Survey also reveals one quarter of Canadian do not trust lenders to help them with debt issues.
TORONTO, Jan. 15, 2020 /CNW/ - A new survey of Canadian borrowers and lenders reveals the impact of mounting debt pressures and the disconnect between these two groups on several important issues. The survey, conducted by DUCA Impact Lab with Angus Reid, talked to over 2,000 Canadian borrowers and over 250 lenders and sheds light on gaps in perceptions among the two groups. Nearly half of borrowers surveyed report that personal debt has impacted their ability to save and build wealth. The report shows a significant number of borrowers surveyed experience stress due to personal debt and are driven to unhealthy behaviours as a result, including trouble sleeping, and poor lifestyle choices like skipping meals, eating unhealthy foods and spending more time alone.
The survey found that 37 per cent of borrowers report avoiding their financial services representatives due to perceived pressures to manage their finances in a way they do not feel comfortable with or because they are being recommended products they do not understand. Despite this discomfort and lack of financial literacy amongst borrowers when it comes to products being put in front of them, roughly half of lenders surveyed report they do not prioritize client comfort and level of knowledge in their product recommendations. Not only that, 42 per cent of Canadian lenders admit that borrowers don't understand the financial 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," said Doug Conick, President & CEO, DUCA Credit Union and Chair of the DUCA Impact Lab. "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 report also reveals the impact of debt is felt very differently across generations. Borrowers who have a mortgage are more likely to be wealthy and older, report a good credit score and a better ability to manage their finances. In looking at respondents without a mortgage, a quarter of which are millennials, 49 per cent report poor personal finances compared to 78 per cent of those with a mortgage who report good personal finances. These findings are concerning when considering 42 per cent of millennial borrowers surveyed also report they prefer minimal to no contact with their financial advisors.
What's behind the hesitation by borrowers to engage financial institutions, especially amongst those who need help the most? Perhaps a lack a trust around the motivation of lenders. The study found that a quarter of Canadian borrowers report they don't trust the advice of their financial institution while 42 per cent of Canadian lenders identify their institutions as 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," added Conick.
DUCA Impact Lab is a not for profit arm of Duca Credit Union which explores solutions to inequities in today's financial system. Bringing together innovators, experts, and stakeholders from the community to identify, test and champion catalytic solutions that provide fair financial services for all.
About DUCA Impact Lab
The DUCA Impact Lab has been purposefully designed to test and prove new models of banking and finance to unlock the positive impact and social value banking can have for people, businesses, and communities.
DUCA Credit Union launched the DUCA Impact Lab in late 2018 to explore and live test new banking solutions that unlock the potential of banking that benefits all. The DUCA Impact Lab brings together a community of experts to dynamically test new ideas, products and services, acting as an ongoing vehicle to explore and tackle challenges currently faced by all participants in the financial system and the underbanked.