How a Canadian FCO with 1 million members and a $40 million annual budget can be formed
WHAT IS THE FINANCIAL CONSUMER ORGANIZATION (FCO)?
The Financial Consumer Organization (FCO) is a proposed federally chartered, non-profit organization designed to represent and educate consumers on financial services issues. The FCO will advocate for fair service from financial institutions before the industry regulators, the government and the courts. It will also educate financial consumers on issues such as service charges, credit cards, and mutual funds.
The FCO model is based upon Citizen Utility Boards (CUBs) which have been established in four states in the U.S. In these states, all of the utilities were required to enclose a one-page pamphlet in their billing envelopes inviting people to join the CUB. About five percent of consumers usually join the CUB at a $40 annual membership fee. CUBs are independent, broad-based watchdog groups that are run democratically by their members and represent consumers' interests in the marketplace. For example, in Illinois the CUB has 150,000 members, a $1.5 million annual budget, and has saved consumers about $9 billion since 1983 by opposing rate hikes by utilities.
According to a
of Canadians, 64% of Canadians support the creation of
the FCO using the pamphlet method.
As well, the Task Force on
the Future of the Canadian Financial Services Sector
recommended in its September 1998 Report
that the federal government create an FCO using the
pamphlet method (See Recommendation #56(b) on page 208
of the Report). The House of Commons Finance
Committee, and Senate Banking Committee, endorsed the
Task Force recommendation in their December 1998
WILL THE FCO BE SET UP AND HOW WILL IT WORK?
institutions could volunteer to enclose the pamphlet,
and as long as enough large institutions volunteered
enough financial consumers would receive the pamphlet
to make the FCO viable.
The pamphlet will describe
the FCO and invite financial consumers to join at a
nominal annual membership fee ($40 -- with a lower fee
for people with low incomes). The government can
either lend or grant to the FCO the funds needed to
print the first pamphlet. After the first flyer,
however, the FCO will pay all the costs of the
pamphlet. As a result, the FCO can be set up at
little or no cost to government or the financial
As well, the government can
require financial institutions to hand out the
pamphlet to customers when they come in do banking at
a branch or teller.
If only five percent of Canadian bank and insurance customers join the FCO, it will have one million members and a $40 million annual budget. With these resources and large membership base, the FCO will be strong enough to counter the power of banks, trusts and insurance companies.
The FCO will be a
democratic organization, controlled by its members
through the election of regional delegates and the
FCO's board of directors. The board will hire
the FCO's professional staff and determine the group's
WILL THE FCO DO?
The FCO will also educate
consumers through price surveys, public forums,
shopping guides and various other publications.
IS THE FCO NEEDED IN CANADA?