Following up on revelations made by CBC Go Public regarding questionable banking practices, the Small Investor Protection Association (SIPA) has released a new report, Web of Deception, which outlines what it calls broad-scale “strategic insidious deception” of Canadian investors.
“Although there are some good people selling financial products, they are limited in what they can do for clients,” the group said in its report. “[T]here [are] a great number who are driven by commission grids.”
According to SIPA, players in the financial industry are motivated by a desire to get more money from Canadian investors. To this end, the group said, they are using various tactics to maintain the perception of trustworthiness without actually acting in the public’s best interests. These tactics include:
- Exploitation of exemptions by Canadian companies to bypass requirements for financial disclosures and other consumer protection laws, allegedly costing Canadians tens of billions of dollars;
- Firms’ use of misleading advertising to make people believe they will get financial planning and holistic advice when, in the end, firms will claim they have little to no obligation to protect clients’ interests;
- Institutions using titles such as “financial advisor” and “vice president” to make certain representatives and employees seem more qualified and credible than they actually are; and
- Errant firms using confidentiality agreements, non-disparagement agreements, and no-contest settlements to avoid damage to their reputation
The group also called out regulators, saying that the actions they have taken to protect investors are not enough. In particular, it said that while regulators would occasionally release news of huge fines, hundreds of millions of dollars’ worth of penalties remain unpaid. The group describes the Financial Consumer Agency of Canada’s (FCAC) call for Canadians to protect themselves from big banks through education as “unfair” and that current punitive tactics at its disposal — the power to impose fines up to $500,000 and “name and shame” serious offenders — are not enough to punish or deter violators.
“We demand that trust be brought back into our lives and back into our financial service relationships,” the group wrote.
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