TD CEO de­nies ‘wide­spread prob­lem’ with ag­gres­sive sales tac­tics.

National Post (National Edition) - - FRONT PAGE - AR­MINA LI­GAYA

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.

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