SALES PRACTICES ‘SOUND,’ TOP BANK EXECS INSIST
Scotiabank, BMO try to soothe investors as they reject claims of unethical tactics
The heads of two of Canada’s biggest banks defended their organizations’ sales practices to shareholders on Tuesday, with the Bank of Nova Scotia’s chief executive calling allegations of aggressive tactics at some banks “largely unsubstantiated.”
Brian Porter, president and chief executive officer of Scotiabank, said his organization has “very sound sales practices,” in his first public comments since CBC News published an initial story quoting employees of Toronto-Dominion Bank who felt pressured to upsell to meet difficult sales targets.
“We monitor and adjust (sales practices) where we think it’s necessary ... These claims the CBC is making are largely unsubstantiated,” he said in response to a question from a shareholder at Scotiabank’s annual meeting in Toronto on Tuesday.
Meanwhile, Bank of Montreal’s chief executive Bill Downe told shareholders at its annual general meeting in Toronto that he was confident that his staff “know we’re not in business to push products” and that the organization has fostered a culture where staff can “voice concerns without fear.”
The chief executives’ comments were made as the Canadian banking industry has come under scrutiny after CBC News reports quoted unnamed current and former TD employees, some of whom claimed to have raised credit and overdraft limits without customer consent in order to reach difficult sales targets. A subsequent CBC News story also cited nearly 1,000 emails and calls from staff from all the Big Five banks, describing feeling pushed to meet unrealistic sales goals or risk losing their jobs.
These allegations prompted the Financial Consumer Agency of Canada to move up its review of the financial sector to April.
Last week, TD’s chief executive Bharat Masrani told shareholders at its annual general meeting that he doesn’t believe there is a “widespread problem” with aggressive sales practices at the bank. Still, the lender has brought in an unnamed professional services firm to assist with a review of its processes “to make sure we really test ourselves,” Masrani said.
TD has received “a few hundred complaints related to their sales practices that were escalated beyond the initial channel” and of those, fewer than 100 had compliance concerns, and these were investigated and addressed, Masrani added.
Scotiabank has received eight complaints related to sales practices out of the 400 million transactions the bank conducted last year, Porter said Tuesday. “We take each of those eight very seriously. We investigate them.”
Executives at both Scotiabank and BMO said Tuesday the banks regularly review their processes and did so after U.S. bank Wells Fargo became embroiled in a scandal involving abusive sales practices in its branches last year and then revisited them after recent media reports.
Downe outlined BMO’s “robust” checks and balances, such as performance scorecards where customer satisfaction is equally weighted alongside customer purchases and a process whereby accounts that are cancelled soon after opening are scrutinized.
BMO hasn’t seen any movement in the number of incidents of employee or customer dissatisfaction in the most recent period, Downe added. “I believe that we have a sound philosophy around doing business, and that’s what I see the evidence supporting,” he said.
Both executives also weighed in on the importance of open trade after U.S. President Donald Trump took the first steps last week towards redrawing the North American Free Trade Agreement.
NAFTA could be updated to “better reflect today’s realities” but “open markets remain the surest path to greater prosperity,” Porter told shareholders. “We agree that it would be timely to update some provisions ... For example, provisions governing services, e-commerce, and intellectual-property protections could all be added to the agreement,” he said.
Scotiabank has the largest international presence of the Canadian banks, with a footprint in Mexico, Chile, Peru and Colombia.
Porter reiterated that Scotiabank remained “confident about Mexico’s economic prospects in the near term, and especially over the longer term.”
Downe told reporters that NAFTA could be improved but BMO’s view is “more open borders and trade agreements that have multi parties to them are the most efficient.”
I believe that we have a sound philosophy around doing business, and that’s what I see the evidence supporting.
BILL DOWNE, BMO chief executive