Thursday 30 April 1992

Government Cheque Cashing Act, 1992, Bill 154

Ontario Coalition Against Poverty

John Clarke, provincial organizer

Daily Bread Food Bank

Sue Cox, assistant executive director

Cheque Cashers Association of Canada

Stephen A. Clark, president

Leslie Baril, member


Chair / Président: Hansen, Ron (Lincoln ND)

Vice-Chair / Vice-Président: Sutherland, Kimble (Oxford ND)

Caplan, Elinor (Oriole L)

Carr, Gary (Oakville South/-Sud PC)

Christopherson, David (Hamilton Centre ND)

Jamison, Norm (Norfolk ND)

Kwinter, Monte (Wilson Heights L)

Phillips, Gerry (Scarborough-Agincourt L)

Sterling, Norman W. (Carleton PC)

Ward, Brad (Brantford ND)

Ward, Margery (Don Mills ND)

Wiseman, Jim (Durham West/-Ouest ND)

Substitutions / Membres remplaçants:

Brown, Michael A. (Algoma-Manitoulin L) for Mr Kwinter

Fletcher, Derek (Guelph ND) for Ms Ward

Ruprecht, Tony (Parkdale L) for Mr Phillips

Also taking part / Autres participants et participantes: Kormos, Peter (Welland-Thorold ND)

Morin, Gilles E. (Carleton East/-Est L)

Clerk pro tem / Greffière par intérim: Mellor, Lynn

Staff / Personnel: Campbell, Elaine, research officer, Legislative Research Service

The committee met at 1013 in committee room 1.


Consideration of Bill 154, An Act to prohibit the Charging of Fees for the Cashing of Government Cheques / Loi interdisant de demander des droits pour l'encaissement de chèques du gouvernement.

The Chair (Mr Ron Hansen): We'll open hearings this morning in the standing committee on finance and economic affairs on Bill 154, An Act to prohibit the Charging of Fees for the Cashing of Government Cheques, which is a private member's bill. Mr Morin, please begin.

Mr Gilles E. Morin (Carleton East): Thank you very much, Mr Chairman. I want to let you know that I will be speaking for approximately 22 minutes.

We're here to study Bill 154, the Government Cheque Cashing Act, which prohibits charging fees for cashing a government cheque. I am pleased to have this opportunity to explain why this bill is important. I would like to demonstrate why it is essential that we seek a solution to a problem that has been identified, documented and debated by those involved with recipients of social assistance, yet this problem has never been addressed in a satisfactory manner. This is why it persists. I sincerely hope these hearings will yield positive, concrete results.

The cheque-cashing issue has been of great interest to me for a number of years. I have long been aware of the difficult circumstances that accompany poverty: restricted opportunities, hunger, limited access to goods and services that guarantee a better head start in life, discrimination, dependency, lack of autonomy and loss of dignity. These are some of the signs of poverty.

Being poor is not an advantage in our society. It confers a stigma upon persons who do not have the financial means to keep up with the rest of society. I suppose one can argue over the meaning of poverty and, to a certain degree, it may be considered relative to a given society. However, let's not be mistaken. Real poverty, as defined by the lack of basic necessities, is very present in our society.

I am not referring to a person's incapacity to keep up with current trends or to maintain the social standards of North American society. Poor Canadians suffer from want. In the midst of affluence they want for the basic necessities of life, such as regular and nutritious meals, proper clothing, safe housing and freedom from constant insecurity. These are not only minimal Canadian standards of living; they are dictated by what should be considered common standards of decency.

Poverty has a devastating impact not only on an individual but also on society. It drains society's resources and wastes its human potential. As poverty becomes an even greater burden, society is less capable of managing the present and preparing the future. This is not a problem for the uncaring society which values ends over means, but I believe Canadian society is a caring one.

The evolution of the welfare state in Canada illustrates well the belief that the community is partially responsible for the wellbeing of its less fortunate members. Accordingly, this belief was translated into social assistance programs. Programs were designed to bring relief -- not the life of luxury, but simply relief to the needy -- in the hope that eventually recipients of social assistance would be able to pull away from their difficulties.

This is where the notion of the poverty line comes into play. The poverty line helps to establish a certain level of subsistence below which a person should not fall. The financial aid a person receives should maintain that person at the poverty line. Programs such as family benefits and a general welfare assistance plan should ensure that basic necessities are provided to every person. The sad reality is that they do not always accomplish this.

This leads us back to a statement I made a few moments ago. I was referring to the difficult circumstances that accompany poverty. Bill 154 addresses one of the difficulties faced by the poor. It aims at reducing to the greatest extent possible the discrimination encountered by the poor in the course of their financial transactions. It wishes to alleviate, if not eradicate, the hardships caused by this discrimination.

Financial transactions are an almost natural part of our existence. We cannot avoid them. In order to get on with our lives we must on a regular basis deal with financial institutions. The poor may not have much money, but what little they do possess usually entails some dealings with financial institutions.

I have said before that cashing a cheque was not a difficult task for people like ourselves. Establishing our identity never becomes an issue. We possess an array of identity cards and sufficient income to ensure our access to a variety of financial services. If we dread at all having to deal with a financial institution, it is not for reasons of intimidation.

Recipients of social assistance, on the other hand, are not so fortunate. They encounter discrimination right from the start, based upon the fact that they are poor. They must face prejudices or preconceived notions, such as, "The poor cannot be trusted," or "The poor have a greater tendency to commit fraud." Some people assume, "If this person is poor, it's because he or she is lazy, doesn't want to work." When that hurdle is passed and communication is established, the recipient must provide ID. This is a reasonable request. However, a low-income person does not always possess two or three adequate forms of identification, and when you're poor, regulations tend to be applied in a more stringent manner. Individuals who are not branch customers are simply turned away.

Many financial institutions are reluctant to handle government cheques because of the potential loss due to fraud. Yet how much more fraud is committed by credit card holders or simply by common thieves? Is it not discriminatory to infer that recipients of social assistance are more fraudulent than other members of society? Is it not discriminatory to single out a group of persons and say, "We will refuse them services because they are not reliable customers"?


Some have said that Bill 154 itself discriminates against recipients of social assistance by singling out their source of income. My reply, and I have said this before, is that the source of a person's income is important, as it is one of the main causes of discrimination by established financial institutions.

The recipients of social assistance are stigmatized because of their financial situation. It restricts their access to regular financial services. This is why they turn to alternative means to cash their cheques.

This bill addresses and hopes to alleviate this type of discrimination faced by the poor. So to state that Bill 154 is discriminatory by invoking specious arguments simply evades the issue. Nor is this bill any more paternalistic than any other piece of social legislation. Social policy, as such, is paternalistic. There is no way of getting around this. Either we leave individuals to fend for themselves regardless of the consequences, or we take certain measures in order to help people meet basic needs.

The object of our social legislation is to try to increase the degree of independence of the needy and hopefully to see them become fully independent. This bill aims to ensure that low-income persons benefit from mainstream traditional financial services and are not, because of discrimination, forced to resort to cheque-cashing outlets or any other business that charges fees for cashing government cheques.

As for the argument that this bill would restrict much-needed competition for the banking industry, it would take more than that to effectively begin to challenge the monopoly enjoyed by financial institutions in Canada. Banks are not threatened at all by cheque-cashing businesses who have, as a matter of fact, taken on a clientele they prefer not to serve. The simple fact is that for many low-income persons a visit to a local bank can be a daunting event, to be avoided if possible, even if it means paying fees to cash a government cheque. This is why recipients turn to alternative sources for cheque-cashing purposes.

