Project Summaries 2006-2007 - Union des consommateurs (UC)

6226 St-Hubert Street
Montreal, Quebec
H2S 2M2
Tel.: (514) 521-6820
Fax: (514) 521-0736

1. Obstacles to Changing Financial Institutions - $38,822

The Financial Consumer Agency of Canada (FCAC) has developed several tools that help consumers identify their needs in terms of products offered by financial institutions. It is therefore possible for consumers to choose the banking service package that best suits their needs using for example, the Cost of Banking Guide. Despite the various tools developed to help consumers in making their choices, is it possible for them to easily change banks? Are there tools available to help them? Are there obstacles that could prevent them from changing banks?

The goal of this research is to review and identify the obstacles faced by consumers looking to change financial institutions, to look at the situation in Canada and other countries, to see if tools have been put in place to facilitate consumer choices and, lastly, to analyze, if required, the proposed solutions making it easier to update consumer choices.

Methodology

• Literature review: theories and studies on the "departure" costs and other obstacles to changing financial institutions;
• Development of an analytical grid for obstacles to changing financial institutions;
• Identification and analysis of "arrival/departure" services at financial institutions that are proposing to oversee the transfer of financial products;
• Comparative study of the costs related to changing personal accounts and financial products in Canada's 10 major financial institutions, including ING Direct;
• Listing of identified obstacles to the transfer of financial products from one financial institution to another in Canada;
• Overview of tools available to consumers in other countries to make it easier to transfer from one financial institution to another (e.g. Fast track);
• Study on the transferability of identified measures (to Canada).

2. Fuel Efficiency Labelling for Vehicles and Incentive Programs - $25,050

While some consumers choose to make environmentally conscious choices on their own, authorities try to establish programs or measures, fiscal or otherwise, designed to raise awareness among consumers or prompt them to make more responsible choices. Vehicle labelling is one preferred method of informing consumers about the key features they are looking for. If a label displays the relevant fuel efficiency features, it can also provide the basis for effective incentive programs for the purchase of fuel-efficient vehicles.

Union des consommateurs (UC) is proposing to prepare a detailed profile of the best practices in labelling from an international standpoint. The study will also help to identify the best ways to promote the purchase of fuel-efficient vehicles (tax measures, adjusted licence fees, etc.) as they relate to this labelling. These measures will be part of a campaign, geared to affected government authorities and insurance companies, , to ensure that they can become widely adopted in Canada.

Methodology

• Literature review: detailed survey of current practices in Canada related vehicle efficiency labelling, incentive programs for the purchase of certain types of vehicles and licence fee adjustment programs;
• Critical analysis of the current situation in Canada;
• Comparative analysis of the fuel-efficiency labelling models used in OCED countries in order to determine which one provides the best opportunities and the most consistency to warrant being used in setting up incentive programs for the purchase of fuel-efficient vehicles;
• Comparative analysis of incentive programs for the purchase of fuel-efficient vehicles in OCED countries (tax measures, insurance, licences, etc.), based on the criteria of the actual outcome in terms of vehicle sales;
• Identification of one or several optimal labelling and incentive program models, based on their applicability within the Canadian context;
• Preparation of a recommendation report.

3. Extended Warranties: Are Consumers Getting Their Money's Worth? - $28,704

It has become common practice for certain retailers to automatically offer extended warranties for the products they sell. However, given the way extended warranty clauses are written and presented to consumers, it can be difficult for consumers to determine what is actually covered by the warranty and, as a result, to determine if the price being charged for this coverage is reasonable.

Union des consommateurs (UC) is proposing to verify the actual scope of each of the extended warranties it examines and therefore determine if the price retailers charge for this coverage is reasonable. The study will also help identify the obstacles preventing consumers from assessing the actual cope of the extended warranties. Finally, the study will allow UN, if necessary, to recommend the legislative measures and information media most likely to eliminate these obstacles and, as a result, to protect consumers.

Methodology

• Review legislation covering these warranties in New Brunswick, Quebec, Ontario and Manitoba;
• Analyze case law in Quebec, Ontario, New Brunswick and Manitoba dealing with legal and conventional warranties;
• Review literature;
• Analyzes practices and identify three products, belonging to three different product categories, for which retailers most often suggest the purchase of an extended warranty;
• For each of the products chosen, identify three retailers in each of the three provinces selected from the following four: New Brunswick, Quebec, Ontario and Manitoba;
• Carry out preliminary research in order to develop an analytical grid;
• Develop an analytical grid designed especially to assess the following aspects: the scope of the warranty; the clarity and readability of the documents outlining the terms and conditions of the warranty; the limits and exclusions of the warranty; the warranty activation methods; the cost of the warranty;
• Retrieve and review (using the analytical grid) the documents outlining the terms and conditions of the extended warranty offered by each of the three retailers in each of the three provinces for the products selected;
• Field study: review the accuracy of the claims made by the salesperson regarding the content of the document outlining the terms and conditions of the extended warranty;
• Using the analytical grid and in light of applicable laws, assess the actual scope of the extended warranties, focusing particularly on what they add to applicable legal and manufacturer warranties;
• Review the various results obtained using the analytical grid in order to determine to what extent they are subject to the legislative framework governing each of the extended warranties;
• Draw up conclusions and recommendations.

