As the federal government moves to reduce bank fees for vulnerable groups, people in Ontario’s Kitchener-Waterloo area are already tackling the issue in their own backyard.

This week, about 75 representatives of financial institutions, social agencies and government met with pensioners, people on social assistance and other fixed incomes to brainstorm ideas around the concept of financial inclusion.

'Without money you don’t have a voice as well. I would really like to change that' - Jackie Baker

"People on the low end of the economic ladder need more than financial literacy, they need to be part of the discussions and the solutions,” according to Stephanie Mancini, co-founder of The Working Centre, a multi-service agency in Kitchener that coordinated the event.

People need easy and affordable access to bank accounts and practical financial advice, she said.

"It’s just that this is such a hard topic. If there were easy answers we would have thought of the solutions already,” she said.

Groups feel excluded

Jackie Baker, 51, understands the problem all too well. The mother of three grown sons grew up on welfare and was forced into the system again as she raised her boys.

“I never felt like I had much of a say in my life,” she said. “I would never even dream of going into a bank and asking for a loan or a mortgage or even know what a mortgage meant. I guess I felt why learn about it because I don’t have the money anyways.”

Baker shared her experiences with others at her table, including the barriers she faced trying to establish credit, balance a budget on social assistance and navigate the confusing world of banks.

“There’s just a whole society that doesn’t know or care we exist and it seems without money you don’t have a voice as well. I would really like to change that,” she said.

Many on low and fixed incomes don’t even have bank accounts, according to Bob Theisz, supervisor of finances for the 8,500 people on social assistance in the Waterloo Region. Problems such as the cost of securing proper identification and bad credit mean many are afraid of banks, he said, so they resort to using payday loans and cheque cashing stores which charge large user fees.

'How much would a bank lose if all the people on social assistance or disability didn’t pay a service charge' - Sue Collison

That means they are carrying around hundreds of dollars in cash, leaving them vulnerable to thieves, he said.

Theisz has now teamed up with a local Scotiabank branch in Waterloo to help clients set up bank accounts and manage their money.

“We do a hand-off to the bank, here’s this person, they are on social assistance, what kind of service can you offer them?” he said.

“I honestly thought it was a great idea,” said Rick Fazari, a senior manager with a downtown branch in Waterloo. A bank account with card access to an automatic teller offers a safer option than carrying cash. And it begins to give low-income people a credit history.

“We sit down with these individuals and say here’s one account, let’s explore a little more, how many transactions are you going to do a month and it will be this amount,” he said. “We’re not there to up-sell and try to go with the highest service charge, it’s just going with the right account.”

Options available

Douglas Spence would have welcomed that advice. A musician, he was seriously injured in a car accident several years ago. He lost his job and now survives on a disability allowance.

Each month he would go to the bank and withdraw everything but the bank’s service charge. One of the cashiers finally noticed that he was paying a huge fee for only one transaction a month.

“Nobody told me there was a lower one,” he said. “Had somebody told me over the last two years I could have saved hundreds of dollars.”

Jennifer House, 48, has dystonia, a neurological condition that affects her motor skills and lives on a disability allowance. She has a good relationship with her bank, but says they are often trying to sell her products she can’t or isn’t allowed to use. 

“They seem to want to push the TFSAs (Tax Free Savings Accounts) and lines of credit and stuff like that and I say, ‘No, no, I don’t need that,’“ she said. “It might be helpful if they could do some research themselves and know the limits and the rules around our money situations because there are limits on what we are allowed to have.”

These are all common issues for Sue Collison, a financial outreach worker at The Working Centre. A former bank employee, she now advocates and helps those on fixed or limited incomes overcome financial barriers.

“For example, if you don’t have a credit card, you can’t get a bus ticket, like a Greyhound ticket so that excludes the poor who would likely take the bus. Also, with the train, to get a reduced fare you need to have a credit card,” she said.

Looking down the road

Collison urges banks to start thinking differently about helping vulnerable people.

“How much would a bank lose if all the people on social assistance or disability didn’t pay a service charge? That’s a conversation to have – and how much would they gain from a business point of view,” she said.  “Just because someone is on a low or fixed income now, doesn’t mean they are always going to [be]. How many times do we see someone who has had a big turnaround?” 

Ben Janzen, outreach worker with the Mennonite Savings and Credit Union, says it’s a matter of building relationships and breaking down the image of banks as “big-walled institutions.” He said this week’s meeting opened the doors for banks to work together with community groups to find solutions that benefit everyone.

“I think more and more there’s a recognition that financial institutions need to be more cooperative with the community,” he said. “We’re people working in these organizations too, we believe in the same things as you and we think we might be part of the solution at the ground level.”