Do you remember the scandal that rocked the RESP provider Kaleido, then called Universitas, seven years ago? Fundamentally, the rules of the game for determining the amount of money to be given to young people had changed to the detriment of students. Her punished parents have not forgotten. Still bitter and outraged, some spent Monday in the Longueuil courthouse or with teams to watch the start of the trial.
Published at 6:30 am.
This case is unique in its form as it is being heard by the Small Claims Court, although it affects 90 Kaleido customers throughout Quebec. Your files have been grouped. Since the parties cannot be represented by a lawyer, one of the parents appears on behalf of the others. Dominic Bonin is an entrepreneur and father of four daughters.
Kaleido is represented by its Head of Transformation and Vice President of Sales and Business Development, Hugo Côté.
PHOTO FRANÇOIS ROY, THE PRESS
Kaleido’s Chief Transformation Officer and Vice President of Sales and Business Development, Hugo Côté
He is assisted by two lawyers who sit at the back of the room and can advise him during breaks and possibly send him a text message during the proceedings. In addition, Dominic Bonin emphasized to the judge that he was uncomfortable when the other party used his smartphone…
The case affects these 90 people, but also tens of thousands of other Quebecers, because it calls into question Kaleido’s credibility and goodwill.
Their mission, academic persistence, is noble. However, the approach raises doubts and the operation of Collective Registered Education Savings Plans (RESPs) has attracted many strong criticisms over the years.
The outcome of this matter will therefore be of great interest to all parents and grandparents who have invested or are thinking about investing in an RESP with Kaleido.
***
The year 2017 is already far in our memories. Allow me to summarize (I promise quickly) the events that gave rise to the dispute and the functioning of the two collective RESPs that Kaleido sold at a given time (Plan Universitas and Reeeflex).
The basic idea behind both plans is that the further a young person progresses in their studies, the more they receive a large number of study grants (EAP). In a cohort born in the same year, young people who dropped out of CEGEP therefore left money in the coffers for those who enrolled in university. This phenomenon was called “wear and tear.” And attrition has been the focus of the organization’s marketing and promotion of selling its RESPs. When your child goes to college, you will win big! we pleaded.
However, it seems that some customers have complained about this formula. They wanted more young people to be able to receive multiple PAEs, so that a CEGEP student could receive as much as a university student. Kaleido held a vote on the issue. Flexibility won. Since then, almost all types of study have been entitled to the same amount. You know what happens when you divide a cake into 12 instead of 6…
“If it’s legal, how can it be legal?” That’s why I’m here to understand it,” Julie Tanguy, an actuary and mother of two teenagers who estimates her loss at nearly $25,000, told me. She still cannot believe that Kaleido was able to punish parents who understood the concept of the RESP group well in order to favor those who understood it less well and therefore complained about it. “What a fun solution they found! »
After the vote, the Financial Markets Authority (AMF) opened an investigation. Because Kaleido’s customers lacked the information to make an informed decision, a second vote was conducted in 2018. The result was the same.
PHOTO FRANÇOIS ROY, THE PRESS
Some of the people who believe they have been defrauded came to the Longueuil courthouse on Monday to attend the first day of Kaleido’s trial, seven years after the changes to his group’s RESPs.
Since realizing that his slice of the pie would definitely be smaller than expected, Dominic Bonin has been fighting to have the treaty changes declared illegal. Nothing in the documentation provided initially led him to believe that the nature of his group, RESP, could change.
I was sold by attrition. If I had known they would eliminate the fluctuation, I would have gone to the bank to open an RESP. There were no longer any pronounced advantages.
Dominic Bonin, entrepreneur and father of four daughters
The problem was that once the reconciliations had taken place, unhappy customers were unable to transfer their money to an RESP account opened at the bank. The departures are so punishing that this is not an option. “I’m stuck in a bad situation. When I contribute every month, it breaks my heart,” Julie Tanguy told me.
Every other parent I met in the courthouse hallways also spoke to me about the uncomfortable feeling of being “shackled” to an organization that has “distorted” their child’s RESP by radically changing the way it operates.
Kaleido’s representative, Hugo Côté, did not want to speak to me “out of respect for the legal process.” He must present his case on Wednesday, which is likely to be very revealing and demonstrate the values that drive the organization today.