Canada’s biggest banks on the defensive over sales practice allegations


Allegations of aggressive, and in some cases illegal, sales practices at several of Canada’s biggest banks have put top executives on the defensive at annual meetings this spring, with Scotiabank’s CEO telling shareholders on Tuesday the reports are “largely unsubstantiated”.

Brian Porter said that out of 400 million interactions between the bank’s clients and employees, Scotiabank (TSX:BNS) received eight complaints about sales practices last year.

“We take each of those eight very seriously,” said Porter. “We investigate them. We’re proud of the bank. We’re proud of our employees. We’ve got very sound sales practices. We monitor and adjust them where we think it’s necessary.”

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Porter was asked by a shareholder to respond to the reports by CBC, which cited unnamed employees at Canada’s major banks who alleged they broke the law in order to meet sales targets and keep their jobs.

Porter’s comments came on the heels of similar remarks made by TD Bank’s CEO (TSX:TD) last week, who said that less than 100 of the complaints the bank received last year had compliance concerns.

Bharat Masrani said during his company’s annual meeting on March 30 that TD has brought in a professional services firm to help the bank review its businesses in light of the reports.

When asked by reporters if Scotiabank has any plans to launch a review or bring in external help, James O’Sullivan, head of Canadian banking, said the bank is constantly reviewing its businesses.

“We’re constantly assessing the culture,” O’Sullivan said, adding that the bank started doing so long before the fallout at Wells Fargo last year.

The U.S. bank publicly apologized and paid large penalties after it came to light that its employees had opened millions of unauthorized accounts and credit cards on behalf of clients.

Bank of Montreal (TSX:BMO) CEO Bill Downe also referenced Wells Fargo when asked by reporters about sales practice allegations.

Downe said he has a “high degree of confidence” in the bank’s employees and that the bank has “rigorous disciplines” in place to make sure that top-level executives are aware of what’s happening on the sales floor.

“We track incidents of customer or employee dissatisfaction and I’ve seen no movement in the numbers in the most recent period,” Downe told reporters after the bank concluded its annual shareholder meeting Tuesday.

The Financial Consumer Agency of Canada has launched its own review of business practices in the financial sector, in light of the CBC report. The Canadian Bankers Association, which represents the country’s major banks, has said its members will co-operate with the investigation.

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