Yes, cheque-cashing outlets have filled a need unmet by banks, but no, they do not offer the best alternative to recipients of social assistance. As a matter of fact, cheque-cashing businesses have become associated pejoratively with the clientele they serve. This, in essence, singles out low-income persons more cruelly than anything else, because it implies that a low-income person whose main source of income is a government cheque is not good enough or worthy of proper service in a regular financial institution. It implies the segregation of people and services in our society based upon the source of an individual's income. This is condoning, in effect, one type of financial service for the well-off and another for the needy. Can it be more discriminatory? This bothers me. I do not believe that we, as a society, should be comfortable with such inequity.

I think this is an important point. The arguments brought forth in opposition to Bill 154 invoke such notions as consumer freedom, the right to choice and equality with other consumers. In practical terms they would serve only to maintain the status quo, and the status quo is the reality described above. Ontario would continue to sanction discrimination based upon one's source of income or lack of income.

I would like to examine more closely some of these concepts, especially the notion of equality. Equality of rights is an attractive slogan. The mere mention of equality can be enough to gather support for one's cause. Of course, people will say, everyone should enjoy equality of rights. It's a basic assumption in our society.

We live in a democratic society and democracy implies equality of rights and treatment. What is easily forgotten in the midst of these appeals to equality is the indisputable fact that, as consumers, the poor and the well-off are not equals. They do not enjoy the same purchasing power, the same privileges, nor the same degree of influence as a consumer group. As a consequence, their freedom as consumers is greatly affected. I will explain this.

Freedom of choice has been linked to the concept of equality. If every person is considered equal, then of course they are all entitled, equally, to choose freely. The poor, like the wealthy, should enjoy the right to choose freely the type of financial services they wish to receive. This is the gist of the argument. But there's just one drawback to this assertion. The right to choose implies the capacity to carry out that choice.

This means that if a low-income person chooses to deal with a financial institution instead of an alternative party for cheque-cashing purposes, then he or she should be able to carry out that choice. He should be able to walk into a bank and receive service. In reality, lack of access to regular financial institutions automatically guarantees that the low-income person's right to choose is impeded, because he may choose to deal with a bank and still be refused service.

It is misleading, therefore, to invoke the right to choose as some sacred principle, based upon an inaccurate view of equality, without any regard to the actual exercise of that right. To assert the existence of a right without ensuring its exercise is, in effect, to deny that right. It's like acquiring money that has lost all of its value and can't be spent. So this bill is not depriving low-income persons of any right to choose. They will remain free to seek service in a cheque-cashing business if they wish to do so. The only difference is that they will no longer be charged a fee for cashing their cheques. If an agreement is reached between representatives of financial institutions and the provincial government, low-income persons will finally enjoy access to better financial services like the rest of society does. They will no longer be marginalized because of their source of income.

I imagine it's now evident that this bill has a number of objectives. The first, clearly, is to prohibit charging fees for cashing government cheques. This is a morally and socially unacceptable practice. We cannot allow low-income recipients of government cheques to lose a percentage of their income, especially when it represents a vital minimum.

The government of Quebec took the initiative in 1981 and prohibited charging fees for cashing government cheques. Money Mart challenged article 251 of the Consumer Protection Act, which prohibits charging fees, and lost its case. Two appeals of that decision were rejected. The Supreme Court upheld the constitutionality of article 251, as well as the validity of its aim, which is the protection of low-income consumers. I will return to this question of consumer protection in a moment.

Now obviously, the prohibition of fees only resolves part of the cheque-cashing problem. The bill's second objective addresses the greater issue of the poor's lack of accessibility to regular financial services. This lack of access causes them to turn to alternative means of cheque-cashing. It is based on the financial institution's mistrust of low-income recipients of government cheques and on the fear of fraud involving government cheques. Not that this fear is groundless, but as I have indicated earlier, there is no greater prevalence of fraud among low-income persons than among the rest of the population.


I believe that an agreement can be reached between the government of Ontario and the Canadian Bankers Association, along with the credit unions and the caisses populaires, which would facilitate cheque-cashing. Such an agreement should specify acceptable types of identification cards, as well as set out the conditions for reimbursement of fraudulent cheques by the government. It could also contain provisions regarding the opening of an account. The question of accessibility to better financial services can only be resolved if financial institutions and the government cooperate. This bill wants to encourage the government and financial institutions to face their social and moral obligations towards the poor.

This leads us to a third objective which will help meet the second: improving our social assistance programs, making them more responsive to the needs of recipients, streamlining the system of distribution of social assistance. This too will require cooperation between ministries and financial institutions. If, for example, the electronic transfer of funds were instituted, or the direct deposit program expanded, the cheque-cashing problem would cease to exist. Low-income persons would be dealing with financial institutions like you and I do. They would possess a withdrawal card that would enable them to withdraw money from an automatic teller without having to go through the hassle of establishing their identity.

I would add that reorganizing the system of social assistance should make it more efficient in terms of administration and costs. Simply reducing incidences of fraud will prove less costly to the system while ensuring that dollars intended for the needy get into their hands. The reduction of fraud is another objective which can be met through an improvement in the way social programs function and funds are delivered. This objective, again, requires the cooperation of financial institutions.

I would like to return now to the issue of consumer protection, because in my view this issue concerns the protection of low-income consumers. It concerns the protection of their limited income. This is why I referred my bill to the Ministry of Consumer and Commercial Relations, because I feel that the solution starts there. First, we must ensure that those cheques which provide a basic minimum are not subjected to any fees. The Ministry of Consumer and Commercial Relations must take that initiative.

We are not just talking about welfare cheques. There is a whole range of cheques issued by the federal, provincial and municipal governments that supplement already meagre incomes, such as the old age pension or disability pensions. These are not, generally speaking, considered welfare cheques; however, they do represent low incomes, incomes that barely keep those recipients above the poverty line. These incomes require as much protection as a family benefits cheque or a general welfare cheque. As consumers, low-income persons are entitled to protection from certain commercial practices. It is the responsibility and within the jurisdiction of the Ministry of Consumer and Commercial Affairs to protect consumers.

Second, in order to meet the objectives set out earlier, other ministries must become involved in this issue and they already are. Meetings have been held involving the Ministry of Community and Social Services, the Ministry of Treasury and Economics and the Ministry of Financial Institutions.

The Ministry of Community and Social Services has met with representatives of groups which lobby on behalf of the poor. All of this is important, but what I wish to stress is that at some point we must stop talking and start doing something. Decisions must be made. There have been many consultations, many reports. We are now familiar with the issue. We know what the solutions are. All that is needed is the will to decide, to say: "This is what must be done. This is how we intend to resolve the problem." There is no reason to delay.

I have a list of witnesses and I hope you will hear them. You should also meet with the Canadian Bankers Association; I met with them. I met with the credit unions and I met with the caisses populaires of Ontario. These are all witnesses. I felt, through my conversation with them, that they are willing to cooperate, so I hope this committee will act as a trait d'union, as a link, bring them together and come to a decision. It has been going on for too long.

Are there any questions?

The Chair: Are we going to have questions of Mr Morin at the very end?

Mr David Christopherson (Hamilton Centre): Yes. Let's hear some of the other submissions.

Mr Morin: Later on, then. Fine. Perfect. Sure.


The Chair: The next group is the Ontario Coalition Against Poverty. Mr John Clarke, come forward please. Welcome to the standing committee on finance and economic affairs. You may proceed. We need some time at the end to ask questions on behalf of the group you're representing.

Mr John Clarke: Certainly. I'll be fairly brief.

