Agency launches review of business practices at banks

TORONTO — Canada’s financial consumer watchdog is launching a review of business practices among the major banks following reports citing unnamed employees who alleged the lenders were signing customers up for services without their consent.

Lucie Tedesco, commissioner of the Financial Consumer Agency of Canada, said Wednesday she is concerned by the accusations and issued a statement reminding the lenders of their obligations to obtain prior consent before increasing credit limits and providing clients with new products.

“Financial institutions’ compliance with these rules is non-discretionary and the message must be disseminated from the boards of directors on down to customer-facing staff,” Tedesco said.

“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.”

The review, which is set to begin next month, comes after the CBC reported that some employees from Canada’s five biggest banks alleged that they felt pressured to upsell, trick and even lie to customers to meet sales targets that were unrealistic.

TD (TSX:TD), the focus of early stories about the issue, has said it doesn’t believe the reports accurately reflect the bank’s workplace.

Scotiabank (TSX:BNS), Royal Bank (TSX:RY), CIBC (TSX:CM) and the Bank of Montreal (TSX:BMO) said in emailed statements that they put clients’ needs first, they regularly seek feedback from their employees and customers, and work to resolve any issues.

“While there will be instances in which we make mistakes, we will always be committed to working with our employees and our customers to make things right,” Scotiabank said in its statement.

The Canadian Bankers Association said its member banks will co-operate “fully and constructively” with the review.

“We are confident that the banks’ strong policies, procedures, and controls are functioning well,” the association said in an email.

Edward Jones analyst Jim Shanahan likened the situation to similar allegations facing Wells Fargo last year. In that case, the U.S. bank issued an apology and paid large penalties after regulators concluded that its employees had opened millions of unauthorized accounts and credit cards on behalf of clients.

“I can’t remember ever hearing of anything of this magnitude happening in Canada,” Shanahan said. “It hasn’t reached scandal proportions yet, but it’s certainly blowing up.”

Shanahan said banks are feeling intense pressure from investors to continue growing their earnings and profitability in spite of headwinds such as rock bottom interest rates and higher capital requirements.

That pressure trickles down to executives and, ultimately, customer-facing sales representatives, Shanahan said.

“I don’t think we’ve heard the worst of this yet. This is going to probably get a lot worse before it gets better.”

The financials sector was down 0.28 per cent on the Toronto Stock Exchange in early afternoon trading Wednesday, with all five of the major Canadian banks in the red.

Just Posted

Doctor first in Red Deer to offer Mohs surgical suite for skin cancer

A local doctor says a skin cancer surgery newly offered locally will… Continue reading

Methamphetamine, THC found in half-million dollar seizure and Bowden Institution

Nearly half a million dollars worth of drugs and other contraband was… Continue reading

Community support needed to bring Canadian Finals Rodeo to Red Deer

Bid from Westerner Park and Red Deer & District Chamber of Commerce

Long-tenured former Blackfalds mayor recognized by Alberta Urban Municipalities Association

After 19 years serving on Blackfalds council, Melodie Stol was thrilled her… Continue reading

Preserving Innisfail pioneer home means Isabella Sinclair’s story will live on

House from 1890 will be moved next month to historical village

VIDEO: Red Deerians taste what the city has to offer

Red Deerians sampled some of the finest foods Central Alberta restaurants have… Continue reading

New columnist joining Advocate team

Market Gypsy starts on November 30

Volunteer with victim services in Red Deer

Learn more at info session on Nov. 27

Updated: Missing Sylvan Lake women found

Women were reported missing earlier this week

Liberals propose billions for affordable housing, including individual benefits

A Liberal government fond of promising help for those working hard to… Continue reading

Alberta Party sees growth in Central Alberta

Greg Clark addressed health care needs addressed in Red Deer

Ponoka council freezes Ponoka Fire Department spending

All discretionary spending frozen until full budget numbers are presented

WATCH: Ponoka’s Festival of Trees sees continued support

Three days of celebration and fundraising held at the Calnash Ag Event Centre

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month