Canada's top consumer watchdog says it is reviewing business practices at Canada's federally-regulated charter banks starting next month, following a CBC investigation that has uncovered reports of troubling sales practices at Canada's major financial institutions.
Lucie Tedesco, commissioner of the Financial Consumer Agency of Canada, said in a statement Wednesday that her office is concerned with reports that bank employees are pushing for and sometimes signing customers up for products without their expressed consent, in order to meet their own sales targets.
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As such, the FCAC will be launching a review of business practices in the federally-regulated financial sector starting next month.
"The law requires that, in order to provide consumers with new or expanded products or increase their credit limits, financial institutions obtain their customers' prior consent and disclose key information about the costs and charges of the products they are purchasing," Tedesco said.
In a series of reports from the CBC's Go Public team, employees have reported that increased pressure to meet unrealistic sales targets has caused them to bend the rules. That overt and covert pressure often comes from their superiors, who have their own financial targets to meet.
Following the rules 'is non-discretionary'
"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, adding that she has already discussed some of the issues brought up by the CBC's reporting in her regular meetings with the executives and board members of Canadian banks.
In various statements to CBC, all of Canada's big banks said they act in the best interest of their clients and that employees are expected to follow codes of conduct.
The watchdog is urging consumers "who have experienced what they believe to be misleading business practices, or who have received a financial product or service to which they did not consent," to file a formal complaint by emailing the FCAC.
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"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.
"We will investigate and enforce any incidence of non-compliance."
The Financial Consumer Agency of Canada is a government regulator tasked with raising consumers' awareness of their rights and responsibilities when dealing with financial firms.
They also ensures that banks and other federally regulated institutions comply with consumer protection measures already on the books. The FCAC has the power to levy fines and other penalties if financial firms under its mandate don't comply with regulations. But penalties can be as high as $500,000 per infraction.
In a statement Wednesday, the Canadian Bankers Association, which represents Canada's biggest lenders, says its members "look forward to co-operating with the Financial Consumer Agency of Canada (FCAC) in the review announced today."
"Canadians are well-served by their banks, which is reflected in the very high level of satisfaction that bank customers have with their own bank over 90 per cent of Canadians having favourable impressions of their bank," the CBA said.