TD CEO denies ‘widespread problem’ with aggressive sales tactics.
TORONTO • The chief executive of Toronto-Dominion Bank told shareholders on Thursday that he does not believe the bank has a “widespread problem” with aggressive sales practices, but nevertheless it has brought in an outside firm to assist with a review “to make sure we really test ourselves.”
Bharat Masrani, speaking to investors for the first time since CBC News reported allegations of high-pressure sales tactics at the bank and unethical behaviour by some employees, said that he and his leadership team had since spoken with colleagues across the country and “so many of them have told us that these reports are not their experience.”
“Still, the experiences expressed by some of our colleagues concern me — they go against the very fibre of our culture .... While we have sales goals to help manage our business, people behaving unethically in order to achieve these goals would be inconsistent with who we are as an institution, and I don’t believe we have a widespread problem of that type of behaviour,” he said at the company’s annual general meeting in Toronto.
Masrani also told reporters that an unnamed professional services firm would “assist the bank with our ongoing review of processes that we have, and if there are opportunities to enhance our existing processes, we will do so.”
TD has received “a few hundred complaints related to their sales practices that were escalated beyond the initial channel,” Masrani added. Of those, fewer than 100 had compliance concerns, and these were investigated and addressed, he said.
“I also want to assure you: We take the concerns raised very seriously and are reviewing all of them,” he said.
Masrani’s comments come weeks after CBC News published stories citing “hundreds of current and former TD Bank Group employees” who described feeling pressured to meet high sales goals, with some claiming to have raised credit and overdraft limits without customer consent.
Shares of TD, Canada’s second-biggest lender by market capitalization, fell by more than five per cent on March 10 in the wake of these allegations, closing at $66, and have not recovered. On Thursday, they closed at $66.22.
A subsequent CBC News report included allegations from employees at other Big Five banks also describing aggressive sales environments. The allegations, which have yet to be proven, prompted the Financial Consumer Agency of Canada to move up a review of the financial sector.
The consumer watchdog’s commissioner, Lucie Tedesco, “expressed concern” at the claims that financial institutions were selling products and services without obtaining the consent of customers, an issue the FCAC would focus on during the review, which will now start in April. FCAC expects to publish a report by the end of the year, but may release some interim reports before then.
Masrani told reporters TD wants to ensure that the bank’s own review will be done “thoroughly” but over a “reasonable period of time.” He declined to name the professional services firm and did not offer a specific time frame, but said six months to a year would be too long.
When asked what controls TD had to monitor sales practices such as upselling, Masrani said the bank had various controls and reviews in place. He also said it was premature to say whether TD would consider changing how its branch staff are incentivized, which some banks in other jurisdictions have done. For example, Wells Fargo & Co. last year eliminated all product sales goals in retail banking after it became embroiled in a scandal involving abusive sales practices in its branches.
Masrani said TD uses sales goals to manage its business, but customer experience also plays an important role.
“We are very comfortable with how we incent people and how we manage this business,” the TD chief executive told reporters. “And we have done so for many, many years. But if there are ways to improve or opportunities to enhance, we will certainly look at that.”
Among the hundreds of shareholders gathered at the Design Exchange on Thursday, none took to the microphone to press TD’s executives over the reports of aggressive sales tactics and its impact on shares.
TD executives were, however, challenged on the bank’s involvement in financing Kinder Morgan’s Trans Mountain Expansion oilsands pipeline, as protesters attended the meeting and made statements at the shareholders’ podium.
As well, TD shareholders voted in favour of a proposal to allow investors with smaller holdings to have a bigger voice when choosing directors for the board.
The proxy-access proposal, submitted by a shareholder to both TD and Royal Bank of Canada, pushed for investors holding a threeper-cent stake (and some other requirements) to nominate a director to the board.
Bharat Masrani, CEO of TD Bank, speaks during the annual meeting on Thursday.