Banks's business practices are under investigation: a hot-button issue

By Kathleen Ann Rake

Since the CBC aired its report in early March, serious concerns have been raised about alleged disturbing sales strategies used by certain major banks. Given that consumer protection is foremost among our concerns and in light of the upcoming review of the Bank Act, key questions remain about what kind of impact these alleged business practices could have on sales of insurance products.

Shedding light on high-pressure sales tactics

To put things in perspective, bear in mind that the CBC aired a report in early March in which TD Bank employees said they had been subjected to undue pressure to reach ambitious sales targets. At the time, they admitted that they had violated their obligations to obtain their clients' consent and to disclose information on the costs and fees associated with banking products, primarily out of fear of losing their job.

What came next was the snowball effect: a few days later, hundreds of employees from five major banks across the country confirmed the existence of similar practices, according to a Radio Canada report on March 15.

While the bank employees basically stated that they had been forced to prioritize the achievement of sales targets over consumers' best interests, the financial institutions concerned rejected the allegations and stated that they act for the benefit of their clients.

The Bank Act is a key part of consumer protection efforts

In December 2016, I wrote an article that was similar in nature. In it, I drew your attention to Bill C-29, which included amendments to the Bank Act that could have weakened Quebec's consumer protection mechanisms. I say "could have" because a few days later, the Trudeau government backed down and withdrew the contested provisions.

Although the banking sector connection may be the only thing linking these denunciations of high-pressure sales and Bill C-29, the consequences are very comparable. Once again, we are forced to admit how fragile consumer protection mechanisms are when set against banking institutions that loom so large in Canada's economy.

Let me be clear: although the allegations made by these hundreds of bank employees are still in the process of being compiled and investigated, it is not difficult to imagine the consequences that improper business practices could have if they were to occur in the insurance sector. If the law is changed and it becomes possible for lending institutions to sell insurance to the same clients they grant loans to, the impact of high-pressure sales tactics would be disastrous; this is the case with investments and mortgage rates and it would be just as disastrous in the case of insurance products.

Please bear in mind that the Bank Act is in the process of being reviewed (in this regard, 2019 is just around the corner). One of the points that the RCCAQ will fight for tooth and nail is the need to maintain a very strict limitation on banks' ability to sell insurance products. This limitation protects consumers against potential pressure if they're ever shopping for insurance and banking products at the same time; it also makes sure that the vast majority of brokerage firms, which are too small to survive in direct competition with the chartered banks, can continue to offer an alternative to consumers.

Representing brokers dealing with challenges

The insurance sector is not directly affected by this wave of reports currently involving the banks. However, the parallels are relevant and forcefully underscore the RCCAQ's key role. We must continue to stay vigilant with respect to dubious business practices in our own sector and we must vigorously denounce any situations that could undermine consumer protection, as we have done in the case of certain auto dealers' illegal practices. We must also acknowledge that the RCCAQ's lobbying efforts with decision makers are central to defending our interests.

Would you like to get involved?

The Bank Act review will be a major battle and we face a number of powerful adversaries. We will need all our resources to bring this matter to a successful conclusion. Needless to say, these resources include the RCCAQ team and the board members—but first and foremost they include individual members such as yourself. Coming together makes us stronger, and our collective strength is decisive when it comes to defending our positions in dealings with government bodies. Thanks to your membership and your participation in our fundraising activities, such as our annual golf tournament or convention, in addition to your direct contacts with elected officials, you make a real difference.

These are also the forms of engagement that, when all is said and done, turn battles into victories!