In 2009, after hearing stories of excessive remittance fees from countless low-income families around the world, ACORN International launched a campaign targeting regulation of the remittance market.
Every year, millions of Canadians send money to family members overseas. Many of the processing companies charge predatory fees. Money transfer companies and banks make enormous profits at the expense of many people living in Canada who send money to friends and family in some of the world’s poorest regions. As Doug Saunders concludes, “whatever the precise effects of remittances, it is worth ending these discriminatory costs.”
In 2014 the G20 members vowed, as they have before, to impose regulations to restrict the cost of sending remittances to a maximum of 5 percent. But we need to pay close attention to the details.
In 2009 Canada committed, as a member of the G8, to reduce the global average cost of transferring remittances from 10 percent to 5 percent. The assumption at that time was that this goal could be reached without across-the-board caps, so the stress instead has been on enhanced information, transparency and competition. While these measures may affect average fee levels, they still mean that wealthier remittance senders who send over $500 pay well under 5 percent, and lower-income families, who send much smaller amounts, continue to be charged far in excess of 5 percent.
A recent ACORN Canada survey showed on average that people who send $100 or less are charged 13.26 percent compared with those sending over $500, who are charged on average 1.84 percent. (Those sending $200 or less represented 89 percent of the survey.)
The recent G20 statement on imposing regulations to restrict the cost of sending remittances appears to be more focused on guarantees for all remittance senders. But we will see.
At our 2011 national convention in Ottawa, ACORN members managed to leverage a meeting with the deputy minister of finance by showing up en masse at the ministry. In that meeting, Deputy Minister Michael Horgan said the current federal administration would never regulate the banks on this matter, since it would represent a slippery slope to start regulating price and consumer rights.
So we turned to the provinces. So far, efforts have been most successful in Ontario. Through our lobbying, a private member’s bill was introduced that aimed to cap fees at 5 percent, along with guaranteed full disclosure. However since then Ontario’s Wynne government has committed only to looking into targets rather than caps.
These movements are a step in the right direction, but more pressure is needed. Only with such pressure from affected communities will government start taking this issue seriously.
