Cheque Encashment Service Changes

for Social Assistance Recipients

 The Community and Neighbourhood Services Committee recommends:

 (i)the adoption of the following report (April 21, 1998) from the Commissioner of Community and Neighbourhood Services, subject to amending Recommendation No. (1) by deleting the words Aaccording to the conditions outlined in this report@, and inserting in lieu thereof the words Ato December 31, 1998, under the existing terms and conditions@, so that such recommendation reads as follows:

 A(1)the agreement with the Bank of Montreal for social assistance banking arrangements be extended to December 31, 1998, under the existing terms and conditions, until superseded by new City of Toronto Banking arrangements;@ and

 (ii)that a copy of the report from the Commissioner of Community and Neighbourhood Services be forwarded to the Corporate Services Committee for information:

 Purpose:

 This report outlines the interim cheque encashment arrangements between the Bank of Montreal and Social Services Division and recommends that equitable cheque encashment for social assistance recipients be included in the agreement with the City of Toronto=s future banking service provider.

 Funding Sources:

 As a result of the interim arrangements, the administration costs for cheque encashment will increase by an average from $48,000.00 gross, $24,000.00 net, to $60,000.00 gross, $30,000.00 net, per month from May through December, 1998.

 Recommendations:

 It is recommended that:

 (1)the agreement with the Bank of Montreal for social assistance banking arrangements be extended according to the conditions outlined in this report, until superseded by new City of Toronto banking arrangements;

 (2)as part of the negotiations with the single banking provider, for the City of Toronto, Finance staff request that there be unrestricted and equitable cheque encashment for social assistance recipients in the City of Toronto banking contract; and

 (3)the appropriate City officials be authorized and directed to take the necessary action to give effect thereto.

Background:

 Beginning in 1995, terms and conditions were established with the Bank of Montreal for a three-year contract for the encashment of social assistance cheques through a variety of means, ensuring that social assistance recipients had access to mainstream banking services. The initial changes to the agreement occurred as a result of incremental increases to services charges from $2.00 per cheque to the current $5.00 per cheque.

In the spring of 1997 the Bank of Montreal informed the Department that they planned to limit the encashment of social assistance cheques to 10 specific branch locations for non-account social assistance recipients and that they would reserve the right to periodically change encashment locations.

 In response, through staff discussions, the Department advised the Bank of Montreal that the restriction of encashment to 10 designated locations represented a significant reduction in client service and was not consistent with corporate policy of equitable treatment and services for residents of Toronto. Concerns around disabled access, proximity of proposed branches to area offices and access to public transportation were identified. Four of the proposed branches did not have disabled access and three other branches are located within shopping malls which do not appear to have disabled access.

As a result of the identified concerns, the Bank of Montreal officials agreed to reassess their service proposal.

 Not withstanding ongoing staff discussions, on April 9, 1998, the Bank of Montreal outlined the terms and conditions under which the bank would be willing to extend its social assistance banking arrangements with the Department past the April 30, 1998, termination date.

 With payment processes for social assistance clients currently under review and the overall corporate banking contract currently subject to a Request For Proposal (R.F.P.), the Department required an interim solution having minimal client and administrative impact. Consequently, an extension of the existing banking relationship was desirable and appropriate, given that no other bank is currently interested in meeting the Division=s specific service needs on a dedicated basis.

 Comments:

 Effective May 1, 1998, the Bank of Montreal will limit the encashment of Social Assistance cheques to 13 locations, Appendix I, for non-customers of the bank and will establish a flat fee for encashment of Social Services cheques to $60,000.00 gross per month. Currently the volume driven fees for cheque encashment average approximately $48,000.00 per month.

 Due to the limited time lines, the Division has had to accept the arrangement. The concerns noted in response to the spring 1997 proposal are still valid. In the interim, through a cheque insert, staff are notifying the restricted access to 13 branch locations for non-account customers and by way of posters in the area offices= reception areas. Regardless of staff interventions, there is bound to be confusion on the part of clients, particularly with the other concurrent social assistance regulation changes to eligibility requirements.

 Presently, the average monthly caseload is estimated to be 85,000. Approximately 65 per cent. of all payments are delivered via direct bank deposit. The balance of allowances are issued via cheques of which it is estimated that 9,600 are cashed directly at the branches of the Bank of Montreal for which the new services are affected.

 Currently, the City of Toronto is in the process of selecting a bank for its general banking requirements through a request for proposal procedure which will likely have a selection within this month and implemented by mid-year. Social services banking requirements have been incorporated as part of the general corporate requests and are expected to be met by the successful proponent. Social Services will be available to ensure their client needs are addressed with development of service arrangements with the successful proponent.

 Conclusions:

 The Social Services Division is committed to ensuring recipients of social services benefits have appropriate access to mainstream banking services. The Division is concerned that, in the interim, social assistance clients will not have equitable access to banking services as a result of the restricted new cheque encashment procedures. It may result in having the 13 designated bank branches considered Awelfare bank branches@ further stigmatizing and marginalizing social assistance clients.

 In the meantime, Social Services staff will stress to Finance staff the importance of negotiating access for social assistance clients to mainstream banking services including open access to the encashment of social assistance cheques.

 Contact Name:

 Heather MacVicar:

Tel: 392-8952

 Appendix I

 Special Notice for Clients Without Bank Accounts Cashing Cheques

 Beginning May 1, l998, clients without bank accounts who wish to cash Social Assistance cheques at the Bank of Montreal can only use the following locations:

 2122 Bridletown Circle at Echo Point2448 Lakeshore Boulevard at Mimico-New Toronto

2739 Eglinton Avenue East at Brimley1530 Albion Road at Kipling-Shoppers World

3601 Lawrence Avenue East at Markam*885 Jane Street at Alliance Road-Jane Park Plaza

1220 Queen Street East at Leslie1293 Bloor Street West at Lansdowne*

175 Bloor Street East at Church1211 King Street West at Dufferin*

6 King Street West at Yonge* 1 Yorkgate Boulevard at Finch Avenue-

Yorkgate Mall

1700 Wilson Avenue at Jane Street

 * Locations are not wheelchair accessible

 The Community and Neighbourhood Services also submits the following communication (April 22, 1998) addressed to Mr. Eric Gam, Executive Director, Social Development and Management Services Division, Community and Neighbourhood Services, from Mr. Edward J. Zinger, Vice-President, Government Building, Bank of Montreal:

 Further to our telephone discussions of yesterday and earlier today concerning our contract extension letter dated April 9, 1998, and Ms. Shirley Hoy=s response dated April 15, 1998, I am pleased to confirm the following:

 -cheque encashment will not be restricted to the 13 locations noted in our April 9, 1998, letter, rather they are the primary branches now used by your clients and therefore they are the branches that will be staffed and equipped to meet the needs of your clients. As always cheques can be cashed at any branch that City of Toronto clients wish to cash their cheques at; and

 -fees for cheque encashment will remain unchanged, to that now in effect, through to December 31, 1998.

 We are pleased to have this opportunity to clarify our position on the cheque encashment locations and to address your concern over the pricing.