I would like to begin by making the point, particularly to the government members, that this issue of cheque-cashing outlets and dealing with the problem is something that frankly should be a housekeeping issue for the NDP government. I believe it's something that should be dealt with immediately. It's so much a part of the mandate of dealing with problems of poverty that your government sought in opposition, when it was campaigning for office, that I think there's a real responsibility to move on this and to specifically throw some weight behind Bill 154.

In our opinion, there is no question that a very major problem with regard to cheque cashing exists in Ontario. The Daily Bread Food Bank will be appearing shortly, but I would just like to point out one of the observations that it makes in the work it has been doing around this issue; that is, a survey of people using food banks indicates that 26% or 27% of people have gone to a cheque-cashing outlet during the course of the last year. That's an enormous problem. That's an enormous amount of money that people desperately need and are not able to utilize, and I think in your deliberations you need to keep that in mind.

When you look at operations like Money Mart and other such operations and you see large lineups of obviously needy people going in there to hand over an unacceptable portion of their incomes, when you see people having to give their thumbprints for purposes of identification in places like that, I think an understandable feeling of outrage begins to emerge.

At the same time, I think it also needs to be pointed out that the numbers of people going to cheque-cashing outlets constitute in many ways only the tip of the iceberg in terms of this problem.

When I was involved with the London Union of Unemployed Workers, I well remember that we endeavoured to challenge the opening of Money Mart in our community. We gave out leaflets to people going in there. I remember a conversation I had with a young man who pointed out to me that while he agreed it was unacceptable to have to hand over this portion of his cheque to Money Mart, he had in fact, for some three or four years, been handing over a larger portion of his cheque to his landlord to provide exactly the same kind of service. So there is, behind the cheque-cashing outlets, an even greater problem and that's something that I think you need to keep in mind.


When it comes to people having to turn to cheque-cashing facilities, it seems to us that there are three major factors that are at play. One is the fact that people live on desperately inadequate incomes. Again borrowing from Daily Bread, they point out that among people using the food banks, after rent has been paid and an amount of money spent that Agriculture Canada says is necessary to provide a nutritious food basket for the month, the average user of a food bank would have $1.52 left over to spend on everything else. It's hardly surprising then that people desperately need to cash cheques and desperately need to find a means to cut through whatever barriers are put in their way and get money, even at the cost of turning over a portion to people like Money Mart. There is for the poor absolutely no room to manoeuvre when the cheque arrives.

The other glaring problem that has come to our attention in the work we've done is the phenomenon of the post-dating of cheques, by which I mean that the cheque is mailed a few days before the end of the month and received a few days before the end of the month but is dated for the first of the month. That's true of family benefits cheques and it's true of a great number of municipal welfare cheques. My understanding is that where municipalities have removed the post-dating of cheques the business of operations like Money Mart has been cut into very severely.

But the even greater problem that causes the situation, as Mr Morin has pointed out, is the question of banks and their practices with regard to low-income people, with regard to the problems people have with identification and other such problems.

I think it is noteworthy that cheque-cashing outlets have been notoriously unsuccessful in the Maritimes, and that's probably for a very good reason. It is that in that part of the country there has been chronic poverty and very widespread poverty for very much longer than in other places, and the resistance of banks and other such institutions to cashing cheques is not there in the same way it is in Ontario. Opening up something like Money Mart in Halifax would prove to be extremely unsuccessful precisely for that reason. Therefore it reveals very clearly that if the will is there on the part of banking institutions, the need for cheque-cashing services is wiped out at a stroke.

I think it is necessary for the government to move in the direction of ensuring that banks deal fairly with people, that banks cease to discriminate against people and that acceptable means of identification -- acceptable to the banks and acceptable to recipients of social assistance -- are provided.

One idea that has been floated is the idea of the Ministry of Transportation and Communications issuing an identification comparable to a driver's licence which does not require the taking of a driving test so people could very readily provide that as an acceptable means of identification.

I think, however, while it is necessary to look at those measures, the concrete thrust of Bill 154, the outlawing of the practice of cashing cheques for financial gain, is something that has to be supported and has to be enacted if we are going to be successful, if we are going to clean up this very serious social problem, this very serious attack on the rights of poor people.

I also note that 154 provides a grace period so you don't just simply immediately come down and stop the practice without providing a period of time in which problems around identification and the receptiveness of financial institutions to dealing with social assistance cheques can be worked out reasonably. I believe if the will is there on the part of the Ontario Legislature, arrangements with financial institutions that are suitable are quite possible to arrange.

In terms of opposition to the proposals around the elimination of cheque-cashing outlets, I have heard a number of arguments advanced, but perhaps the most glaring and ridiculous of all is the notion that to enact such a measure would remove freedom of choice for poor people. I don't think we are dealing here with any legitimate consideration of freedom of choice for poor people. What I think in fact we are dealing with is a situation where hungry and desperate people are being held over a barrel and are being taken advantage of. I think if in any comparable way rich people were being pressured to hand over a portion of their income, there would be an outcry and the matter would be dealt with very expeditiously by the Ontario Legislature.

I think, therefore, that I want to conclude by making an appeal to all of you on this committee to ensure that Bill 154 is dealt with and dealt with very seriously. While I'm not an accomplished parliamentarian, I know that private member's bills are notoriously susceptible to dying before they make it through to become legislation. I think this bill needs to be an exception to that rule. I think it is absolutely necessary for this committee to throw its weight behind it, to recognize that it is a vital measure. It is a measure that's very simple, very straightforward and needs to be taken. Bill 154 needs desperately to become law in the province of Ontario.

The Chair: Okay, I think Mr Sutherland had a question.

Mr Kimble Sutherland (Oxford): I know that Ontario family benefits has started direct deposit, but I believe right now it's still an optional thing as to whether those who are receiving want to have direct deposit. That certainly seems, at least on the surface, to be a more effective way and one way of getting around the system of having to go to the Money Mart and having fees charged. I was wondering what your organization and you feel about that right now when it is optional, if it were to be that all cheques would just be mandatory direct deposit.

Mr Clarke: Certainly I would support the notion of the encouraging of a direct-deposit system that is voluntary. I think it is a valuable part of an approach to the question of dealing with this problem. I can't support, and our coalition can't support, the notion that cheques should be automatically directly deposited without any freedom of choice on the part of recipients of social assistance. People have a number of concerns around that, one of which is that bank accounts are generally garnisheeable but government cheques or social assistance cheques are not. People have concerns about the ability of creditors to get at them. I think beyond that it is simply a question that people should have the right to make those arrangements that seem best for them. Compulsory direct deposit, no, but certainly the working out of a system that is as attractive as possible and that as many people as possible would want to turn to is something, I think, to be supportive of.

Mr Sutherland: So you're saying there's a dignity issue with it and an empowerment issue with it.

Mr Clarke: I think that would be true.

Mr Jim Wiseman (Durham West): I have just a couple of questions, and this stems from what I don't know enough about: the number of people who actually are using the service to cash government cheques. I would like to know that number because I think it's an important thing to take a look at.

But basically what we're talking about here is the absence of equality for the disadvantaged who are receiving cheques, and the whole system of access to the monetary system as it exists. So we have to ask ourselves why that happened and what the solutions are to the problem. It seems to me there's a whole demand system put into place that the Money Marts seem to be fulfilling, given the absence or the withdrawal of the banks and other institutions, and my concern is about potentially creating a problem.

I have to tell you, I'm totally sympathetic with everything M. Morin said and everything you have said. I am totally sympathetic. But I'm wondering, if we passed this, whether we might not be creating even more hardship by making it impossible for individuals to cash a cheque anywhere. I think that's an issue I need to have dealt with. There was an editorial in the paper about the difficulty that recipients of welfare in Montreal are having because the cheque-cashing places will not cash them. Let's face it: they're in the business for a profit. They need to make a profit to pay their workers, to pay whatever interest rates they're paying on capital they are borrowing.


