Welcome to the Finanical Mainstream?
The hazards facing low-income people when navigating the financial world
has two purposes. The first is to document some of the lessons learned from conducting a financial literacy course on behalf of Houselink Community Homes over the winter of 2013/14. The response to the course was overwhelmingly positive. Participants spoke eloquently about the impact of financial problems on mental health. Much of what they said confirmed observations that I have been making over many years about what motivates the financial behavior of marginalized people. We want to share these insights with others who work with consumer survivors and low-income people.
The second purpose is to shine some light on issues we are often unaware of when we design financial literacy courses. Not all of these issues can be resolved by teaching yet more financial literacy. Some of them will require us to become advocates on a new front. That’s because consumer protection in the world of banks and financial products is woefully inadequate—especially if you are poor.
As financial literacy educators in marginalized communities, we need to retool ourselves, so that we know how to champion people dealing with issues like debt, fraud, and “coercive tied selling” (more about that later). We also need to be talking to government and financial agencies about
the realities of accessing mainstream financial services, and what needs to change.
The ‘meat’ of this report divides into four parts:
1. The outright barriers that marginalized people face when attempting to access mainstream financial services, such as banks
2. The invisible, lurking dangers of going mainstream, especially for people with debt histories
3. The useless, expensive frills they will hear far too much about when they go shopping for financial products
4. The valuable financial products and government benefits they will hear far too little about.
In each of these sections, I describe the issues we’ve encountered and the information we gave participants that they found really useful. I talk about what is teachable. But I also put forward some recommendations for protecting consumers from what is realistically beyond the scope of financial education for most Canadians—especially vulnerable Canadians.