Regulator to launch review on sales practices at key banks

The federal banking regulator is reviewing domestic retail sales practices at Canada’s key banks, focusing on the inherent “reputational risks” and the potential impact on the institutions’ financial stability.

The review by the Office of the Superintendent of Financial Institutions comes as the country’s financial consumer watchdog is conducting its own probe of practices at Canada’s biggest banks, prompted by news reports earlier this year containing allegations of high-pressure sales tactics by some bank employees.

OSFI’s review will be “focusing on risk culture, the governance of sales practices, and how banks manage the potential reputational risk inherent in sales activities,” according to a consultation paper released by the Department of Finance on Friday.

The Financial Consumer Agency of Canada said Tuesday that OSFI’s review is “concurrent” with its probe launched in April.

OSFI would not confirm details of its review, such as timing or specific institutions, as it is “considered protected supervisory information.”

The consultation paper (the second released as part of the department’s review of the Federal Financial Sector Framework), says OSFI is reviewing “domestic retail sales practices at domestic systemically important banks.”

OSFI has identified those banks as Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and TD Bank.

In March, CBC News published reports that included allegations of a high-pressure environment at Toronto Dominion Bank, quoting unnamed current and former employees — some of whom claimed to raise credit and overdraft limits without customer consent to reach difficult sales targets. A subsequent CBC News story outlined complaints from unnamed employees from all Big Five banks who described feeling pushed to meet unrealistic sales goals.