I'm just a little worried because you described earlier about the landlord who used to have control and power over the recipients because they couldn't cash the cheque. This is a well-known percentage and people have used it. It is regulated to the extent that the books have to be audited and people have to be accountable. There are systems in place so that fraud cannot take place within the cheque-cashing institution. If they decide they're not going to cash the cheques and we haven't dealt with all of the other problems we've heard listed here this morning, then where do they go?

Do they wander around for weeks with cheques in their hands that they can't cash? Do they go to the landlord or the local loan shark or something and sign over? Then they're at their mercy and those people can charge you an even higher fee. While I'm totally sympathetic to what you're saying and while I don't like these cheques to have service fees paid on them because I know how much people need the money, can you give some kind of assurance that voting for this bill will not create the kind of scenario I just described?

Mr Clarke: You asked first of all about the numbers. I confess I don't have the numbers. I suspect Daily Bread coming after me is going to have a little more information on that than I do. I know, however, that enormous numbers of people are using cheque-cashing institutions. In municipalities where the postdating of cheques practice has not been ended, on GWA cheque day you get the sense that it would be necessary to use a crowbar to get people in or out of the local Money Mart. That was certainly the experience when I was working in the London situation, which really leads me into the second aspect of the question.

I think what we are dealing with here is effectively a levy on the poor. We're dealing with a situation where people are losing a portion of desperately needed income in a way, and I think this is really the consideration this committee needs to make. It is totally and utterly unacceptable. You're quite correct: In an ironic sense Money Mart, it could be said, is fulfilling a need. The problem arises because of the failure of financial institutions, especially banks, to provide what should be an obligatory service -- the provision of cheque-cashing to persons with welfare cheques.

The problems arise in a number of ways, but I believe that in many situations, perhaps at the local level in banks, there is a feeling that the cashing of welfare cheques is at best an unpleasant chore and banks have shied away from doing it. I think the approach a government needs to take is not to say that giving away money to cheque-cashing operations is an unfortunate ill, but we have to reconcile ourselves to it. I think the approach the government would have to take is to say that we are going to ensure banking and other institutions start living up to what should be a responsibility.

The passage of Bill 154, I think, should facilitate and increase the process by which the government makes clear to banking institutions that (a) it is ready to work on the problem of providing acceptable means of identification, such as the MOT identification proposal, and (b) that it is going to work seriously to negotiate with banks to ensure people are not left hanging. My understanding of the experience in Quebec is that there were some problems around not providing acceptable alternatives, of passing the law first and then worrying about the problems. I don't think that needs to be the situation with regard to Bill 154.

Mr Norman W. Sterling (Carleton): On the identification issue, the state should always be concerned about how much identification a person is required to carry around with him etc. Are there acceptable proposals to you to improve the identification of people who are using this kind of service?

Mr Clarke: I certainly think the abovementioned notion of an issue of an identification through the Ministry of Transportation that people could access if they wished to seems to me to be an equitable and reasonable arrangement. If the provincial government at the same time made clear that as far as it was concerned it was a valid piece of identification and the cheques that were cashed using that piece of identification would be honoured, then surely the worries of financial institutions would be very readily removed.

Mr Sterling: Mr Wiseman makes a good point in terms of leaving these people in the lurch, so to speak, if in fact we pass this bill, and that's a concern. However, the big problem is that successive governments have dragged their feet in terms of doing anything really positive on this. I suspect our government didn't do anything back in the early 1980s and I know the Liberal government was talking about doing something, and you know that talk goes on and on. I guess what Mr Morin's bill would do is provide some impetus for the government to really take action because it would be faced with a critical problem if action wasn't taken.

If we did pass this bill I would insist on a much later date. I've talked to Mr Morin privately about the July 1st deadline and that's probably not practical in terms of putting something else in place and that kind of thing. How much communication is there with various organizations, with these people who use this service so that they would be able to get ready for the judgement day, so to speak?

Mr Clarke: In large measure, organizations like ours consist precisely of people who use Money Mart. When we met this last week with representatives of the Ministry of Community and Social Services, several people around the table who were representing anti-poverty organizations were able to pull out their Money Mart cards and lay them on the table. I don't think there's a problem there. I would also like to say, however, that I'd like to stretch the point you made about the need to actually put some pressure on the negotiation process in terms of passing the bill and then working during the grace period. I think many of us around this table have been involved in negotiations of one kind or another and we have an appreciation for the fact that it's sometimes necessary to start the clock if you're going to do a good job of negotiating.

Mr Sterling: I don't find it totally reprehensible that you charge a customer something for the service. I just find 2.9%, 2.7% or whatever it is extremely excessive for the service they're providing. That's what I consider the problem. In terms of the people who have bought these franchises in good faith, under our laws in Ontario we do not have any franchise legislation which requires the master franchiser to provide any information to the franchisee as to what the dangers are, if there's no prospectus required. Some of these people presumably have put out a fair buck in terms of setting up. They might be into leases which could be for a long term. I guess the easy thing for anybody to say is that the government should give compensation to the franchisee. Have you got any comments on that?

Mr Clarke: On the first part of what you said, I think it does need to be said that the kind of money being taken by cheque-cashing institutions crosses the line between any concept of a legitimate fee and the taking of a cut. However, with regard to your second point, the franchise holders, I have to confess that I'm not an expert in the area and it's not my particular matter of concern. I don't wish to appear inordinately insensitive to people's plights. All I would have to say is that if franchise holders feel they've been wronged, they're going to have to argue their case. I'm certainly not here to argue it for them.

Mr Morin: It's not a question I want to ask, but just comments that were made by Mr Wiseman and Mr Sterling. The first one is on Quebec having passed the law and having difficulties, because there is a certain element of truth that they're having difficulties cashing their cheques. I understand that Quebec at the moment is in negotiation with the Canadian Bankers Association to arrive at a solution.

This is the key of the whole thing. It's to bring financial institutions together to come to a solution and solve that concern you have. I know it can be done. For instance, we checked in Holland and other parts of Europe and this is not a problem over there. It doesn't exist, so we must assure ourselves that we know we can find a solution.


The second thing is about franchise. There are questions, of course, that I ask myself about franchise. First, let's look at the number of outlets of Money Mart that existed in 1985. I'm told in my research there were only 42 at that time across Canada. There are 93 now in Ontario alone. It seems to be a sort of gauge for the economy; if the economy is bad, you see the number of Money Marts increasing. Of course, there are more people on welfare.

I ask myself a question. A trial was taking place in Quebec, Money Mart was appearing in court. They appeared, they lost; they appealed, they lost. They went to the supreme court of Quebec; they lost. All through that time, they were selling franchises in Ontario.

I was in the investment business for 17 years dealing in stocks, bonds, debentures, mutual funds and portfolio analysis. I dealt with banks, financial institutions and insurance companies, and I had a fairly large list of clients. Some were gamblers and others weren't. Of course, it varied with age; the older you get, the more security investment you want to have. The first questions they always asked me were: "What are the risks? Is the company healthy? Is the capitalization of the company good? What is the earnings ratio? If I put in $1,000, what kind of return will I have?"

When it came time for Money Mart to sell franchises in Ontario, were these questions asked by the person buying the franchise? "What are my risks? Is the government involved?" The issue wasn't new. This is not a surprise, it's been going on. In 1981 the province of Quebec passed a law, and Money Mart operated illegally and was brought to the authorities. They challenged the law and they lost.

