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Consumers Council of Canada News

Ontario will revoke its product labeling and inspection protections against unsafe stuffed goods

Dec 10, 2018 7:15 PM

Ontario Ministry of Government and Consumer Services (MGCS) announced it will revoke the Upholstered and Stuffed Articles Regulation that protects Ontario consumers from unclean and unsafe stuffing in consumer goods such as upholstered furniture, stuffed toys, bedding, mattresses, and winter coats.

The regulation to be revoked requires that product manufacturers attach an approved label to their products and register with the Ontario Technical Standards and Safety Authority (TSSA), enabling traceability should a safety issue arise. Labels must also be placed on used articles such as mattresses that are returned to retailers and re-sold to consumers. TSSA inspectors will lose the authority to enter premises, inspect products, and write correction orders – including ordering the destruction of an article believed to pose a danger to public health.

The Consumers Council of Canada has published a Consumer Perspective 360° report Perspective on Ontario’s Revocation of the Upholstered and Stuffed Articles Regulation concerning the regulatory change and suggesting options for consumers seeking to minimize risks of harm or identify products using regulated content labeling subject to inspection. The report can be obtained from the Council's ebookstore.

Downloads: PDF Version | ePUB Version (suitable for smartphones and e-readers)

 

Public Statements, Clothing, Home Furnishing & Equipment, Public Safety, Standards Development, Trade, Right-Product Safety, Right-Choice, Right-Safe Environment  
  

Extended protections often misunderstood and bought mostly by specific segment of consumers

Nov 30, 2018 9:30 AM

A specific segment of consumers buy most of the extended product protection plans sold on major household durables, a just-released Consumers Council of Canada research report found.

The report, Consumers and Product Insurance Purchase Decisions, identifies that while type of product, its price and the cost of protection all affect the purchase decision, the minority of consumers who buy extended protection appear to have a distinct predilection to do so.

About 30 per cent of consumers have purchased extended protection on a major durable in the past three years, while more than half say they never purchase it.
"Consumers are frequently at an information disadvantage when they decide whether they need an extended warranty," said Consumers Council of Canada President Don Mercer. "Vendors have much better knowledge of the risk of product failure and repair costs than consumers.

"Also, consumers don’t do themselves any favour when they fail to read terms and conditions before they sign a contract, often presented at length and in small type that discourages reading."

Major appliances and home electronics (including phones) are the most frequently protected products. Consumers who purchased protection on one product were about three times more likely than other consumers to purchase protection on another product, the research found.

The results are based on a web panel survey conducted by Environics Research of 2,000 Canadians who had purchased a major household item in the past three years. 

The report also includes a review of legislation, current industry practices and interviews with industry participants. The study aimed to evaluate consumer attitudes and behaviours towards the suite of offerings -- protection programs, extended warranties, service plans -- designed to provide additional guarantees about products beyond the manufacturer’s standard warranty.  

Among the report’s other key findings: 

  • In general, extended protections are not well understood by consumers, who misunderstand terms and conditions, neglect to read the contracts and show little appreciation of the different regulatory structures and business models associated with different products.
  • Most major retailers use third-party service providers, who have adopted U.S. practices to serve Canadian consumers, and do not follow the extended service model operated by Sears Canada, which resulted in a loss of protection for consumers due to its bankruptcy.
  • Better informed consumers are generally less likely to purchase extended protections.
  • About one-quarter of claims for service are resolved unsatisfactorily or with substantial consumer inconvenience. 
  • Legislation and regulation concerning warranty and extended warranties is inconsistent among Canada’s provinces. In particular, it is not consistent province to province whether extended warranties are considered insurance .
  • The necessity of relying on courts for redress likely discourages some consumers from pursuing their legal rights to warranty and extended warranty claims.

The report makes numerous recommendations for public policy, consumers, merchants and third-party service providers.

"The report shows that Quebec consumers in general are more knowledgeable about extended protections," said Mercer. "That’s likely because Quebec law requires sellers to disclose information about basic warranties before offering additional warranties for sale. That’s one obvious way to better protect consumers."

Consumers Council of Canada has received funding from Innovation, Science and Economic Development Canada’s Contributions Program for Non-profit Consumer and Voluntary Organizations. The views expressed in this report are not necessarily those of Innovation, Science and Economic Development Canada or the Government of Canada. 

DOWNLOAD THE COMPLETE REPORT 

Research Announcements, Financial Services, Home Furnishing & Equipment, Insurance, Right-Information, Right-Choice, Right-Redress, Right-Education  
  

Minister Morneau takes welcome first step to fix banking dispute resolution

Nov 23, 2018 12:00 PM

The Consumers Council of Canada welcomes a measure in the federal government's Fall Economic Statement signalling the government heard consumer opposition to unfair banking dispute rules: banks should not be able to choose their own referees in disputes with their customers.

In the Fall Economic Statement, on behalf of the government, Finance Minister Bill Morneau s announced “the Financial Consumer Agency of Canada will conduct a review by June 2019 to assess banks’ complaints handling processes and the effectiveness of the external complaints bodies.” 

This review follows calls from the three consumer groups to end a system that pressures external dispute resolution firms to rule in the banks' favour by forcing them to compete for banks' business. 

