Another scathing report, published by CBC this week, uses hidden cameras to capture the pervasive culture at Canadian Banks. Current and former bank employees from all the big banks: TD, RBC, BMO, Scotiabank and CIBC. CBC all expressed similar concerns about enormous sales pressure they say leads to potentially costly or otherwise dangerous financial products being pushed on customers. Below are some of the important insights about the banking industry in Canada and how it might impact your financial decisions.
retail sales pressure inside the big banks. CBC's Go Public team began investigating in 2017, after three TD Bank employees spoke out about sales targets they considered unethical and harmful to customers.
Over the next few months, more than 3,000 current and former employees from all the big banks contacted CBC to speak out about sales pressure, resulting in an investigation by the Financial Consumer Agency of Canada (FCAC), the banking regulator.
The FCAC issued a report in 2018 that found a focus on sales targets was increasing the risk of banks placing sales ahead of the interests of customers.
Sales Pressure in Canadian Banks
Employees from major Canadian banks, including TD, RBC, BMO, Scotiabank, and CIBC, reveal significant pressure to meet sales targets, potentially at the expense of clients' best interests.
This pressure has led to unethical practices, with employees admitting to selling unnecessary financial products to meet targets.
"I had to mislead customers into getting products that they didn't need, to reach my sales target," said a recent BMO employee."It's not a customer service … environment," a former Scotiabank employee said. "We're there to sell — and make money for the bank."
High-Pressure Environments
Employees describe a high-pressure environment with frequent meetings and emails emphasizing sales targets.
Some employees express fear of losing their jobs if they fail to meet targets, leading to a culture focused on sales rather than customer service.
Unsuitable Products
Undercover investigations at bank branches reveal instances of employees pushing unnecessary financial products and providing misleading advice, potentially violating banking regulations.
Hidden cameras captured employees offering products such as credit cards and lines of credit without proper consideration for clients' financial well-being, or recommending clients pay off minimum debt balances to "protect" their credit.
Employees also provided unsuitable investment advice, such as recommending products like GICs and mutual funds solely to meet sales targets, rather than considering clients' financial goals and risk tolerance.
Clients were misled about fees, being told that fees only apply to gains (not the entire lump sum) or not discussing the topic altogether.
"The ideal situation is for a credit card to be given to somebody who then keeps a balance on it and can't pay it of. They're not only getting bad advice, they're getting illegal advice."
Regulatory Oversight
The Financial Consumer Agency of Canada (FCAC) previously investigated sales pressure in banks and issued a report highlighting the risk to customers.
Despite some measures taken, employees claim that sales targets have increased again, particularly during difficult economic times.
Call for Stricter Oversight
Concerns are raised about the efficacy of the FCAC as a regulator, with calls for stricter oversight and penalties for violations.
Employees and consumer advocates emphasize the need for the government to take action to protect consumers from unethical sales practices in the banking sector.
The FCAC has issued less than $20 million in fines over 20 years, whereas regulators in the U.S. and U.K. have issued billions in fines in just 10 years.
When considering financial advice, non-bank, unbiased, and independent investment firms operate without the pressure of meeting sales targets set by large financial institutions and prioritize client satisfaction and financial well-being above all else. With a focus solely on serving your best interests, independent investment firms provide a level of transparency, trust, and integrity that may be lacking in the sales-driven culture of major banks.