Canada’s key banks are facing scrutiny as two federal bodies launch simultaneous reviews concerning the firms’ domestic retail sales practices.
The Office of the Superintendent of Financial Institutions (OSFI) is conducting a review of the risks and impacts the banks’ practices could have on the companies, according to the Financial Post
According to a consultation paper issued by the Department of Finance on Friday, OSFI will conduct a review of “domestic systematically important banks,” with a focus on “risk culture, the governance of sales practices, and how banks manage the potential reputational risk inherent in sales activities.”
OSFI has identified Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, and TD Bank as the firms to be investigated. The agency has refused to divulge more specific details, such as the timing of the review and particular institutions targeted, as they were “considered protected supervisory information.”
“OSFI regularly reviews the operations of the financial institutions it regulates,” OSFI spokesperson Kaitlin Sabourin told the Post in an email, adding that the current review focuses on reputational risks and their potential impacts on the banks’ financial stability.
The OSFI’s review comes as the Financial Consumer Agency of Canada (FCAC) continues its own probe into banks’ practices.
In March, current and former bank employees went to CBC News with allegations of high-pressure sales tactics. The outpouring of testimony prompted the FCAC to commence with its industry review in April, specifically targeting areas such as sales tactics and policies, client consent, and employee sales targets at banks.
“Concurrently with the Office of the Superintendent of Financial Institutions, FCAC is meeting bank personnel at all levels and in all functions pertinent to this review,” FCAC spokesperson Lynne Santerre said in an email to the publication. “This means front line retail personnel up to the CEO.”
Aside from meeting with employees, the agency will look into the banks’ compensation and performance programs. Santerre added that internal policies and controls will also be reviewed, as well as consumer complaints on sales of bank products and services achieved without consent or through misleading means.
Preliminary results from the FCAC will be released later this year. The agency expects to finish the review in June, after which it will publish a final report.
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