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Questions and Answers about the proposed Financial Consumer Organization (FCO)

How a Canadian FCO with 1 million members and a $20-30 million annual budget can be formed

The Financial Consumer Organization (FCO) is a proposed federally chartered, non-profit organization designed to represent and educate consumers on financial services issues.  The FCO will advocate for fair service from financial institutions before the industry regulators, the government and the courts.  It will also educate financial consumers on issues such as service charges, credit cards, and mutual funds.

The FCO model is based upon Citizen Utility Boards (CUBs) which have been established in four states in the U.S.  In these states, all of the utilities were required to enclose a one-page pamphlet in their billing envelopes inviting people to join the CUB.  About five percent of consumers usually join the CUB at a $40 annual membership fee.  CUBs are independent, broad-based watchdog groups that are run democratically by their members and represent consumers’ interests in the marketplace.  For example, in Illinois the CUB has 150,000 members, a $1.5 million annual budget, and has saved consumers more than $20 billion since 1983 by opposing rate hikes by utilities.

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

As well, the Task Force on the Future of the Canadian Financial Services Sector 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 (see that recommendation referred to in the “Consumer Organizations” subsection of Chapter 6 of the 1999 House Finance Committee Report)).  The House of Commons Finance Committee, and Senate Banking Committee, endorsed the Task Force recommendation in their December 1998 reports.

In addition, a national coalition made up of 100 citizen groups with a total membership of 3.5 million Canadians supports the creation of the FCO.


To set up the FCO, the federal government must require federally-regulated financial institutions (banks, trusts and insurance companies and, working with each provincial government, mutual fund companies and credit unions), to include a notice at the top of every email they send to their 30 million customers and, for anyone who still receives monthly bank statements, credit card bills and insurance premium statements by mail, 1-2 times each year include a pamphlet in the same envelope.

Alternatively, financial institutions could volunteer to enclose the notice in their emails, and the pamphlet in their mailings, and as long as enough large institutions volunteered enough financial consumers would receive the email notice and pamphlet to make the FCO viable.

The notice at the top of emails that financial institutions send their customers will say something like “Need help from an independent consumer group dedicated only to helping you, click here to join the Financial Consumer Organization (FCO). The pamphlet that financial institutions would enclose in mailings to their customers will describe the FCO and invite financial consumers to join at a nominal annual membership fee ($20-30 — with a lower fee for people with low incomes). The government can either lend or grant to the FCO the funds needed to print the first pamphlet. After the first pamphlet, however, the FCO will pay all the costs of the pamphlet. As a result, the FCO can be set up at little or no cost to government or the financial institutions.

If only about three percent of Canadian bank and insurance customers join the FCO, it will have one million members and a $20-30 million annual budget. With these resources and large membership base, the FCO will be strong enough to counter the power of banks, trusts and insurance companies.

The FCO will be a democratic organization, controlled by its members through the election of regional delegates and the FCO’s board of directors.  The board will hire the FCO’s professional staff and determine the group’s policies.

The FCO will hire economists, experts, organizers, lobbyists and attorneys to represent consumers.

The FCO will also educate consumers through price surveys, public forums, shopping guides and various other publications.

In the past 20 years, the big five Canadian banks have obtained control of a majority of total financial institution assets, deposits, consumer credit, and mortgage loans in Canada, while reaping record profits.  Over the same period, many trust companies and insurance companies have failed and have been bailed out by the government with taxpayers’ money.

There have been ongoing complaints about service charges, credit card interest rates, misleading information and irresponsible lending by the banks.  In addition, many groups representing women, visible minorities and people with low incomes have documented discrimination by financial institutions in providing loans and other financial services.

Consumers are an important part of Canada’s financial system, but because of lack of resources their voice is not strong enough to be heard by governments, especially given the enormous resources and strength of the banking lobby.  The FCO will give act as an umbrella group to bring together consumers and existing consumer groups an organized voice for their interests on financial services issues in the marketplace.

With financial institutions offering up to 500 products and services, consumers often lack the information needed to compare prices among products.  The FCO will also provide this information, encouraging competition in the marketplace and better service for all financial consumers.

For more details, go to Democracy Watch’s Citizen Association Campaign