The agency conducted a mystery shopping exercise and found concerning sales practices, especially among certain communities
Canada’s big six banks need to review their sales practices to ensure compliance with tighter incoming regulations.
Concerns have been revealed by the Financial Consumer Agency of Canada (FCAC) following a mystery shopping exercise at federally-regulated financial institutions.
It found that 74% of the 712 different shops that were made at Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, and Toronto-Dominion Bank, were deemed positive overall experiences.
However, 32% of chequing account shoppers and 45% of credit card shoppers reported that bank employees recommended an inappropriate product.
The undercover investigation was conducted ahead of more robust consumer protection regulations that come into force at the end of June. These were announced in 2018 as a new Financial Consumer Protection Framework (the Framework) in the Bank Act.
Concerning sales practices
Concerning sales practices identified by the mystery shoppers, even among those with an overall positive experience, included:
- an inappropriate product was recommended
- information provided was not clear and simple, or was considered misleading
- pressure was exerted
- the employee did not seem knowledgeable or well-trained
Additionally, those who self-identified as visible minorities, Indigenous persons, and students, had more concerning experiences than other shoppers.
New framework
FCAC’s new Framework will be implemented on June 30 and comes with new obligations for banks to:
- strengthen their complaint-handling procedures so their customers get their issues resolved faster
- offer and sell products or services to their customers that are appropriate for them based on their financial needs and circumstances
- provide their customers with new disclosures about their day-to-day banking to help them make informed and timely decisions about their finances
FCAC commissioner, Judith Robertson, said that the financial services industry has a shared responsibility with regulators to protect financial consumers.
“We expect banks to focus on the areas for improvement that have been identified as they implement Canada's new Financial Consumer Protection Framework and ensure they consider the needs and abilities of consumers, including those in vulnerable circumstances,” she said.
The mystery shopper activity was conducted in the last quarter of 2019.
