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Yes, it's your money but no, you can't have it >> Banks use chequefreezing to get rid of poorer customers by JACQUIE CHARLTON
But what happens if all you want to do is cash a cheque? Chances are, if it's a new account, it will be frozen for five working days--though the number of days varies according to the bank--and this for a period of six months. And these are paycheques we're talking about: personal cheques can take seven or more working days, depending on the bank's policies. And the freezing doesn't just happen to new account holders: some clients have begun having their paycheques frozen even after years of banking in the same institution--especially if their accounts don't tend to be of the money-building variety. For many frozen-out account holders, the only alternative is to take their cheques to expensive cheque-cashing services like Money Mart. Cathy Bertini, media relations officer with the TD Bank, which regularly freezes cheques in new accounts, says it's all "part of getting to know customers." According to Bertini, 20 per cent of the bank's customers have their cheques frozen, but offered no explanation as to why that was the case. But Eric Fraser of Option Consommateur, formerly the Association coopérative des économies familiales, which has done surveys on access to basic banking services, says there's no reason to freeze cheques. Fraser says he could understand how a new account holder could get his or her first deposited paycheque frozen, but says freezing of any subsequent cheques is "pretty weird." He advises any account holder encountering this delay in cashing their paycheques to contact the bank's ombudsman or the Canadian ombudsman. Wendy Hope, of the Canadian Payments Association--the body that oversees Canada's clearing and settlement system for cheques and electronic payments--says cheques issued by a major Canadian financial institution take only 24 hours to clear. She advises anyone told by their bank that their pay cheque must be frozen to take it up with their bank manager, and make a complaint in writing if they feel strongly about it. The Canadian Community Reinvestment Coalition (CCRC), a coalition of 61 organizations seeking greater accountability from the big Canadian banks, is asking that standards be set on the duration of time banks can freeze cheques similar to those set out in U.S. law. The CCRC's Duff Conacher says cheque-freezing is just one of the means the major banks are using to dissuade poorer customers from using their services. "Money Mart opened in 1983 with 16 outlets and now it has over 130," he says. "They've just been booming. I think the banks have looked at the Money Marts and said, 'Well, let them handle these people and, hey, I'm glad they're competing with us for these people because we don't want them. Meanwhile, we'll subtly or more explicitly try to make things more difficult for those we're not going to make a lot of money off of, and they'll go to cheque-cashers eventually if we all do it.'" According to surveys, three per cent of adult Canadians have no bank account, a proportion reaching eight per cent for those with an annual income of less than $25,000. Conacher describes an Ottawa Sun article a few years ago, in which an unnamed bank manager is quoted as saying that each account holder in his bank is ranked according to certain criteria with an A, B, C or D. An A is the signal to give golden gloves treatment; a D is for actively discouraging any banking there at all with such means as credit, ID and employment checks, cheque-freezing and minimum balance requirements. Says Conacher: "In the U.S., in France, people have a right to a low-cost, no-frills account, and there's no reason why people banking at our banks--which are much larger than many U.S. and French banks and much more protected and much more profitable--shouldn't have the same right as well. It's part of what our banks should be giving back to Canada."
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You may have read the pamphlets as you waited in line to see a teller: banks are now eagerly offering a plethora of services ranging from mutual fund investment to insurance to international money market transactions. Complex organigrams describe the administrative paths to follow for things like investment counselling, portfolio management services, securities, mortgages, loans or specialized financing. Accounts with names like Moneybuilder or Premier Service are there, tailor-made for your banking needs.