Consumer watchdog to review banks’ sales practices
TORONTO The Financial Consumer Agency of Canada will scrutinize sales practices at the country’s banks in the wake of news reports containing allegations of aggressive and unethical sales tactics.
The consumer watchdog’s commissioner, Lucie Tedesco, “expressed concern” at claims that financial institutions were selling products and services without obtaining the consent of customers.
That issue will be the focus of the FCAC’s next review of business practices in the federally regulated financial sector, which is due to start in April.
“We will examine financial institutions’ business practices in relation to express consent and disclosure, including the identification of any factors that may be contributing to non-compliance,” Tedesco said in a statement on Wednesday. “We will investigate and enforce any incidence of noncompliance.”
Wednesday’s announcement comes after CBC News last week reported that numerous employees at Toronto-Dominion Bank had described using aggressive sales tactics in order to meet sales goals. Some TD employees told CBC News that they increased lines of credit, overdraft protection and credit card limits without customers’ knowledge.
On Wednesday, CBC News reported that employees from Canada’s other Big Five banks have also claimed to face high-pressure sales environments with unrealistic sales targets.
Shares of TD Bank slipped 5.5 per cent to $66.15 in Toronto on Friday — marking the biggest decline since January 2009. The stock has since rebounded slightly.
TD has said “the environment described in the media report is very much at odds with how we run our business, and we don’t recognize it from our own perspective, experience or assessments.”
“We will review all of the concerns raised and we are committed to doing the right thing,” said TD in a statement.
Terry Campbell, the president of the Canadian Bankers Association, said its member banks look forward to co-operating with the FCAC’s review. “Canada’s banks will cooperate fully and constructively with the regulator . ... We are confident that the banks’ strong policies, procedures, and controls are functioning well,” he said in a statement on Wednesday.
There were also calls for a parliamentary inquiry, with two lawmakers who sit on Canada’s House of Commons Standing Committee on Finance calling for an examination of banks’ practices and the effectiveness of financial regulation in Canada, Reuters reported. “Is it adequate enough? Do they have enough power?” asked Liberal MP Robert-Falcon Ouellette.