Financial Literacy

Canadians stressed about debt exercise less, don’t sleep well, and are alone more

By: Lisa Coxon on January 20, 2020

Canadians are stressed out about their debt loads, and it’s resulting in unhealthy behaviours, such as poor sleep, spending more time alone, and buying less healthy food.

These are the findings of two recent studies by DUCA Impact Lab and Angus Reid.

One study was done on those who have debt (2,042 Canadians), and one on those who work for a debt-lending institution (252 Canadians). The goal was to find out the different behaviours and perspective of these two groups. The studies were conducted in October in parallel. 

Fifty-six percent of Canadians said they eat out less due to personal debt stress, 54% don’t sleep well, and 34% exercise less. 

To make matters worse, 45% said they don’t have a budget or a set of financial goals prepared. 

Building a financial plan and creating goals is typically something borrowers do with a financial representative — someone like their bank’s financial advisor, for instance. But DUCA’s studies revealed that there’s a big disconnect between the behaviours and perspective of borrowers and lenders.

For example, the survey found that 37% of borrowers avoid their financial services representatives because they feel pressured to manage their money in a way they aren’t comfortable with or because they're recommended products they just don’t understand.

Of the 252 adults who work or have worked at a credit union, bank, financial technology company, lending company, or private lender in the past two years, roughly half said they don’t prioritize client comfort and level of knowledge when recommending products to borrowers. In fact, 42% of lenders admit that borrowers don’t understand the products they purchase. 

“The findings of this study bring to light some important gaps in the current banking system which fail to serve the best interest of the average Canadian,” Doug Conick, president and CEO of DUCA Credit Union and chair of the DUCA Impact Lab, said in a release. 

“Whether it be navigating the best way to manage household debt or raising awareness around financial literacy and the products and services available more broadly, lenders should make it their shared responsibility to better support borrowers.”

The study also found that 25% of borrowers don’t trust the advice of their financial institution, and 42% of lenders say their institutions are sales-oriented as opposed to customer-driven.

“We remain acutely focused on raising awareness of and driving a conversation around the importance of a fair banking system and providing a level playing field for Canadians when it comes to addressing issues surrounding debt and accessing financial services more broadly,” said Conick.

DUCA describes “fair banking” as a financial product or service that lives up to the following:

  • Pricing is clear, transparent and well understood.
  • Pricing is representative of the cost of funds, cost of administration and risk, rather than what the market will bear.
  • It is clear to all parties how any personal data is being used by the lender.
  • Personal data is only used for purposes agreed to by both the borrower and lender.
  • The terms and conditions, including penalties and the rights of each party are clearly explained and well understood by both lender and borrower.
  • Products are only recommended that will bring the borrower closer to their expressed goals.
  • The borrower is clear on what the institution will do (and not do), with deposits to earn a return.
  • The assessment of risk is objective, transparent and not prejudicial.
  • Financial institution recommendations are not biased towards in house product recommendations.
  • Products empower consumers when they need access to financial services, not just when they don’t.

 

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