Canadian securities regulators are launching a review of sales practices in the country’s bank branches — the latest example of the industry drawing scrutiny on both sides of the border over alleged high-pressure tactics.
The Ontario Securities Commission and the Canadian Investment Regulation Organization, a self-regulatory organization, announced the joint inquiry on Tuesday.
The groups said they were acting in response to reporting earlier this year by the Canadian Broadcasting Corporation, which found that
In their announcement Tuesday, the securities regulators focused on banks’ sales of mutual funds, though the CBC’s reporting was broader, also looking at banks’ efforts to sell checking accounts and credit cards.
Andy McNair-West, a spokesman for the Ontario Securities Commission, did not say Wednesday whether a public report will be issued once the agency review is completed. He said in an email that “we are not confirming the specific details of the review at this stage to protect the integrity of the work and not prejudge the findings.”
The Canadian Bankers Association said in a statement: “Canada’s banks are steadfast in their commitment to providing advice that is clear, transparent and aligns with helping customers reach their financial goals.”
“Banks and their employees take comprehensive steps to comply with consumer protection measures and embrace the responsibility of putting customer needs at the center of all product and service recommendations,” the statement continued. “Banks have a proven track record collaborating with industry peers and regulators effectively. We look forward to building on the strong partnership.”
The CBC’s reporting, which was published in March, relied partly on the use of mystery shoppers and hidden-camera video. It was also based on interviews with current and former employees of Canada’s largest banks, some of whom said they feared losing their jobs if they didn’t meet their sales targets.
At one of the banks, an employee reportedly advised a mystery shopper — who was posing as a customer with a $50,000 inheritance and $17,000 of credit card debt — to pay off only part of the card debt while investing the rest of the money in mutual funds.
After
In its 2018 report, the consumer agency stated that Canada’s retail banking culture was “predominantly focused on selling products and services, increasing the risk that consumers’ interests are not always given the appropriate priority.”
The agency also found that performance management tools, including sales targets, might increase the risk that banks would engage in mis-selling and breaching their market conduct obligations.
Duff Conacher, co-founder of Democracy Watch, an advocacy group that works on corporate accountability issues, is critical of the Canadian regulators’ review of bank sales practices six years ago.
He argued in an interview Wednesday that the Financial Consumer Agency of Canada did nothing to clean up the problems it found in 2018. And he voiced concern that the review announced by Ontario securities regulators will also have little impact, because Tuesday’s announcement gives banks a heads-up that they should be on their best behavior.
“If you announce it, what are you doing?” Conacher said. “You’re saying, ‘Clean everything up, here we come.’ That’s not enforcement.”
“CBC is our enforcement agency,” he joked. “Unfortunately, it does not have prosecution power.”
In the U.S., where several large Canadian banks have grown their businesses in recent years, high-pressure sales tactics drew the attention of regulators following the unauthorized-accounts scandal at Wells Fargo.
After the Office of the Comptroller of the Currency completed
The OCC said at the time that it didn’t identify any “systemic” issues involving bank employees opening accounts without customer consent. American Banker reported that the agency flagged