Archived—Project Summaries 2008-2009 - Consumers Council of Canada (CCC)
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1. Creditors Insurance — Are Consumers Being Well Served?
Creditors insurance such as that on credit cards, lines of credit, personal loans, mortgage life insurance, mortgage default insurance is a way to protect consumers and their families from the unexpected financial burden resulting from a death, disability or involuntary job loss. A number of these insurance instruments are available which afford consumers protection.
This research seeks to answer the questions:
- What is creditors insurance?
- When would consumers seek out this product?
- Who provides this product and where do consumers typically purchase it?
- Are consumers aware of their options?
- Is time available to examine alternative products and their cost structures?
- Would the consumer be better served purchasing Term Life or Disability Insurance?
- Are consumers paying too much?
- Is tied selling a problem?
- Do consumers feel rushed to make a buying decision?
Current regulations require consumers to purchase mortgage loan insurance for loan amounts that exceed 80 percent of the value of their home or purchases with less than 20 percent down payment. This product is designed to protect the lender in the event of a loan default. It is not to be confused with Mortgage Life Insurance which guarantees the remaining mortgage at the time of death in order to avoid undue burden to the estate. At the time of purchase, consumers may be pressured into purchasing a product without fully understanding its implications or the alternatives that may be available.
This project seeks to examine credit insurance, its scope, cost structure and how it compares to other insurance products. This research is intended to enhance the consumer's ability to make an informed decision.
The satisfaction of consumers with pre-paid long distance calling cards is an emerging issue. Common consumer complaints in regard to these cards include:
- access numbers and/or personal identification numbers that do not work;
- service or access numbers that are always busy;
- card issuers that go out of business, leaving people with useless cards;
- rates that are higher than advertised, or contain undisclosed fees;
- cards that charge you even when your call does not go through;
- poor quality connections; and
- cards that expire without the purchaser's knowledge.
The CRTC no longer regulates long distance service providers, due to the competitive nature of the service. The current Consumer Protection Act in Ontario has banned expiry dates on gift cards thereby protecting consumers from losing the value of their gift card. The issue of long distance telephone card expiry dates should be a priority issue given the recent gift card regulation.
Research in this area is needed to better understand consumers' satisfaction with long distance calling cards. The research will identify the sources of complaints and recommend means to address perceived problems. The research will also identify the need for a regulatory response to the issue. Currently, the Commissioner for Complaints for Telecommunications Services (CCTS) will receive, attempt to facilitate resolution of, and if necessary, resolve eligible complaints after direct communication between a consumer or small business and a service provider member has proven ineffective. The CCTS is limited in scope to dealing with complaints relating to its eleven members.
The key questions to be answered through the research are:
- What are the sources of consumers' complaints?
- What are the characteristics of a basket of cards that are troublesome?
- Is there consistency in the complaints that can be addressed by stronger consumer protection legislation?
- What should consumers know before purchasing a long distance phone card?
- What have other countries done to increase consumer protection with regard to long distance telephone cards (ie. United States, United Kingdom, Australia)?
- What can the Canadian government do to enhance consumer protection?
These questions are all focussed on the consumer perspective and provide a measure of consumer satisfaction in relation to calling cards.
In Canada's urban centres the demand for adequate housing has fuelled a renovation boom. More and more homeowners are renovating than ever before. Entire cable television channels are devoted to home renovations. At the same time, renovation services are one of the leading sources of consumer complaints across Canada. The renovations industry is often characterized by unreliability, poor quality, and dishonesty. Consumer sentiment quickly turns to anger and extreme frustration as the topic is discussed. There is an urgent need to determine what is causing the problems and to find ways to improve the situation.
The Consumers Council of Canada proposes to investigate and evaluate the problems associated with renovation services in Canada. While there is no shortage of consumer tips and checklists (for example, see www.cmhc-schl.gc.ca) on hiring renovators, problems continue to plague the marketplace.
The Council will seek to answer the following questions:
- What are the root causes of consumers' renovation complaints?
- Is there consistency in the underlying causes of complaints?
