Federal watchdog investigating sales practices at Canada’s banks, MPs hear
Canada’s big banks are currently under review by a federal government watchdog, with results to be made public by the end of the year.
Testifying before the House of Commons finance committee Monday, Lucie Tedesco, commissioner of the Financial Consumer Agency of Canada, said her agency began looking into bank practices last September, following a scandal over sales and fake accounts at Wells Fargo Bank in the U.S.
CBC News is live streaming the second hour of the hearings beginning at 6 p.m. ET. (Monday’s committee is also being livecast on ParlVU, the parliamentary online service.)
Tedesco said the agency reviewed the complaints it had received about Canadian banks over the previous three years and found they were stable. It decided to make bank sales practices related to credit cards the target of its 2017-18 industry review and sent a letter to the banks Feb. 3, reminding them of their legal obligation to provide consumers with the required disclosure and to get their express consent when selling them products and services.
However, following reports by CBC’s Go Public of questionable practices by Canadian banks, the agency decided to examine what the banks were doing when it came to express consent and disclosure, she told the committee.
“Since then, our supervision and enforcement team has been hard at work reviewing and investigating complaints,” said Tedesco. “They are looking at any and all factors that may be contributing to non-compliance and have been instructed to take appropriate enforcement action for all breaches they uncover.”
The agency has also sped up its plans for an overall review, she added.
“I also instructed my team to accelerate plans for the broader industry review of bank sales practices, which is now in full swing. Through the review, we are assessing whether sales targets and incentive programs are contributing to practices that may be leading to poor outcomes for consumers.”
Tedesco said in the past 16 months, Canadian financial institutions have reimbursed consumers $15 million, however, she did not say in her opening statement whether that amount was the result of bank employees selling clients products they didn’t need or signing them up for services without their knowledge.
Lucie Tedesco, commissioner of the Financial Consumer Agency of Canada, left, and Darren Hannah, vice-president of the Canadian Bankers Association, spoke to the House of Commons finance committee Monday. (Financial Consumer Agency of Canada/Canadian Bankers Association)
The finance committee hearings come in the wake of a series of stories by CBC’s Go Public, in which bank employees described sales practices by some of Canada’s biggest banks. Allegations included pressuring employees to meet constantly higher sales targets, signing clients up for services without informing them and forging signatures and initials.
To date, thousands of bank employees have contacted Go Public, describing stress-inducing pressure to increase sales.
Banks co-operate with reviews: CBA
In his prepared remarks before the committee, Darren Hannah, vice-president of the Canadian Banking Association, said Canadians are well-served by their banks and it is rare for a complaint between a customer and a bank to not be resolved by the institution.
“With more than nine-billion customer transactions flowing through banks each year from millions of bank customers, the small number of complaints demonstrates a positive customer experience across all banks,” Hannah said.
Hannah said banks co-operate with the federal regulator to ensure they are following regulations and that the regulator regularly conducts “reviews of the banks’ business practices, and banks co-operate with them on these reviews.”
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- ‘Customers are prey to me’: Clients pay price for bank’s ‘unrealistic’ sales targets
The hearings are expected to stretch over three meetings of the committee. Former bank employees who have come forward are expected to testify Wednesday afternoon, while representatives of Canada’s big banks are to appear the following Monday.
If, after the hearings, the committee finds that there are problems that can be addressed by government action or tighter regulations, the committee can recommend that the government take action.
Article source: http://www.cbc.ca/news/politics/banks-finance-mps-hearings-1.4146800?cmp=rss