Andrew Perez, Manager of Advocacy, Canadian Credit Union Association
On March 20, FCAC released a report titled “Domestic Bank Retail Sales Practices Review.” The report presents the findings and conclusions of the FCAC’s review of the domestic retail sales practices of Canada’s six largest banks, which are subject to federal consumer protection legislation overseen by the FCAC.
The review focused on retail banking sales practices to identify and evaluate risks to consumers. The FCAC examined the drivers of sales practices risk, assessed the effectiveness of the controls put in place by banks to mitigate these risks and recommended ways to more effectively reduce them.
Notably, the FCAC’s review found that retail banking culture encourages employees to sell products and services, and rewards them for sales success. This sharp focus on sales can increase the risk of mis-selling and breaching market conduct obligations. The report notes the controls banks have put in place to monitor, identify and mitigate these risks are insufficient. However, it must be noted that the FCAC did not find widespread mis-selling during its review. Instead, it found that consumers carry out millions of successful transactions every day without incident and banks and their employees generally strive to comply with market conduct obligations.
The CCUA will undertake a more thorough analysis of the report as it relates to credit unions.