Consumer advocates have low expectations for probe into Canada’s 5 big banks
A review announced by Canada’s top financial watchdog after revelations that employees at the five major banks routinely pressure customers into signing up for products they don’t need is unlikely to be effective, consumer advocates say.
The Financial Consumer Agency of Canada (FCAC) said Wednesday it will launch an investigation next month into sales practices at Canadian banks. If institutions are found to be in violation of the law, they could be identified and subject to a fine of up to $500,000.
- Bank watchdog saw surge in complaints about dubious credit card applications months ago
The review was announced after bank employees across the country told CBC’s Go Public they felt pressured to hit targets that are monitored weekly, daily and, in some cases, hourly.
More than 1,600 emails
Since the report aired last week, CBC News has received more than 1,600 emails from bank employees and customers.
But consumer and investor advocates criticized the probe, saying the bank watchdog is ineffective, with close ties to the financial sector.
Duff Conacher of Democracy Watch said the bank watchdog should not have revealed that it will investigate next month.
“The banks will now of course clean up and cover up the wrongdoing,” he said.
“And that’s just … ridiculous. It would be like the police announcing in the morning that they’re going to set up a speed trap on the highway and telling everyone where it was.
“You’re not going to catch anyone that way.”
Conacher has been tracking the big banks and the bank regulator for more than two decades. Since 2003, the FCAC has made 125 rulings, but prosecuted just twice.
Stan Buell of the Small Investor Protection Association said Canada’s banking regulators are too closely tied to industry.
“They really have a conflict of interest between protecting consumers and fostering the markets and enabling the companies to make money,” Buell said.
“These are diametrically opposed. What we need is a Canadian authority that would have the sole responsibility of protecting consumers.”
Call for independent group
Conacher has called for an independent financial consumer organization, as recommended by a government task force nearly 20 years ago.
Consumers would run it, direct it and push for changes with no ties to industry or government, he said.
- ‘I will do anything I can to make my goal’: TD teller says customers pay price for ‘unrealistic’ sales targets
“There are similar independent groups in the U.S.,” he said. “They help customers fight off rate increases with utility companies.”
Since the investigation aired last week, bank employees and customers have come forward with complaints about tactics used by their financial institutions.
‘It’s hard to trust them’
Nektaria Kyriakopoulos said her BMO MasterCard limit was increased without her consent.
“I was surprised that they did it without my request,” KyriaKopoulos said. “I’ve had issues with fraud in the past so I was concerned that something fraudulent had happened.
“I mean, basically I don’t trust them as it is. It’s hard to trust them after seeing incidents like this.”
Under the Canada Banking Act, it’s against the law to increase a customer’s credit card limit without knowledge or consent.
In a statement, BMO said they are taking the issue seriously and “will address any concerns.”