to support them . . .” Democracy Watch coordinates a coalition, the Canadian Community Reinvestment Coalition, made up of over 100 groups from across Canada representing over 3 million Canadians and advocating increased bank accountability in Canada.  These groups have all agreed on a model for an FCO in Canada, as Minister Manley stated that he supported.

Democracy Watch’s proposal to create a watchdog group for banks and other financial institutions was endorsed by the Task Force on the Future of the Canadian Financial Services Sector, which recommended in its September 1998 Report that the federal government create an FCO using the pamphlet method (See Recommendation #56(b) on page 208 of the Report).  The House of Commons Finance Committee, and Senate Banking Committee, endorsed the Task Force recommendation in their December 1998 reports.

Given the broad-based support for the creation of an FCO in Canada, it’s about time that the federal government required the financial services industry to cooperate by enclosing the FCO pamphlet in their customer mailings.

Cable-TV and Telephone – Given the necessity for such a group for telecommunications consumers, the federal government must also require the telecommunications industry to cooperate by enclosing a Telecommunications Consumer Organization (TCO) pamphlet in their customer mailings.

Airlines – The takeover of Canadian Airlines by Air Canada in spring 2000 did not solve Canada’s airline industry mess, as the airline bailouts by the federal government in the fall 2001 made clear.  Consumer protection and accountability measures for the industry are also still lacking.  Creating an Air Passenger Organization (APO) is a key step in ensuring that all air passengers are served fairly and well by the airlines.


Shareholder Rights – About 10 million Canadians own shares in a Canadian corporation or mutual fund. Many, many problems have been identified in the investment industry, mainly involving companies lying to, or abusing shareholders in one way or another.  Nortel, Bre-X, YBM, Hollinger, Royal Bank, CIBC, TD-Canada Trust, AIM — all these companies and many more in Canada’s investment industry have been in the news, involved in insider trading, conflicts of interest, stock fraud, financial mismanagement, market timing by mutual fund companies and many other unethical, irresponsible business practices.

Many governments still take large donations from the industry; the industry gouges investors in part to pay for dozens of lobbyists to wine-and-dine politicians and regulators; the industry does not have to disclose key information; the regulator has inadequate resources and powers, and; the rules are full of loopholes.

Things are so bad that the industry actually is the referee for its own behaviour in many areas through the Investment Dealers Association and the stock exchanges.  On their own (although some have banded together in small, poorly funded groups), investors don’t have a chance.

Banking – About 20 million Canadians have a bank account or credit card with a federally-regulated financial institution.  The big six Canadian banks control a majority of financial institution assets, deposits, consumer credit and mortgage loans in Canada.  The big banks enjoy extensive privileges and corporate subsidies including government protection from foreign competition and insolvency.

Many groups representing women, visible minorities and people with low incomes have documented discrimination by banks in providing loans and other financial services. In addition, there have been ongoing complaints about service charges (e.g. in 1994, the Royal Bank received $600 million from fee charges to customers, an increase of 29 percent over 1993), credit card interest rates, information provided about mutual funds, and confusion about the over 500 other products and services offered by banks.  Most recently, Canada’s big banks lost a total of $16 billion, and while the federal government provided a subsidy worth up to $95 billion, it did not require the banks to give anything back in return.

Cable-TV – About 7 million Canadian households subscribe to cable-TV in Canada.  The cable-TV industry is made up of 200 companies operating about 1,800 cable-TV services. Rogers Cablesystems (which was allowed to take over its rival Maclean Hunter in 1994) is the largest company in Canada, with about 30% of the market.  In early 1995, the industry tried to impose new channels on subscribers through a scheme called “negative-option marketing” whereby the consumer has to refuse the new channel or be automatically charged.  However the industry was forced to back down after a consumer revolt during which 2,500 people complained to the industry regulator, the Canadian Radio-Television and Telecommunications Commission (CRTC).  However, ongoing problems with service and gouging in the industry continue to plague cable customers.

Telephone – Almost every Canadian household has a telephone.  The Stentor group of companies, including Bell Canada (the largest telecommunications company in Canada), BC Tel, Telus, and seven other provincial phone companies, control 85% of the long distance market.  Consumers now face a dizzying array of offers of long-distance services, all with different pricing, savings plans and discounts.  As a supposed trade-off for loss of income from long distance, the CRTC granted local telephone companies a $4 per month increase in local telephone rates in 1998.  As with the cable-TV industry, and as the two industries merge by offering combined services, customers continue to be plagued by service and price gouging problems.

Airlines – About 10 million people take an airplane flight in Canada each year.  The airlines have received subsidies and privileges from the Canadian government in the past in terms of financing, protection from foreign competition, and  facilitated takeovers and mergers.  There have been ongoing complaints about health and safety, service quality, pricing, regulation, and public participation in policy-making about the airline industry in Canada.  With airlines offering an increasingly broad array of inter-airline partnership and frequent-pamphlet deals, consumers often lack the information needed to take advantage of these deals.  In the fall of 2001, the federal government bailed out the airlines with over $150 million, and also took other steps to help the airlines, especially Air Canada.

In all of these industries, investing, banking, cable-TV, telephone, and airlines, consumers are largely unorganized, and usually are on their own when complaining about services provided by the very large companies that control these sectors.  Few consumer groups exist to represent the consumer interest and provide information to consumers, and they are usually outmatched by the resources that these companies have for lobbying and public relations campaigns.  Ironically, these companies often pass on the costs of their advocacy to consumers through their bills.