All through that time, they were selling franchises. In 1989 I introduced a resolution in the House. I started working with the project in 1986 after having dealt with other taxation businesses. H and R Block is another system, I think, that took advantage of people who simply didn't know. Profits went as high as 90%. We managed to convince the federal government to change, and it did. So this is the question I ask.

It was a risk; it was not a new issue. We were not taking anyone by surprise. Why were there so many people getting involved in that business? Surely if they asked the right questions -- "How much money can I make? What kind of risk do I have? Is it a calculated risk?" -- it's a calculated risk because Ontario hasn't passed the legislation yet. Quebec, the second-largest province in Ontario, has passed the legislation; surely Ontario is going to do the same. Ontario is going to look at that. Ontario doesn't treat its poor people differently from any other people. These are perhaps questions Mr Clarke could answer. You should ask him these questions. Those are my comments.

Mr Michael A. Brown (Algoma-Manitoulin): This won't come as a surprise to you, because I'm a northerner in a largely rural riding. I was just wondering if you had some information about what kind of a problem exists for rural people in cashing those cheques. Just so you understand, there are many from my community who are 40 miles from the nearest bank. Therefore, I don't know, but I suspect they would tend to go to the local general merchant or whatever to provide that service.

Perhaps in some ways my constituents would relate to the Maritimes situation you described, at least in terms of the fact that identification isn't a problem. Everybody knows everybody, so you don't get into the who's who problem you have in Toronto. But are you getting from the people you represent problems in rural ridings such as mine?

Mr Clarke: I think, generally speaking, there is the Maritimes familiarity sort of situation in rural areas. In some ways the situation tends to be easier. I also think, in talking to people from organizations within our coalition who come from rural areas, it is many times the phenomenon that people go to the local store. Sometimes the deal is that a certain amount of purchase has to be made at that store for the cashing of cheques. There are many ways in which the rural poor have an additional set of burdens, and perhaps that's one example of them.

The Chair: I'd like to thank you, Mr Clarke, for appearing before this committee with your views on Bill 154.


The Chair: The next group to come forward is from the Daily Bread Food Bank. Ms Sue Cox, would you come forward, please. I'd like to welcome you here to the committee.

Ms Sue Cox: Thank you very much. I'm delighted to be here.

The Chair: I don't know whether I see the sun shining out there yet or not. Maybe you brought the sunshine out there.

Ms Cox: I hope I can add something to this discussion. There is a document travelling around which perhaps can help you.

Let me, first of all, declare for you our particular interest in this issue. It obviously has to do with our commitment to taking whatever measures are possible to reduce the need for food banks in the Toronto area. It's frequently argued that in a recession this can't be done, that food bank use must increase and that the conditions of people must continue to decrease or that hardships should continue. Yet it appears to us that this is one of a whole bunch of measures that can be taken, perhaps even at very little cost to the taxpayer, that can have a real impact on people who use food banks.

That's where we're coming from and that's why, for the first time this year in our survey of food bank users, we looked at the issue of the use of cheque-cashing companies and what impact it would have. Of course, as often happens when you do a survey, you ask a lot of questions that you think are good questions, and when the answers come back they beg a lot more questions. So we don't have all the answers, but we have at least got some insights about how often and who uses these kinds of facilities based on our sampling.

Our sampling, incidentally, is of a thousand food bank households, that is, households that use a food bank. They're randomly interviewed in food banks throughout the greater Toronto area over about a three-week period, using trained interviewers. It's a very extensive document. It tells us a lot of background about their income, housing and health. Almost anything probably that you know or have ever read about who uses a food bank comes out of that survey. We do it with the assistance of the city of Toronto's health department and York University. It's a very statistically significant sampling of people.

In our survey this year -- and I must say, incidentally, that we haven't run all the data yet; I was up until the wee, small hours this morning pulling some of this together -- one of the things that shocks us right now is the condition of people who are using food banks. I'd like to use that as the context for what I have to say about cheque-cashing facilities. On the first page of the document that came around, I want you to take a look at the data which show how much people actually have left after they've paid their rent and if they have bought enough food according to Agriculture Canada's standard of what it costs to buy food in Toronto.

On the graph on the first page, the baseline represents what Agriculture Canada says: You need to purchase food for your family, which is a monthly report that comes out, plus the rent and utilities paid by food bank users who are in market rental housing. You'll see from this that you do have about $1.50 left if you're in a one- or two-person household. That's $1.50 a month. It wouldn't get you on the TTC if in fact you bought what Agriculture Canada says you need to buy to stay healthy.

In any family larger than that in fact you have less than what your family needs to buy food and pay the rent. Of course that impact therefore is greater on families with children, because they tend to be the larger family. A family with six ends up with basically half of what it needs to buy food, so the use of food banks is not surprising. Indeed, food banks which supply a meagre three-day supply of food once a month are hardly filling the gap for these people.


Second, in an attempt to gauge the extent of cheque-cashing company use, we asked a simple question about where people cash their cheques. While 27% of people had used one in the last year, at the time of the interview between 13% and 14% of people were currently using a cheque-cashing company to cash their cheques, and the graph shows that. I'd also like to note that people use other places that also take a cut, a fee: informal cheque-cashing arrangements with corner stores, with landlords, with business people they know. That's of equal concern. The use is very high among food bank users. It literally means food off the table.

Welfare recipients report paying 4.9% on their welfare cheques to the cheque-cashing company. The average food bank household has $1,000 a month. We're talking about $49 a month, we're talking about real food, we're talking real meals in those kinds of terms. The hardship is unquestionable. We also found that a lot of our assumptions, and there were indeed assumptions that in some sense went into the survey, turned out not to be true. We'd assumed, for instance, that use was highest among people who are recently in Toronto. It's not true. The highest users are the people who have been in Toronto a long time.

The highest type of use was by FBA recipients. The working poor used them less than anybody else, even though for paycheques the cheque-cashing fee tends to be 2.7%, 2.9% or something of that kind. Long-term residents, Canadian citizens, FBA recipients, tend to look like the typical people who use cheque-cashing facilities. There are actually very little variables across the various types of people except that single people have a tendency to use it more.

The next tables that you see are the ones that show the length of time people have lived in the Toronto area. In percentages, it shows all of the users of food banks, and second, the cheque-cashing facility users. There's a much higher percentage of cheque-cashing users who are long-time residents, if I'm making that clear. Second, we found that refugees virtually never use cheque-cashing facilities. The only instances where they do are where refugees come to the area without any identification, having destroyed their identification when they came.

Other refugees and immigrants appear to have much better identification because they just have; I'm an immigrant myself and I know about those papers. They have good documentation, which is not necessarily true of the Canadian citizens who are using them. We hypothesize and cannot prove that issues of identification are significant ones and account for the longer time you've been in Toronto, if you're a food bank user, the more likely you are to cash your cheques at a cheque-cashing facility.

I think there are a number of other things we found out that interested us, particularly perhaps those dealing with the direct deposit option which we've always supported as an option for very poor people and welfare recipients. We were struck by some of the discrepancies between the number of people who used direct deposit and the number of people who thought it was a good idea. Over half the people thought it was a good idea for them to use direct deposit, yet only 16% were actually getting their cheques in that way. We also found that there was a fair amount of ignorance about this as an option. The conclusion that we draw from that, and again it's hypothetical, is that there are some real problems in access and in information and just knowing how to go about it, for whatever reason; I can't tell you why.

However, it's also in question because the direct deposit is not an option for everyone we talked to. Particularly those -- I'd say almost exclusively those -- who have debts or fear they may acquire debts will not use this as an option because of fear of the money being garnisheed. Of course welfare income is protected, but once it's in the bank it's not any more.

