Telecom troubles

Two years ago when launching this blog, I was singing the Bell Blues. The song goes on, but now it’s Telecom Troubles.

Lousy customer service is common among telecom providers. People are fed up with long waiting times on the phone and persistent billing errors that can’t seem to be resolved.

When a billing dispute lingers, telecom firms are quick to call in outside bill collectors, threatening to besmirch customers’ credit records.

There’s now a federal agency that handles complaints, but its powers are limited. Just check this confusing chart and tell me how easy it is to decipher. When you use words like “forborne” you’re not speaking the language of the consumer.

So, keep sending me those telecom complaints, since I can usually get them resolved quickly. Companies set up terrible systems to deal with ordinary customers, but they sure know how to get things done when the media are looking over their shoulders.

As for Bell, I’m still hearing frequent tales of woe. I wanted to ask Kevin Crull, president of residential services, about his progress. But alas, he’s not available for an interview, despite several recent requests.

Guess it’s hard to turn around a giant ship when the captains keep changing.

The questions I get every day

Since I write about everyday issues, I get an immense amount of email. My readers often ask the same questions in response to my columns and blog posts.

Here’s what they want to know:

— How can banks raise the base rates on personal lines of credit during a recession when the Bank of Canada is lowering rates?

— How can door-to-door sellers promise savings on gas and hydro bills and then lock you into long-term deals at much higher prices?

— How can Bell and Rogers continue to do business when they make so many billing errors and their customer service is so horrible?

— How can financial advisers sell investment products that make them money but are not always in my best interest?

I’m posting some of their comments below, along with links to a petition to tell your MP you don’t approve of banks raising their rates.

Mortgage penalty can be a shocker

If you have a closed mortgage at a fixed rate, and you want to get out early, be prepared to pay a high penalty. The cost may be many thousands of dollars.

Most mortgages have a clause that says premature cancellation requires paying three months’ interest or an interest rate differential (IRD), whichever is greater.

The IRD is greater, now that mortgage rates are falling. I talked about it in my column and got lots of interest from readers (and two requests for radio interviews, as well).

It used to be the case that if you had a mortgage insured by CMHC that was past the three-year mark, you could pay three months’ interest to get out. But in 1999, CMHC pulled the plug on the long-standing prepayment privilege and made it a “non-mandatory requirement.”

Lenders are now free to either honour the old CMHC position or impose their normal prepayment penalty policy on CMHC-insured mortgages.

Real estate lawyer and consumer advocate Alan Silverstein was shocked to hear about the new rules in March 2000. Here’s what he said in the Toronto Star.

Who are the big winners? Banks, trust companies and other CMHC-approved lenders, empowered to siphon larger prepayment penalties from Canadians.

I’m not aware of any public consultation on these new rules, or any dialogue with consumers or consumer advocates. Why not?

I’m not sure what irritates me more: CMHC’s regressive new policy, or the clandestine way it was introduced.

The banks are not consistent in the way they calculate the IRD penalty. So, how do borrowers know what is fair?

Robert McLister, a mortgage broker, has put a calculator at his website so you can see what the IRD penalty may be in your case.

I heard from mortgage brokers about how banks use these penalties to penalize borrowers. The $20,000 example I used is not uncommon.

The Financial Consumer Agency of Canada has information on mortgage penalties here.
I’d like to see a bit more advocacy on behalf of consumers who can’t get a straight story on how the penalty is calculated.

Here’s what McLister says about these penalties:

Some lenders use posted rates for their IRD calculation and some use discounted rates.

Some lenders round up to the next longest term when determining comparable IRD interest rates. Some round down.

A small number of lenders prohibit breaking a mortgage early — regardless of the penalty —unless in the case of an approved bona fide sale.

The moral: Always contact your lender directly for an exact penalty quote.

How is the recession affecting you?

There’s a journalistic trend taking flight these days, often called home economics or the new frugality. The media are running daily stories about how to cut back your standard of living to adjust to the ongoing economic slowdown.

One story I like is about women dyeing their hair in the sink and learning to sew, so they can repair their own clothes. “Insourcing” is about doing yourself what you once gladly paid others to do for you.

The Wall Street Journal, which uses the term “crunchonomics” for this kind of story, has written about a new kind of home shopping. Women turn their closets into stores, while coping with problems that traditional retailers encounter, such as possible returns and cleaning up messes.

You can also find appeals to cut back your driving and use shared vehicles. This week, the New York Times magazine featured a long piece about Zipcar, “an upstart company bent on altering the primal bond between Americans and their vehicles.”

I think many people are ready to give up some of the wastefulness they embraced during the economy’s go-go years. They’re gobbling up such stories, even if only for vicarious enjoyment, to get used to the idea of slimming and trimming their household budgets.

While there’s less need to start hacking your expenses if you’re still employed, you still have to be concerned about the diminishment of pensions and personal savings. Also, it’s not cool to spend freely, even if you have the resources to do so.

I’d love to say I’ve started streamlining, but I’m too busy. You wouldn’t believe how many emails I get from people who unearth nasty, expensive, recurring problems while scrutinizing their spending and checking their bills. And I’m getting more requests to speak than I have had in years.

Funny, isn’t it, that you can make a living telling others how to cut back?

On Co-operators, Aeroplan and Bell Internet

What do these three companies have in common? They’re saying and doing things that make people angry. As a result, many complaints are coming my way.

Co-operators is introducing credit scores as a rating factor for its property insurance customers. This is controversial and cannot be used for car insurance in most provinces (except Quebec). Here’s a link to an online explanation from a Co-operators affiliate.

What makes customers nervous is this Q&A, suggesting their insurance premiums will rise if they don’t agree to a credit check:

What happens if I don’t want your organization to use or access my credit score?

If you do not allow us to access your credit score, we will respect your wishes. However, we will not be able to provide an accurate or competitive premium that reflects the risk we are insuring. As a result, you will not receive the best possible premium available. COSECO will not refuse to provide a quote or coverage if you withhold permission to check your credit score.

Then, there’s Aeroplan, which was the subject of a front-page Report on Business story last Saturday. Rupert Duschene, chief executive, said he was surprised that customers were not using their points, but using cash or credit cards, to pay for flights:

It’s counterintuitive. There hasn’t been a rush to redeem. There are airline seat sales on and people are hoarding the miles.

Some readers rushed to tell me why they thought Aeroplan members weren’t parting with their reward points.

Finally, there’s Bell and its 100 per cent increase for monthly modem rental fees. Some people were sending me their feedback the day they received their notification letters. Bell charges a rental fee even if you buy your own modem, I was told.

This recession is making people more vocal and quick to complain when it comes to consumer and financial issues. I guess that’s one bright spot.

Also below is a familiar complaint about Sears telling people they should have bought an extended warranty if their appliance breaks down in a couple of years — and a less familiar complaint about Nike shoe warranties.