1. CANADIAN FORCES PERSONNEL ASSISTANCE FUND (CFPAF)
Reporting of Distress Loans to a Credit Rating Bureau

2. CFPAF Consist of 4 Programs:
Self Improvement Loan Program (SILP) ($8M)
Education Assistance Loan Program (EALP) ($2.5M)
Minor Disbursement Program ($50K)
Distress Program ($2.5M)

3. CFPAF
CFPAF expenses are growing faster than revenues, essentially as a result of bad debts
The Fund is losing ground
Less funds available for distress grants
Looking for possible solutions

4. CFPAF Two sources of income Three large expense areas
Interest (loans & CFCF)
CFCF Levies
Three large expense areas
Salaries
Bad Debts bankruptcies and loans going in collection – all programs except minor disbursements
Distress Grants

5. CFPAF The changes From 97-98 to 01-02 From 2002 to 2005
Average Bad Debts = $196,766
Distress Bad Debts = $56,909
Average Surplus = $83,828
From 2002 to 2005
Average Bad Debts = $251,366
Distress Bad Debts = $97,260
Average Surplus $2,455

6. CFPAF The changes (In relation to overall revenue)
In Fiscal Year 97-98
Bad Debts = 23%
Grants = 25%
In Fiscal Year 2005
Bad Debts = 33%
Grants = 18%

7. CFPAF Distress Program Loans & Grants $25K & $5K Maximums respectively
Serving and Former members with one full year of service are eligible
Average customer has poor credit habits and credit rating
In most cases CFPAF is the last resort

8. CFPAF
Members & Former Members in financial distress, for the vast majority, no longer have access to credit (if they do it is at a very high cost)
CFPAF absorbs many high interest debts
Credit rating improves significantly over a short period (months)
Once again possible to make use of credit

9. CFPAF
Credit indicator can easily improve by 500 points on a maximum of 1,000
Potential creditors are mislead by the credit file on record since the level of indebtedness is significantly lower
CFPAF does not have any control over this situation

10. CFPAF
Unfortunately most of CFPAF clients in financial distress make use of credit despite having agreed not to during the reimbursement period
Such credit abuse leads to insolvency and related predicaments
The increase to $25K (from $15K) per distress loan has only been in place for three years and losses due to bad debts are therefore expected to increase

11. CFPAF
Solutions:
Report distress loans to a credit rating agency such as Equifax
This will also protect the member from credit abuse and better inform the creditors
Legal advice was obtained by CFPAF and there is no problem with this measure
Other measures are also being implemented:
Closer monitoring by the financial counselors
Recovery of certain loans at the time of release

12. Summary The CFPAF is still healthy
Continues to be one of the best resources at our disposal to help serving and former members
Such action is being considered necessary to be able to maintain all CFPAF existing programs