April 4, 2017
The reaction of the FCAC to the scandal has demonstrated no sense of urgency to investigate and protect financial consumers. Asked to comment on the CBC’s GoPublic reporting, the FCAC’s deputy commissioner Brigitte Goulard appeared on TV to say that the agency had been interested in looking at these sales practices “for a while” but had decided it was going to launch a special investigation in April. A report can be expected by the end of the year, but how deep will it go?
Asked by Radio Canada what would happen if a bank is found guilty of illegal actions in its sales practices, Goulard warned that her agency could impose a fine of up to $500,000. In 2015-16, Toronto-Dominion Bank CEO Bharat Masrani was paid $9.38 million in his first year as top executive so a fine of $500K would equal only a few weeks compensation or a minute fraction of TD’s quarterly profit. Not exactly a huge deterrent for a bank like TD. And she added, “If it’s a serious violation, we could name the institution.”. This is neither the transparency Canadians deserve nor the financial consumer protection they need.
In a statement, FCAC commissioner Lucie Tedesco expressed concern with recent allegations related to the sale of products and services by financial institutions to consumers without properly obtaining their prior express consent. “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,” she said. The real issue is not consent /cost disclosure but rather an unbridled sales culture where client needs are subordinated to sales quotas placed on employees under threat of termination. Clients provide personal and confidential information that is harvested to upsell them based on quotas rather than need. That is exactly the opposite of the type of trust relationship that should exist between a bank and its clients.
Will the FCAC come down hard on the banks involved? Will abused clients obtain restitution or have improper contracts unwound? Or will employees who behaved badly or broke the law under intense pressure be turned into scapegoats for management actions?