You've probably seen the media reports about high-pressure sales tactics at Toronto-Dominion Bank and other Canadian financial institutions. Stories of tellers signing up customers to high-fee accounts and credit cards without their knowledge. Loan officers pushing clients to take on lines of credit they don't want or need. And financial advisers selling unsuitable mutual funds to vulnerable investors.
Sleazy behaviour, if true. Perhaps even illegal.
The Financial Consumer Agency of Canada this week warned banks to behave and launched a review of their consent and disclosure practices. Sniffing a scandal, the NDP is calling for a parliamentary inquiry.
But this is a far cry from the Canadian banking industry's Wells Fargo moment, as some analysts are spinning it.
Recall that last year U.S. federal regulators slapped Wells Fargo with $185-million (U.S.) in fines after an investigation revealed the banking giant had created millions of phony bank and credit-card accounts in an orchestrated effort to drive fee revenue. The scandal led to the firing of 5,300 Wells Fargo employees and the resignation of chief executive John Stumpf.
The revelations in Canada stem from an investigation by the CBC, which says it has received nearly 1,000 e-mails from employees of all five of Canada's largest banks complaining about intense pressure to mislead customers or upgrade them to higher-fee products and services.
The big banks are no angels. But what's happening here looks a lot more like a labour-relations feud than a financial scandal. Employees are rebelling against a cutthroat sales culture that has permeated the once-staid retail operations of the big banks.
The workplace environment at TD and other major banks may well be toxic for many employees, who feel unduly stressed about meeting aggressive sales goals.
But it shouldn't surprise employees or consumers that banks have become relentlessly sales-driven – not unlike car dealers or grocery stores. Of course, banks want us to buy more than we really need and pay more than we'd like to.
Bank branches even look like stores. Gone are the wood-panelled wickets, austere furniture and omnipresent bank vault. Today, bank branches have more in common with the Apple Store or a DavidsTea shop. They are bright and open, with flat-screen TVs touting products, and a lifestyle, to customers.
Sure, 50 grams of Jasmine Crème Brulée tea ($9.98 Canadian) is pricier than a couple of boxes of Tetley tea bags, but it smells so good.
The TD Aeroplan Visa Infinite Privilege card similarly exudes the good life of exotic travel and first-class pampering (for just $399 a year).
The missing piece in the story is any evidence that managers at TD or any of the other banks specifically directed tellers and advisers to break banking regulations – as was the case at Wells Fargo. Nor are there documents or e-mails suggesting the banks are doing anything unethical, beyond aggressively selling financial products.
If employees believe they are pawns in a bank-run scheme to dupe customers, they should lay out their allegations to regulators or the police, rather than gripe anonymously to the CBC.
Similarly, bank customers should file complaints with regulators if they suspect they have been deliberately deceived or forced into products without their consent.
Unfortunately, the evidence does not suggest consumers feel aggrieved. Regulators report no surge in customer complaints related to aggressive or deceptive sales practices by the banks.
That is not to say fees aren't excessive, or that limited competition between the major banks in Canada means it's often tough distinguishing the offerings of the various institutions.
The good news is that consumers aren't helpless. They can log on to the Internet to see exactly what conditions and fees are associated with different accounts and credit cards. The banks typically list their various offerings, and applicable fees, in handy tables.
So just say "no" the next time a bank employee steers you toward a new product you don't want. Or, take your business to a credit union.
Banking regulations require institutions to follow strict disclosure and consent rules. In a statement this week, Financial Consumer Agency of Canada commissioner Lucie Tedesco expressed concern about the allegations reported by CBCs and reminded banks they are bound by law to "obtain their customers' prior consent and disclose key information about the costs and charges of the products they are purchasing."
If that doesn't sound like your bank, complain to Ms. Tedesco.