Re: Supplementary Estimates (C) 2017-18, For the Fiscal Year Ending March 31, 2018

25 Feb 2018 12:21 AM | Anonymous

Receivables Management Association of Canada Inc.
Association Canadienne de la Gestion de Créances Inc.

February 21, 2018

Gaëtane Lemay
Clerk, Senate Standing Committee on National Finance
Committees Directorate
Senate of Canada
Room 1047, Chambers Bldg

Re: Supplementary Estimates (C) 2017-18, For the Fiscal Year Ending March 31, 2018

Dear Clerk Lemay-

On behalf of Receivables Management Association of Canada (RMA), I am writing to offer insights that will help inform members of the Senate Standing Committee on National Finance in their study of the Government of Canada’s Supplementary Estimates (C) 2017-18, for the Fiscal year ending March 31, 2018.

RMA is a national association representing the business and policy interests of Canada’s credit grantors - financial, telecommunications, retail and utility sectors - debt buyers and sellers, and collection agencies. RMA’s members comprise a sizable segment of Canada’s business community, who advocate for strong public policy that benefits Canadian consumers and businesses while strengthening Canada's economy.

In the sections below, RMA offers suggestions regarding how the Government of Canada should adopt, or at least consider, alternate recovery methods to collect the debt owing to the Crown. Specifically, in the near-term, to help reduce the Department of Employment and Social Development’s year-over-year request for funding to write off debts owed to the Crown for unrecoverable Canada Student Loans.


The federal government’s Canada Student Loan Program (CSLP) provides financial assistance to postsecondary students in financial need.

By decree of an Order in Council, on August 1, 2005 the Canada Revenue Agency (CRA) became responsible for the collection of all debts due under programs administered by Human Resources and Social Development Canada, now Employment and Social Development, including the collection of defaulted Canada Student Loans.

Canada Student Loan Program Debt

The year-over-year practice of the Government of Canada writing off unrecoverable CSLP debt is troubling. In six years, more than $1.2 billion in unrecoverable CSLP debt has been written off.

Between 2012-2015, $837 million in CSLP debt was deemed unrecoverable.

In 2016 and 2017, the Government of Canada wrote off $176 million and $178.4 million, respectively.

For the fiscal year ending March 31, 2018, the Government of Canada will write off another $203 million in debt owing to the Crown in what is deemed ‘unrecoverable’ Canada Student Loans.

In 2013, The Windsor Star reported a senior federal government official stating that the Crown decides, in 98 percent of cases, to deem a Canada Student Loan to be unrecoverable following the expiry of a six-year limitation period between when the borrower last acknowledged a loan and any legal activity by the Crown to recoup that debt. The six-year limitation period is completely arbitrary and not adopted by private sector collection agencies (PCAs).

Recovery levels beyond a six-year period can be exceeded by 5 percent when managed by the receivables management industry. RMA understands that a limitation period of six-years is chosen because a debtor’s credit bureau is purged after this period of time.

While figures provided by CRA in late 2016 report a slight increase (3 percent) in loan collections between 2015 and 2016, the trend in year-over-year write offs of bad debt from the CSLP suggest the federal government’s efforts are not leveraging the benefits of modern recovery management methodologies.

In an effort to better understand how to recover a larger percentage of the outstanding CSLP debt to the Crown, RMA recommends that members of the Senate Standing Committee on National Finance raise with senior officials of Employment and Social Development the following questions:

  1. Why does the federal government consider ‘six-year limitation’ as a sufficient period of delinquency?
  2. Is the Government of Canada (or its agents) using modern receivables management methods - delinquency scoring and data computing analytics; the leveraging of consumer data repositories; and, the analysis of structured and unstructured data— to collect upon debts related to the Canada Student Loan Program?
  3. Why isn’t the private sector receivables management industry1 being retained, through competitive procurement processes, to recover these outstanding receivables? Canada’s private sector receivables management industry returns higher rates of debt recovery than public sector collectors.

In Appendix A, RMA outlines the case for why Canada’s private sector receivables management sector would help the Government of Canada to recover greater percentages of outstanding debt to the Crown, beginning with CSLP debt.

I am hopeful that members of the Senate Standing Committee on National Finance will give serious consideration to RMA’s recommendations for change.


Stephen Sheather

RMA President
  Principal, SCORE Statistical Consulting Ltd.

Appendix A | The Case for Private Sector Receivables Management

Canada’s private sector receivables industry has developed a strong reputation for driving down delinquency rates in the management of early- and late-stage debt recovery.

In Canada, private sector debt recovery programs provide consumers and business with accurate and calculated treatment of debt. Canada’s receivables industry protects business credit and debt portfolios while servicing consumers fairly and responsibly.

A reliance upon robust analytics, reliable consumer data, computing power, consumer education, and prescriptive legal activities returns higher rates of recovery.

Canada’s private sector receivables industry also leverages structured credit data, strong legislation and experienced talent to drive results and to provide positive results that support Canada’s economy.

Given a consumer’s financial status can change rapidly, relying on lagging data and information often considered by the public sector will continue to expose consumers to delinquencies and defaults will continue to increase.

Globally, governments (e.g., UK, Australia, Latin America, Europe Union and Asia) are adopting a privatepublic sector debt collaboration model, bringing experience and expertise together to produce dramatic improvements in debt recovery. Millions are saved each year by working closely with the private sector risk and receivables management industry.

The British government has partnered with experienced private sector partners to manage debt recovery. Both consumers and the public sector are benefiting. A consumer’s debt situation is treated in a more positive and informed manner versus the antiquated methods still employed by many public sector bodies.

1 Receivables management industry: Private Collection Agencies (PCAs), data analytics companies, recovery management scoring providers and credit bureaus.

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