Financial Consumer Agency launches review of business practices at banks
ARMINA LIGAYA
FINANCIAL POST AND WIRE SERVICES
TORONTO — The Financial Consumer Agency of Canada said Wednesday it is undertaking a review of the business practices in the federally regulated financial sector, focusing on consent and disclosure related to the sales of products and services.
The review, due to start in April, comes in the wake of allegations in a CBC report outlining aggressive sales tactics and employees’ admissions of law-breaking at Toronto-Dominion Bank.
FCAC Commissioner Lucie Tedesco “expressed concern” with recent allegations related to the sale of products and services by financial institutions without properly obtaining their prior express consent.
“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 non-compliance,” Tedesco said in a statement. “We will investigate and enforce any incidence of non-compliance.”
Tedesco said she had discussed the matter in recent meetings with the chief executive officers and boards of Canada’s biggest banks.
Last week, CBC News reported allegations that TD used aggressive sales tactics and some employees admitted breaking the law to meet sales goals.
Some TD employees told CBC News they increased lines of credit, overdraft protection and credit card limits without customers’ knowledge.
Shares of TD Bank slipped 5.5 per cent to $66.15 in Toronto on Friday — marking the biggest decline since January 2009. The stock has since rebounded slightly. It closed at $65.95, down 0.66 per cent in Toronto on Wednesday.
TD has said “the environment described in the media report is very much at odds with how we run our business, and we don’t recognize it from our own perspective, experience or assessments.”
“We will review all of the concerns raised and we are committed to doing the right thing,” said TD in a statement.
Ottawa-based FCAC, created in 2001, is an independent agency of the federal government that enforces consumer protection legislation, regulations and industry commitments by federally regulated financial bodies.
Shares in Canadian banks closed lower on Wednesday. Bank of Montreal was 1.22 per cent lower. RBC was down 0.63 per cent, Scotiabank 1.02 per cent, and CIBC 0.92 per cent.
Sales practices at lenders have come under scrutiny in North America after Wells Fargo & Co reached a US$185 million settlement with U.S. authorities in September after it was discovered
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 non-compliance.”
FCAC Commissioner Lucie Tedesco that branch staff had opened up to two million unauthorized customer accounts amid pressure to meet internal sales goals.