TD Bank on defensive after CBC stories, stock plunge
TD Bank says it is reviewing “all of the concerns raised” by recent CBC News stories that revealed unscrupulous sales tactics by front-line bank employees.
“TD is in the trust business. We know we must earn our customers’ trust before we earn their business,” said TD CEO Bharat Masrani in a release issued late Sunday.
- TD teller says customers pay price for ‘unrealistic’ sales targets
- TD employees admit to breaking the law for fear of being fired
The bank is on the defensive after two reports from CBC’s Go Public team last week.
In the first, three TD employees spoke out about feeling “incredible pressure” to meet “unrealistic” sales targets by signing customers up for unnecessary financial products.
After that story, hundreds of current and former TD employees wrote to Go Public to share their experiences. The second story described how some of those employees felt they had to break the law to meet sales targets and keep their jobs. Some TD workers said the stressful work environment led to psychological problems like anxiety and depression.
‘A few hundred’ complaints
TD said the bank has “procedures in place designed to monitor sales practices and to detect issues should they arise,” including a system for tracking customer complaints.
“For the twelve month period ended January 31, 2017, of the many interactions with our millions of Canadian personal banking customers, we received only a few hundred such complaints related to sales practices compliance. These were investigated and handled in accordance with our procedures,” said the press release.
“We take the feedback we have received in this area very seriously. We will review all of the concerns raised and we are committed to doing the right thing.”
TD Bank employees may have broken law2:28
Stock analysts downgrade TD Bank
TD’s Canadian share price rebounded by more than 1.8 per cent as of 11:00 a.m ET Monday. TD shares suffered their worst day since 2009 on Friday, closing down more than 5.5 per cent.
Some stock analysts have downgraded their outlook for TD’s performance, citing possible repercussions from CBC’s coverage.
“While this story is still unfolding, the inevitable comparison is to the situation faced by Wells Fargo,” wrote National Bank Financial analyst Gabriel Dechaine in a note to clients on Sunday.
Wells Fargo was fined $185 million US and fired thousands of employees after it was revealed that the bank was creating millions of fake accounts on behalf of unsuspecting customers.
Analysts with RBC Capital Markets and Eight Capital also downgraded their expectations for TD shares.
U.S-based Rosen Law Firm announced Friday that it was preparing a class-action lawsuit on behalf of TD Bank investors who suffered losses amid Friday’s share slump.ÂÂ
But in the long run, any damage could be just “a blip,” according to McMaster University marketing professor Marvin Ryder.ÂÂ
“The reputational damage for TD is going to be relatively slight if they can get out ahead of this,” Ryder told CBC News on Friday.
“If they do, in the long-term this is just going to be a blip, this will just be a little spot on the record and in two or three months once they get ahead of the story it’ll be all forgotten,” said Ryder.
“But I’ll also say that today’s story is a warning to the other major banks.”