They fought to get their landlords to clean up their cockroach-infested apartments and won. They fought to get payday lenders to lower their astronomical borrowing rates and won. Now ACORN Canada, a network of low-income Canadians, is embarking on its most ambitious project.
It has just launched a campaign to get North American banks to reduce the “predatory” fees they charge immigrants and migrant workers to transfer money to their families back home.
ACORN made its first move Monday. It released a report showing the rates charged by Canada’s chartered banks, their American counterparts and two money-transfer companies to send $100 to various destinations.
The figures were startling. Fees ranged from $3.70 to $66.25 (not including the pickup charges usually imposed at the receiving end).
Here is a sample, using a transfer of $100 from Toronto to Mexico:
• MoneyGram, which has the lowest fees, charges between $3 and $10 (depending on the service and destination) plus an exchange rate fee of 70 cents for a maximum total of $10.70.
• TD Canada Trust charges $35.91 for the same service.
• None of the other Canadian banks lists its exchange rate fee, making comparisons difficult. They divulge only their transfer fees, which range from $10 at Scotiabank to $25 at BMO. (CIBC refuses to provide any information.)
• The most expensive Canadian option is HSBC (Hong Kong and Shanghai Banking Corporation), which charges $25 to $30 for the transfer, tacks on a commission of $10 and adds an exchange rate fee of $10.84 for a maximum total of $50.84.
• In the United States, Bank of America tops the list. It charges $56.25 to $66.25 to send $100 from New Orleans to Mexico.
“These rates are predatory,” said Kay Bisnath of Scarborough, who serves as president of ACORN International. “Thousands of our members in Canada are affected.”
The Canadian Bankers Association defends its members’ remittance fees, pointing out that international transfers are complex and there are plenty of choices.
“Consumers are well served by this competition as they are able to choose a remittance service that best meets their needs and fits their budget,” said vice-president Nancy Fung.
To put Canada’s rates in context, the World Bank estimates the average global cost of transferring money between countries is 10 per cent of the amount sent. It has asked rich countries to reduce their rates to 5 per cent by 2014.
Ottawa has agreed in principle. But no Canadian bank is close to the current average, let alone the new target. And there’s no sign of action in Ottawa.
Remittances are a lucrative business. Immigrants and guest workers around the world send more than $400 billion back home every year. Canada’s share of the pie is roughly $15 billion.
Very little is known about these financial flows.
The government doesn’t regulate transfer charges. The banks charge whatever the market will bear. And immigrants rely on word of mouth to find out about hidden fees (for “communication” and “processing”) and costs on the other end.
ACORN used the personal experience of its members plus the legwork of four interns from George Brown College to compile its report. It doesn’t claim its survey is authoritative.
But it does argue there is enough evidence of exploitation to warrant government scrutiny and fee caps. “It is our hope to make it harder and harder for politicians and financiers to ignore the call for change and the demand for a fair and just remittance system.”
A delegation of ACORN members visited the head of TD Canada Trust this week to deliver its report and request a meeting.
They intend to approach all of Canada’s banks, federal financial regulators and provincial consumer protection authorities.
They don’t have much power or prominence. But they’ve swayed giants before.