The solutions, I think, to this problem are not particularly complex, but there isn't one single magic bullet to fix it. We certainly would see this bill as an important measure alongside some other things. For one thing, to make it illegal to cash government cheques just makes plain sense to us, given the hardship on those people who receive these government cheques. Second, we've really got to push the idea of direct deposit. It appears to be the best option for most people, although it isn't the only option and it isn't the option for everyone.

I think we have to actively solicit the cooperation of the banking institution and banks in a variety of measures that make it easier for people to go in. That might include ID, which could conceivably, I suppose, be issued by banks as well as by the government. I don't know what's the best way to do that. But a lot of the onus really does seem to be on financial institutions, from our perspective.

For instance, a lot of food bank recipients tell us that they use savings accounts in order to reduce bank charges. Then they have to go in and pay $3.50 to get a money order to pay their rent -- I mean, $3.50 is a significant amount of money for the people we're talking about -- or any other bill. Perhaps it's naïveté, but I would think that the banking institutions would be fairly willing to talk about some of the issues if they realized the hardship that was imposed on people.

Other surveys we do take a look at food donors and who they see as being responsible for fixing the problem of food bank need, and 80% of them see the government as being responsible. It seems to us that this is fairly easy, relative to doing a lot of things like perhaps across the board welfare increases, which actually we would fight for but perhaps are not possible now.

I think the cooperation of banking institutions could be solicited, and to some good public relations effect, if people realized that their tax dollars were in fact going to where they want them to go. We have fairly good indications, at least among people supporting food banks; they that they would even in many instances pay more taxes to ensure that people are fed if they could be sure that in fact the money went into people's pockets, and that's always the caveat when they answer that question.

I just want to mention before I wrap up that the issue of receiving cheques which are post-dated for welfare recipients is a significant one, and significantly, obviously adds to the use of the Money Marts. I really don't understand why it isn't a fairly simple matter just to insist that the cheques be dated on the day of issue. We know perfectly well that people would rather actually lose the money at a Money Mart than suffer the embarrassment of going to a food bank. Most people are embarrassed about using food banks. They see it as begging. Our phones run hot doing referrals until the day the cheques are issued, and even though the cheques are post-dated, they stop ringing on the day the cheques are issued, because people, if they've got a cheque, will go to the Money Mart rather than go to a food bank. People do not use food banks unless they're desperate, and that's the bottom line.

I'd be happy to answer any questions about all that complex stuff.


The Chair: I have two on my list so far.

Mr Derek Fletcher (Guelph): Thank you for your presentation. I was just wondering. Is this bill standing alone going to solve the problem that's going on right now?

Ms Cox: Not on its own, no. I think working with banking institutions is important. I think it's also important to look at direct deposit options for a lot of people. It certainly is one of the very important first steps.

Mr Fletcher: You think it's one of the first steps.

Ms Cox: Yes I do. It obviously has to be done in conjunction with the discussions with financial institutions. Frankly, what I know about financial institutions you could write -- I remember my personal identification number and that's about the extent of my knowledge.

Mr Fletcher: You're ahead of me.

Ms Cox: I can't pretend any expertise. Obviously it has to happen in conjunction with some kind of action there and I believe that action can be voluntary. I can't believe banking institutions would resist that totally heartily. I think some of the difficulties are always, though -- the issue of branch offices having different practices. You can go to a bank and have one set of rules and regulations for cashing welfare cheques and walk around the corner into the same bank, another branch, and have a different set of rules. I don't know how banks deal with their bank managers. Maybe you guys do.

Mr Fletcher: No, I think the banks have to be brought into line. I think it's about time.

Mr Norm Jamison (Norfolk): Listening to you speak, you seem to be very positive on the direct deposit approach --

Ms Cox: Yes, I feel very strongly about it.

Mr Jamison: -- although your concerns, if I understand you clearly, are that the information on the availability of this to the recipients is really not well known out there at this point.

Ms Cox: I'm hypothesizing. Why is there a huge discrepancy?

Mr Jamison: Coupled with this legislation -- I know there have been some difficulties in the province of Quebec but I think Mr Morin has really indicated that solutions can be found there. I find it at least disturbing to understand that in some cases as high as 4.9% of a cheque is required to cash that particular cheque. That, in my mind, destroys to a great degree the effectiveness of our social system. It can be questioned whether there's a legitimate infringement on the poor there. As much as 4.9% in some cases is far in excess of what the increase in social assistance payments can be, year over year, so I agree with you. I see a very clear problem here.

I don't understand at this point why, if this bill is important -- what other measures would you see that would be important in conjunction with this bill?

Ms Cox: Issuing good identification for people, direct deposit and this bill, plus negotiation with financial institutions, I think, is the picture I see, roughly.

Mr Tony Ruprecht (Parkdale): First, I have some great news for you.

Ms Cox: Oh yeah?

Mr Ruprecht: Yes, there will not be any need for food banks in the future.

Ms Cox: Oh yeah?

Mr Ruprecht: The Premier made a recommendation, a decision, two years ago that we will not have a need for them, so I expect that within a year or two that won't be necessary.

Mr Jamison: This is not the place --


Mr Ruprecht: Second, Mr Chairman, I was at a meeting --

Ms Cox: I think I've heard this discussion before.

Mr Ruprecht: I was at a meeting with a local credit union and the priest stood up -- this was at an anniversary ceremony -- and said to them, "Why would the local credit union --

The Chair: Mr Ruprecht, could you speak into the mike a little closer?

Mr Ruprecht: I thought I was doing quite loudly.

The Chair: We just missed everything that you said.

Mr Brad Ward (Brantford): We didn't miss much.

Mr Ruprecht: The local priest had indicated to the credit union that he had personal knowledge of the problems of the poor in cashing cheques and he suggested that the local credit union would be in a position to cash cheques. Do you have any knowledge of why other institutions would be unable to do that, other than banks?

Ms Cox: No, I don't. I'm afraid I really can't add anything to it. Sorry. Maybe our next survey.

Mr Morin: Could I answer that question? The main reason banks haven't studied the issue is because they never got together. I think if this committee can bring the Canadian Bankers Association and the credit unions, the caisses populaires, together with the government they'll be able to come to a solution. All it takes is time and involvement. A system, I am assured after the discussions I've already had with the Canadian Bankers Association, can be found. It's just a question of sitting together and finding it.

There are all kinds of ideas out there, but it should not be done by imposing it. When you impose it, you create problems. It's through consultation with others, because our goal is to make sure that people receive the full amount, done in a way that dignity is maintained and in a way that people can be treated equally, like anybody else. It is a financial transaction. It's a government cheque. A government cheque, to me, is as good as gold. It's you who's paying for it. We're all paying for it. Why should we tax a certain segment of the society, especially with government cheques?

Please keep in mind that the purpose of my bill is not to close Money Marts; it's to make sure they don't charge a fee when it comes time to cash a government cheque, be it federal, provincial or municipal. It's as simple as that.

So if we can bring the bankers' association, the institutions, here and say to the Minister of Consumer and Commercial Relations, "Sit down with the banking association and come to a conclusion" -- of course, my bill says it should be implemented by July 1992. I had to put that date on. If it's got to be delayed let's delay it, but let's make sure we find a solution. I don't believe in using a big hammer to solve such an easy issue and I cannot understand that we've waited so long.

The Vice-Chair (Mr Kimble Sutherland): Mr Carr, did you have a question?

Mr Gary Carr (Oakville South): I just have a quick comment. I want to thank you for a very fine presentation. It was very thorough and I appreciate it.

Ms Cox: At 4 o'clock this morning --

Mr Carr: It didn't appear like it was that rushed. You did a good job.

The Vice-Chair: Thank you very much, Ms Cox, for coming before us and making your presentation on this issue.

