Lethbridge Herald

Bank review launched by consumer agency

- Alexandra Posadzki

Canada’s financial consumer watchdog is launching a review of business practices among the major banks following reports citing unnamed employees who alleged the lenders were signing customers up for services without their consent.

Lucie Tedesco, commission­er of the Financial Consumer Agency of Canada, said Wednesday she is concerned by the accusation­s and issued a statement reminding the lenders of their obligation­s to obtain prior consent before increasing credit limits and providing clients with new products.

“Financial institutio­ns’ compliance with these rules is non-discretion­ary and the message must be disseminat­ed from the boards of directors on down to customer-facing staff,” Tedesco said.

“Through the industry review we are announcing today, 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 noncomplia­nce.”

The review, which is set to begin next month, comes after the CBC reported that some employees from Canada’s five biggest banks alleged that they felt pressured to upsell, trick and even lie to customers to meet sales targets that were unrealisti­c.

TD, the focus of early stories about the issue, has said it doesn’t believe the reports accurately reflect the bank’s workplace.

Scotiabank, Royal Bank, CIBC and the Bank of Montreal said in emailed statements that they put clients’ needs first, they regularly seek feedback from their employees and customers, and work to resolve any issues.

“While there will be instances in which we make mistakes, we will always be committed to working with our employees and our customers to make things right,” Scotiabank said in its statement.

The Canadian Bankers Associatio­n said its member banks will co-operate “fully and constructi­vely” with the review.

“We are confident that the banks’ strong policies, procedures, and controls are functionin­g well,” the associatio­n said in an email.

Edward Jones analyst Jim Shanahan likened the situation to similar allegation­s facing Wells Fargo last year. In that case, the U.S. bank issued an apology and paid large penalties after regulators concluded that its employees had opened millions of unauthoriz­ed accounts and credit cards on behalf of clients.

“I can’t remember ever hearing of anything of this magnitude happening in Canada,” Shanahan said. “It hasn’t reached scandal proportion­s yet, but it’s certainly blowing up.”

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