While the Council welcomes this progress, this review must lead to a solution to provide Canadians with access to a dispute resolution provider that:

  1. Meets international standards
  2. Is independent and governs in the public interest
  3. Is not-for-profit
  4. Has the authority and mandate to resolve all consumer banking complaints and the ability to identify systemic issues

Adhering to these principles requires a single, not-for-profit organization to act as the ombudsman for the retail banking sector across the country. This had been de facto the status quo in Canada until a growing group of Canada's major banks, enabled by a change of approach in federal law and regulation, stopped recognizing or funding Ombudsman for Banking Services and Investments to resolve consumer disputes.

"Bank customers deserve and require access to an unbiased resolution process when they have a dispute with their bank," said Don Mercer, President of the Consumers Council of Canada "The federal government needs to protect bank customers by mandating a single impartial, non-profit external complaints body – a right that should be restored to them promptly."

To serve Canadians, this review must reform a broken external complaints system that denies Canadians access to a single non-profit, independent dispute resolution provider.

The Council, in cooperation with FAIR Canada and Canadian Association of Retired Persons, urges Canadians to share their views with theirMembers of Parliament about their experiences resolving disputes with banks and to demonstrate their support for a fair system of dispute resolution. Learn more about the initiative and how to participate.

 

Public Statements, Financial Services, Savings & Investment, Right-Redress  
  

Public discussion paper addresses fair, independent and impartial dispute resolution for banking services

Nov 9, 2018 2:30 PM

Consumers Council of Canada has published a public discussion paper, concerning the need for single fair, independent and impartial dispute resolution provider for banking services.

Currently banks choose their own provider. The discussion paper's authors call on the federal government to take immediate action to protect Canadian consumers by changing this policy and designating the Ombudsman for Banking Services and Investments as the exclusive alternative dispute resolution provider for Canadian banks. In addition, the discussion paper suggests OBSI be granted statutory authority to make binding recommendations.

Points made in the paper, among others are:

  • Consumers are best served by a single, not-for-profit, independent dispute-resolution service such as OBSI. Conflict free and neither appointed by nor subject to consumer nor industry interests, OBSI would help re-establish and promote public confidence and trust in Canada’s financial system. 
  • The recently announced decision by ScotiaBank to leave OBSI for ADR Banking Ombudsman, serves to undermine confidence and trust.
  • Scotiabank’s stated reasons for leaving OBSI do not hold up to scrutiny, and why.
  • A single, independent, not-for-profit service like OBSI is not only better for consumers in terms of providing the appropriate degree of objectivity and impartiality, it provides an important public service.
  • A strong case exists for a single, not-for-profit, independent dispute-resolution service, with that provider being OBSI.

DOWNLOAD THE DISCUSSION PAPER

 

Public Statements, Financial Services, Payments, Savings & Investment, Right-Redress  
  

Expensive instalment loans deserve more critical scrutiny by consumers and governments

Nov 8, 2018 1:15 PM

Canadians enjoy little protection against the high prices and sales practices of instalment lenders, whose loans challenge legal expectations, a just-released Consumers Council of Canada research report found.

Consumers, business, government and elected officials are all strained to know what the law expects and interpretations vary widely, the report found. However, some business practices observed across Canada appeared similar to those that prompted a cease and desist order issued September 13, 2017, by the British Columbia Superintendent of Financial Institutions against Western Life Assurance Company, Venue Financial Lt.d and Cashco Financial Inc.

As part of the research, the Council sent representatives to the premises of 93 instalment lenders across Canada and the websites of leading online lenders to conduct sales practices audits, to determine what takes place in practice.

Lenders engaged in a number of practices which placed consumers at a disadvantage, the research found.

Many lenders embed optional charges in quoted periodic repayment amounts, but leave it out of interest rate calculations. These charges often add 50% or more to the total amount repaid.

The audits identified that lenders frequently choose long loan durations, subtly inflate borrowed amounts, mis-inform borrowers about how interest rates work and can improperly adjust payment amounts for more frequent repayments, resulting in borrowers paying interest at higher rates than disclosed. The effectiveness of required contractual disclosures is blunted by industry practices that often prevent consumers from viewing the contract until they decide to take out the loan.

"Consumers would be better protected if there was some clarity about the Criminal Code usury limit," said Consumers Council of Canada President Don Mercer. "Most lenders price to this limit. Provincial governments should look seriously at licensing lenders, adding a suitability test for borrowers and limiting optional charges."

The report recommends that federal consumer literacy initiatives could address more directly the scenarios that lead to high-interest borrowing, and help consumers identify alternatives.

"The need to help Canadians better understand credit and fair terms for obtaining it is urgent," said Mercer. "The research found reason to fear Canadians are more commonly turning to expensive instalment loans without knowing the associated terms and conditions of agreements."

 

Consumers Council of Canada has received funding from Innovation, Science and Economic Development Canada’s Contributions Program for Non-profit Consumer and Voluntary Organizations. The views expressed in this report are not necessarily those of Innovation, Science and Economic Development Canada or the Government of Canada.

 

DOWNLOAD THE REPORT

Research Announcements, Credit, Financial Services, Payday Loans, Focus-Indebtedness, Right-Information, Right-Choice, Right-Education  
  
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