Ms Cox: Hurry it along.


The Vice-Chair: I would now like to call upon Mr Steve Clark, who is president of the Cheque Cashers Association of Canada, the next group up. I believe you have a video you want to show.

Mr Clark: I will get to that in a moment. In the information kits that are handed out --

The Vice-Chair: Could you just please take the chair? Otherwise the mikes have trouble picking you up. Just before you begin, I don't know the other person; just for the purposes of Hansard, if you both could introduce yourselves that would be great.

Mr Clark: My name is Stephen Clark, president of the Cheque Cashers Association of Canada, and this is Leslie Baril, owner of several cheque-cashing outlets in the Metro Toronto area.

If you look at the information kits that were handed out, if you pull the last brief out on the right-hand side, that's what I will be presenting right now, if you care to follow along. It has this appearance. The rest of the information certainly can be looked at at your leisure.

The CCAC was incorporated in November 1990 and represents 170 of the 200 cheque-cashing convenience outlets, 100 of which are in Ontario.

The industry today is dramatically different than it was 10 years ago. The first stores served predominantly those who were not being served by the banks. We had a very narrow customer base, and over the years we carefully listened to the desires of the consumers who came to us and we worked very hard at identifying and delivering their needs.


The result today is that consumers appreciate the personalized convenience and they know we will go out of our way to provide a level of service that's superior to that obtained elsewhere. Today's stores are bright, clean and modern. They offer a safe, casual and comfortable environment.

The industry has grown substantially over the last 10 years and today there are 4,100 cheque-cashing outlets in North America.

Today's consumers want fast service and convenience. Most outlets are open until 9 pm, and several are open even later. The majority of the business is done outside banking hours. The locations are designed for easy access and neighbourhood convenience.

In addition to cheque-cashing, most outlets provide Western Union service, mailbox service, currency exchange, utility bill payments, photo identification, bus passes and American Express money orders.

Money orders are very popular and are provided at less than one third the cost charged by financial institutions. Many outlets provide money orders free to customers when they pay to get their cheques cashed, and this of course is considered added value by the consumers.

On average, the fee charged for most cheques cashed today is 3.5%. Generally the range is from a low of 2.9% to a high of 4.9%. The fee amount is reflective of the cost of providing the service, the ID presented and the risk involved in performing the task.

Over the years this has become a very competitive industry, which continues to influence not only the fees charged but the level of customer service provided. Fees have constantly been reduced, while the level of service has increased.

Ultimately the services provided and the fees charged within the industry have to compete with the level of service and the charges of financial institutions and automated teller machines. For example, it can cost $1 to $2 to get $40 from the "fast cash," most frequent amount button on ATM machines. This represents a fee in the range of 2.5% to 5%.

We're a convenience business, much like neighbourhood convenience stores. People don't buy everything they need from a 7 Eleven, and just the same, people do not cash every cheque they get at a cheque-cashing outlet. The average use is 4.5 times a year for a cheque-cashing customer of our industry.

The industry today is dramatically different than 10 years ago. Not only is it a much broader base of customers but the reasons today's customer uses us have changed. Their lifestyle is different; their appetite for fast service and convenience is tremendous. There have also been significant technological changes, enhanced social awareness and significant government and banking policy changes as a result.

Bill 154 does not reflect today's situation. We have watched the debate regarding Bill 154 and we're concerned that there are some very serious misconceptions about the cheque-cashing industry and the financial institutions.

Legislation should not be passed without a sound factual base and a rational understanding of the issues. Although well intended, Bill 154 will not ensure access to financial services by low-income Ontarians. Further, a review of Bill 154 shows nothing that will require the banking industry in the province to work with the government. These misconceptions that are inherent with Bill 154 are primarily due to the lack of understanding of today's facts. Of course this is a communication issue.

The facts today are that people can and do cash cheques at financial institutions. Over 99% of the approximately 3.8 million government cheques are negotiated every month at credit unions, banks and trust companies. Although most people do, they are not required to have a bank account to obtain cheque-cashing services if they choose not.

Anyone who holds a cheque made payable to themselves can present the item to the bank it's drawn on and get it cashed. Today's trends are such that in many ways it's easier to cash a government cheque than most payroll cheques.

As I've said, things have changed, and over the last 10 years governments and the banks have shown awareness, sincerity and actions regarding the issue of access to financial services by low-income Ontarians. For example, in March of 1985 the Canadian Bankers Association "adopted a common policy under which known account holders, cashing government cheques at their own branch, will receive their funds immediately. In some circumstances in the past, these funds were place on `hold' while cheques cleared."

The problem at hand, of course, was that people wanted their cash immediately, and this is a fundamental service provided by the cheque-cashing outlet.

As well, in May of 1986 the banks went even further and an agreement was made with the federal government whereby the federal government would guarantee cheques up to $750 for non-bank customers.

Other similar agreements exist in the provinces of BC, Alberta and Quebec. In May of 1984, for example -- this is relevant to today's issue, gentlemen and ladies -- the following excerpt from a prepared statement by the Canadian Bankers Association regarding British Columbia's agreement was provided. See if this sounds familiar:

"With respect to provincial MHR cheques, the government recognized that with the dramatic increase in the number of persons being assisted under social service programs, action had to be taken to ensure recipients were able to cash their cheques. A program was established to ensure that on being presented with approved pieces of identification or a special letter of identification from the government, banks would be able to cash Ministry of Human Resource cheques.

"The provincial government agreed to indemnify the banks for any losses due to fraud or forgery if the cheques were negotiated within their stipulated guidelines."

The brief went on to say, "Frankly, we can see no reason why recipients of BC government cheques would wish to pay a fee to use the service of Money Marts, other than for convenience."

The question today is, if Bill 154 was to become law, what would be the result? Bill 154 would require those from the cheque-cashing convenience industry to refuse service to many Ontarians based solely on their social and economic condition -- because they receive benefits from the government -- while at the same time provide service to those who receive their income from the private sector.

Discrimination such as this offends the fundamental principles of society. Constituents, consumers and advocates of the poor will not accept legislation which dictates how recipients receive and spend their benefits.

I have brought with me today -- the boxes are here; there are four there and there are four there -- 60,000 signatures protesting Bill 154. These signatures came from constituents and consumers who are furious about any legislation that singles out and stigmatizes recipients of unemployment and welfare benefits and, in doing so, harms their feelings of self-worth by implying they don't have the ability or the intellect to make a rational choice. They are angry because this bill will cause a decrease in needed competition to the banks, it will effectively decrease access to financial services and literally force people to use financial institutions as their sole choice, even if they desire not to.

Further evidence of the public's view is provided by the enclosed Decima Research survey in your kits. In that survey, 75% of those asked felt, "People who receive government benefit payments should not be required to cash those cheques at banks only, but should have the same right to choose as everyone else."

The right for recipients to determine how to spend their benefits has also been publicly advocated by the Ontario government's Community and Social Services minister, Marion Boyd. In a recent article dated March 14, 1992, in the Hamilton Spectator, Ms Boyd agreed with the principle that the government has no right to dictate how recipients spend their benefits.

Referring to comments made on CHML's John Hardy Today talk show, Ms Boyd defended the government's refusal to make welfare recipients accountable for how they spend their benefits. She told one caller that suggestions that welfare recipients are not entitled to take cabs or buy a case of beer represents a "punitive attitude." She further stated, "Welfare payments allow the poor an opportunity to learn how to handle money, and the state shouldn't intervene to ensure it's not spent on beer or bingo."