- What are the perceived problems with renovation services?
- Are these consistent with existing complaint data?
- How can the perceived problems be addressed?
- Can the root causes be addressed by stronger consumer protection legislation?
- What frameworks for addressing the issues exist elsewhere?
- Are there other possible means to address the sources of the issue?
- What can the governments do to increase consumer protection in this field?
Understanding the nature of complaints will provide the base for examining the consumer perspective in detail. By probing the underlying causes that brought about complaints and relating these to the perceived problems with renovations services the fundamental consumer problems with renovation services can be understood. The consumer experience with renovation services can then be examined with a view toward resolving the issues through consumer protection legislation, or other means.
A 2005 study by the David Suzuki Foundation reports that Canada ranked 28 out of 30 OECD countries with regards to its environmental performance. While Canadians have the strongest environmental values of any OECD country, Canada's environmental record is among the worst. The country's consumption patterns in large measure can account for its poor performance. Canadians produced 490 kg per person of municipal waste in 1997, and although this number is slightly below the OECD average, "Canada is firmly in the bottom half of the industrialized nations" (Canada vs. the OECD: An Environmental Comparison, 2001). Canada must identify and adopt more sustainable consumption patterns not only to act as a responsible member of the world community but also to act as a model for developing countries.
Understanding household consumption and recommending more sustainable approaches is how consumer groups can participate in this important issue. "Environmental and consumer NGOs have been instrumental in translating abstract debates about 'sustainable consumption' into practical action areas for households" (Towards Sustainable Household Consumption, 2002). This research will allow the Consumers Council of Canada and One Earth to develop the needed understanding of the issue and recommend approaches to the Canadian Government which could in turn be used to develop a national strategy. This research project contributes directly to the work of both Environment Canada and Industry Canada. Sustainable household consumption is a component of the broader societal goal to move away from unsustainable production and consumption patterns.
This report will pose as its main research question:
- What are some key considerations and elements for designing a Canadian strategy for sustainable household consumption?
The Government of Ontario is currently in the process of facilitating its commitment to install 800,000 smart electricity meters in homes and small businesses by the end of 2007, and throughout Ontario by 2010. The introduction of the smart meters will allow for the introduction of flexible, time-of-use pricing intended to encourage a conservation culture in Ontario aimed at reducing overall electricity use and peak demand. The implementation of the smart meter initiative is being carried out by the Ontario electricity distributors with direction from the Ministry of Energy and the Ontario Energy Board. In addition, the Ontario Independent Electricity System Operator (IESO) has been given the mandate to establish a Meter Data Management Repository, providing a common infrastructure for the management and storage of consumption data received through the new meters.
Consumers in Ontario stand to benefit from this initiative, but will also be responsible for the costs. In fact, many Ontario consumers are currently paying for the costs of the meters, although the meters have not yet been installed. Of more concern, the technology is not yet capable of billing on the basis of time-of-use pricing.
The key research questions that will be addressed in the project are:
- What are the potential benefits for Ontario consumers of the Ontario initiative?
- Are the potential benefits expected to outweigh the costs?
- What has been the experience in other jurisdictions with time-of-use pricing?
- Can those experiences be transferred to the Ontario market?
- What are the implications for other regions within Canada contemplating smart meters?
The final research paper will include the following components:
- a description of the Ontario Government's plan for the implementation of smart metering in Ontario and the various components of the plan;
- an examination of the expected costs and benefits of the plan both at a provincial level and at the individual customer level;
- an examination of the impacts of the plan on consumers;
- a description of examples where smart metering has been implemented in other jurisdictions either on a pilot basis or more broadly,including any findings to date from implementation of the Ontario Smart Metering plan, e.g., pilot studies, and to include recommendations to avoid or address problems encountered by consumers elsewhere or in Ontario with smart meter programs This will be done in the context of considering how those lessons learned could be relevant to the Ontario initiative; and
- a consideration of how the smart metering communication plans could be implemented in order to maximize the benefits of the plan for residential consumers.
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