BANKS DEFEND SALES TACTICS
‘We’re not being complacent’
Canada’s big banks were in the hot seat in Ottawa on Monday as executives were forced to defend their organizations’ sales practices before a parliamentary committee examining allegations of aggressive tactics.
Andrew Pilkington, Toronto- Dominion Bank’s executive vice president of branch banking, told the House of Commons’ finance committee that the bank has many checks and balances in place to monitor and prevent some of the practices described by current and former employees in reports published by CBC News earlier this year.
“We think we have very robust processes here. But we’re not being complacent, we’re not saying that, ‘ Hey, we’re perfect,' " Pilkington said. “We think there’s an opporunity now to just look as I mentioned earlier, to tighten up and make the appropriate tweaks and adjustments and make it even stronger.”
James McPhedran, the Bank of Nova Scotia’s executive vice president of Canadian banking, said that the measures taken at his bank since the allegations emerged in March include examining data related to customer and employee feedback more frequently — on a weekly instead of monthly basis.
Pilkington and McPhedran were two of six bank executives who testified on Monday in the third in a series of hearings by the House of Commons’s Standing Committee on Finance.
Many of the big bank executives said their employees at the branch levels don’t have product-specific sales targets.
They said the practices described in the CBC reports do not fall in line with their internal codes of conducts.
As well, the banks des cribed t he compliance mechanisms they have in place to monitor and track employee behaviour, such as reviewing sales calls using speech analytics and watching customer feedback data for any anomalies, in addition to various employee feedback channels.
Dan Albas, MP for central Okanagan-Similkameen-Nicola in B.C., however, pressed the executives on why allegations have surfaced despite these measures.
“Given all those things, we still have reports of allegations on the news channel outlining that people have felt something is horribly wrong with their experience of the system. How can you square that between what you’ve told us?” he said.
The committee has held two other hearings examining the business practices of Canadian banks, prompted by reports published by CBC News in March. The initial stories focused on the sales practices of TD employees, some of which said they raised credit limits on credit cards, overdraft protection and lines of credit without customer consent to meet unrealistic sales targets. A subsequent CBC News story quoted staff from all Big Five banks also describing highpressure sales environments.
These news reports and a flurry of complaints prompted the Financial Consumer Agency of Canada to move up its scheduled review of the financial sector to April and refine its focus to business practices and express consent.
The first phase of the probe is a data- gathering exercise, and a “full pack of data” detailing the bank’s head office and branch processes is due to the FCAC by the end of June, Scotiabank’s McPhedran told the committee Monday. “It’s a very comprehensive request, and we have teams of people that are working night and day right now pulling that information together.”
The committee last week heard from the FCAC, the Canadian Bankers’ Association, former bank employees and investor and consumer advocates.
The watchdog told the committee it is scrutinizing business practices at Canadian financial institutions, and “assessing whether sales targets and incentives are contributing to sales practices that may be leading to poor outcomes for consumers,” said FCAC commissioner Lucie Tedesco, according to remarks prepared for the committee hearing on June 5. This review is expected to be complete by the end of the year.
Overall, complaints about banking are on the rise at both the banks’ ombudsman offices and the external complaint bodies that handle disputes if the banks can’t resolve them.
TD Bank chief executive Bharat Masrani said last month that the lender had conducted its own review, and concluded it does not have a widespread problem with aggressive sales tactics.
The other banks have also said the allegations of aggressive tactics were largely unsubstantiated.