Bill 154 directly refutes the principle of individual freedom of choice. Government has the responsibility to deliver benefits to those who are in need. Once delivered, these benefits belong to the recipient, and it should remain that individual's decision as to what type of financial services he chooses. To do otherwise is to assume a paternalistic attitude, the principle of which is not supported by the government of Ontario.

These principles have also been articulated in Ontario reports such as Transitions, which states:

"Individual responsibility is greatly enhanced by treating people with respect and providing them with choices rather than imposing solutions. Self-determination is not promoted when people become accustomed to having decisions made for them by others."

It goes on to say, "Concerted and innovative alternatives should replace legislation that reduces self-esteem and profoundly limits choices."

Regarding the issue of identification, one needs to look again at the proposed bill. We find nothing in any of the sections that addresses the issue of lack of identification required for encashment of government cheques. It's difficult to see how Bill 154 will do anything to enhance the situation of those who are temporarily without valid identification. Bill 154 would require the industry to refuse service to those people. Regardless of your income, birth certificates, social insurance cards, passports and OHIP cards are available. Furthermore, the government also issues photo identification. It costs $10, it's readily available.

Social service recipients can now obtain a letter of identification from their social worker. This is important. This letter is acceptable by the banks, and cheques are currently being cashed for those without identification on this basis. The government is acting on this issue.

It is clear that Bill 154 does not reflect today's trends, the desires of the consumers or what would be in the best interests of the people of the province. The stated aim of Bill 154 is to ensure that recipients of government assistance enjoy access to financial institutions and not be penalized for their socioeconomic situation. Bill 154 will not ensure that banks cash government cheques.

Once again, looking at all sections of the bill, we fail to find anything that indicates to us it will ensure access to financial institutions. It's not there.

A reading of the bill indicates to us that it will reduce access to financial services. Over 100 Ontario locations currently providing a convenient neighbourhood service, even after the banks have long closed for the day, will have to refuse service, because the simple fact is that this service cannot be performed for free. Regardless of whether the service is performed by financial institutions, a merchant or a cheque-cashing outlet, there is a very real overhead cost. There's a substantial capital requirement and a very real risk of significant loss. In Metropolitan Toronto, 1,300 stop payments are placed on benefit cheques every single month.

Bill 154 does not reflect today's situation any more than section 251, a similar legislation of the Quebec Consumer Protection Act. Was there a problem to address in Quebec back in 1976 when it was first proposed, and in 1978 when it was first enacted? Probably so. There were probably problems then. It certainly was not addressed to our industry. This industry did not exist in Quebec or anywhere in Canada until 1982. Once section 251 was enacted in Quebec, did it ensure access to banks by low-income Quebeckers? No, it didn't. Nothing changed and the problem of the day continued.

No policy changes were made by banks in Quebec until 1985, seven years later. It is important to note that there is no power within either legislation that will force the banks to cash government cheques. It's not there. If you look at the legislation, either one, it's not there.

In a recent conversation with Lise Corbeil, the executive director of the National Anti-Poverty Organization, she informed me that low-income individuals' access to financial service is not an issue for them and has not been an issue for several years.

Further, in a letter from the Metro Toronto community services department, Ray Lazanik informed Mr Morin's office -- this is important -- that:

"At Metro we have changed the cashable dates of cheques so they are immediately cashable and have just released a request for proposals to the chartered banks for a comprehensive service and direct deposit system. Apparently, these for-profit companies are filling a need for some of our customers presently unmet by banks, some of which seem to not want to deal with our customers under any circumstances. Forbidding the existence of for-profit services can drive them underground or to the corner store. This would not solve the problem, but only bury it."

This in fact was exactly the result in Quebec when section 251 was enacted. There are stories of 20% and 30% fees being charged in the late 1970s and the early 1980s in Quebec.

It's been clearly demonstrated that the banks are very willing to dialogue with the Ontario government, just as they have with other governments. It's our understanding that positive initiatives such as direct deposit alternatives and agreements similar to those I have already mentioned are under way. Our industry supports the efforts of Metro Toronto and we support the efforts of the government's ongoing negotiations for agreements with banks, and specifically we support the alternative of direct deposit.

The Ontario government is already acting on today's circumstances and in the best interests of the public. In a recent response to a letter we sent to all members of the Legislature on November 25, 1991, Treasurer Floyd Laughren indicated that, "Bill 154...did not reflect current government policy." He went on to note that while he supported the concept of social assistance recipients requiring 100% of their payments for daily needs, he stated that:

"Prior to the end of the legislative session, Bill 156 was passed, which substantially amended the Financial Administration Act. In preparing these amendments we decided not to proceed at this time with any restrictions on fees for cashing the cheques of the government of Ontario. At present, the government of Ontario prefers to develop alternative ways to manage the payments process with no cost to the recipient. This would appear to be the most desirable goal, rather than, as you correctly observe, restricting individual freedom of choice in dealing with their funds. Measures under consideration include encouragement of direct deposits to individual bank accounts, reducing timing differences between cheque issuing and payment dates and raising the awareness of the banks to provide cheque-cashing services to welfare recipients."

This is an important comment that he includes in his letter. "We also have an arrangement with one of the major banks involving encashment of government cheques for those recipients who do not have bank accounts or sufficient identification." They're currently being served and the choice is there for them.

It should be noted that the policy decision arrived at by the officials of the Ministry of Treasury and Economics was a result of input received from all other relevant ministries, including the Ministry of Community and Social Services, which, as you know, is the issuer of government welfare benefits.

The Cheque Cashers Association of Canada strongly opposes Bill 154. Although it's well intended, it does not reflect a knowledge of today's situation. Clearly things are not what they were 10 years ago, and they certainly are not what is implied by Bill 154.

While we agree the delivery system, the financial institutions and the cheque-cashing industry are not perfect, Bill 154 is not an improvement to that imperfection. This bill is not only out of step with current issues, it is not a means to enhance access to financial services. The passage of 154 would lead to a serious violation of the principles of organized society by robbing individuals of their right to make their own decisions about where and on what services to spend their own money.

Our industry should not be forced to refuse service to someone simply because his or her income comes from the government. This legislation will decrease access to financial services, it will cause a dramatic loss of hundreds of jobs by those employed within the industry and ultimately threaten the existence of a well-liked and well-supported financial service. With continued and improved access, there is no need for discriminatory legislation such as Bill 154.

Our industry is more than willing to share our knowledge. We've worked with these people for 10 years. We have some knowledge here that we are gladly willing to share. We will work with the Ontario government in order to determine the nature and the scope of any existing or future problems as well as aiding in the development of solutions to such problems.

Thank you very much for your time and patience. Briefly, we anticipate that many people here have not had an opportunity to really be in a cheque-cashing store, so we've got a four-minute video -- that's all it takes -- just to let you have a look at what this is about.

[Video presentation]


Mr Clark: I'd be happy to answer any questions as long as time permits. As well, if need be, since time was short and we started late, I certainly can return to any future meetings.

The Chair: No questions? I'd like to thank you for coming before this committee.

Mr Clark: Thank you. I appreciate your time and patience.

Mr Sutherland: Mr Chair, we've had presentations, and there might be one or two organizations that maybe we should have heard from, but I think we've heard a variety of groups. I'd be willing to put the issue to a vote right now, if that's agreeable.

The Chair: Is it the pleasure of the committee? Should we have a 10-minute recess?

Mr Sutherland: There are also private members' bills going on and there could be votes on them. If we take the 10 minutes, we might not be able to get back here for the votes, so perhaps the committee is willing just to take the vote right now.

Mr Ruprecht: It's a good idea.

The Chair: Okay, fine.

Sections 1 to 4, inclusive, agreed to.

Title agreed to.

Bill ordered to be reported.

The committee adjourned at 1158.