Shortly after the Financial Consumer Agency of Canada (FCAC) released the findings of its investigation of aggressive sales practices at Canada’s big banks — BMO, CIBC, RBC, Scotiabank, TD, and National Bank — many stakeholders were disappointed. The reason: the FCAC report stopped short of declaring that there was a prevalent problem across the banks.
That may be explained by new revelations from a new CBC News investigation. It found that the report “underwent several drafts that eliminated proposed protections for consumers … after the regulator sent early versions to the federal Finance Department and the big banks.”
Based on internal documents obtained from the FCAC, CBC News found that some recommendations — including a proposal to have banks work in the best interest of consumers — were weakened or removed.
While the final report found that banks encourage employees to sell products and services, and offer rewards for sales success, it also said the FCAC did not find evidence of widespread harm done to consumers. Furthermore, it did not name a single bank, nor did it provide an excerpt from the FCAC’s interviews of over 600 bank employees and reviews of over 100,000 pages of documents and 4,500 customer complaints.
“When I saw the March  report, I said, 'There's more to it than meets the eye,” said public policy researcher Ken Rubin, who requested for draft copies of the FCAC report on sales practices, as well as related correspondence.
The documents released to Rubin, which he shared with CBC News, showed that the FCAC sent a draft of its report to the banks that were the focus of its eight-month review. The banking regulator explained that it wanted to let the banks “identify factual errors.”
But Duff Conacher, co-founder of Democracy Watch and adjunct professor of law at the University of Ottawa, argued that the agency report constitutes evidence that would form the basis for findings of wrongdoing. “If the agency wanted to check the facts in the report … they could have just sent them those facts," he said.
The revisions appeared to go beyond questions of accuracy. A line added to one intermediate draft noted that banks are “in the process of enhancing their oversight and management of sales practices risk”; one from the original saying that banks “lean disproportionately in favour of a sales driven culture” was dropped from the final draft. Another line in the final published version, not present in the original draft, said that the review did not find “widespread mis-selling” by the banks.
“The language seems to belie the rest of the report, which goes into some detail about how sales practices — which are a little unseemly — can be performed,” John Lawford, executive director of the Public Interest Advocacy Centre, told CBC News.
The internal documents obtained included dozens of pages of apparent input from the banks and the finance minister. Entire pages from the banks’ responses were redacted under an Access to Information Exemption that protects commercial interests. The documents from the minister’s office indicate at least six comments on the first draft of the report, though most of the comments were redacted.
“The biggest thing is there were three recommendations saying banks should be 'required' to make changes, and those were all changed to 'suggestions' that the banks should do some things,” Conacher said.
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