4. Improved Controls for Reverse Mortgages - $45,058

Reverse mortgages are not regulated by federal mortgage legislation but rather by various provincial authorities. To date, only the province of Manitoba specifically oversees this type of loan. Are the features of reverse mortgages and how they work clearly explained to seniors? What type of information do they receive? How is this product sold? What are the possible problems (and solutions) a client could encounter?

The goal of this research project is to identify the problems surrounding reverse mortgages through the analysis of experiences in England, the United States and Australia and the solutions proposed by these countries, as well as by Canadian provinces. An on-line survey of members of seniors' associations in Canada will be conducted in order to assess their knowledge of the types of mortgage financing available and the alternatives.

Methodology

• Review literature: how reverse mortgages work; the reverse mortgage industry; the needs this product meets and the targeted clientele; the alternatives offered to elderly homeowners to work around their insufficient income;
• Identify the issues:
  • Analysis of what is available in Canada, Australia, England and the United States.
  • Conditions surrounding the promotion and sale of the product, including: information provided to consumers; cost and fees; contracts terms and conditions, particularly those pertaining to contract termination;
• Review the existing regulatory framework: the Canadian context; federal and provincial laws and regulations; regulatory and monitoring agencies; the foreign context - England, Australia and the United States; consumer protection;
• Analyze the various problems that Australia, the United States and Great Britain have encountered with reverse mortgages, and put them into context;
• Prepare a list reviewing other possible solutions; advantages and disadvantages of reverse mortgages;
• Collect information regarding complaints about reverse mortgages that may have been registered with the Financial Consumer Agency of Canada or provincial authorities;
• Develop a questionnaire and an analytical grid dealing particularly with the following: knowledge of reverse mortgages; availability and conditions; the actual needs of elderly homeowners; known solutions to insufficient income; concerns about transfer of property;
• Conduct an on-line survey of 1,000 people across Canada who are 62 years of age and older to identify the needs and concerns of seniors, to measure their level of knowledge of the solutions available for insufficient income and to assess their information needs.

5. New Consumer Trends and Food Information: How to Meet the Needs of Consumers - $54,726

Canadian consumers are increasingly interested in agri-food issues. They recognize the links between the food they eat and their health and are concerned more ever than before about how food is produced and processed, as well as the environmental, social cultural, ethical political impacts of this food. These new consumer trends give rise to new food labelling requirements for consumers who are seeking clear, comprehensive, user-friendly and standardized information on production methods, processing procedures, product origin, as well as nutritional details, especially those related to health claims.

Union des consommateurs (UC) will prepare a detailed profile of the new consumption trends in the agri-food sector and to bring to the forefront the information that is required by consumers as a result of these trends. By doing so, its goal is to influence the industry and regulatory authorities regarding the development of labelling policies that complement and facilitate these trends so that more and more consumers can make responsible and informed choices when it comes to eating.

Methodology

• Review literature on how consumer concerns about food and labelling have evolved, as well as how the trends have emerged; review the standards and guidelines of the Codex Alimentarius Commission and the regulations governing food labelling currently in effect in Canada, the United States, some European Union countries (France, England, Germany, Spain, Sweden), Australia, and New Zealand;
• Look at initiatives that support labelling policies (education or awareness programs) in the above-named jurisdictions;
• Conduct a comparative analysis of the regulatory framework for food labelling practices in these same nations and the standards and guidelines of the Codex Alimentarius Commission, particularly in terms of nutritional, environmental, social, cultural, ethical and political considerations.
• Develop and conduct a forecast survey among 500 Canadians in order to: identify sources of information on the usefulness and use of new labelling; identify the factors that influence decisions about food purchases and responsiveness to influencing factors other than labelling; verify the usefulness of various labelling elements for consumers; identify mounting concerns and see what forms of labelling would be most likely to meet the requirements of consumers;
• Carry out a critical analysis (survey and literature), based on the needs that were expressed, in order to determine what information is required by consumers and in what form (e.g. labelling or other (seals, etc.);
• Establish the balance between the needs to be met for consumers and the information to be provided, including outreach, awareness and/or education strategies;
• Draft a report and formulate recommendations for the development of food labelling models that are straightforward, extensive and comprehensive recommendations, that incorporate best practices in labelling and that are adapted to current and future consumer needs and trends, as well as other recommendations regarding consumer education and awareness programs and communication strategies to ensure that Canadian consumers have the information they need to make responsible and informed food choices.