{"id":497479,"date":"2024-11-26T17:45:23","date_gmt":"2024-11-26T22:45:23","guid":{"rendered":"https:\/\/www.investmentexecutive.com\/?p=497479"},"modified":"2024-11-26T17:50:09","modified_gmt":"2024-11-26T22:50:09","slug":"osc-ciro-to-review-banks-sales-practices","status":"publish","type":"post","link":"https:\/\/www.investmentexecutive.com\/news\/from-the-regulators\/osc-ciro-to-review-banks-sales-practices\/","title":{"rendered":"OSC, CIRO to review banks’ sales practices"},"content":{"rendered":"

Citing concerns about bank-based representatives aggressively pushing mutual funds, the Ontario Securities Commission (OSC) and the Canadian Investment Regulation Organization (CIRO) are undertaking a joint review of sales practices in bank branches.<\/p>\n

On Tuesday, the regulators announced a co-ordinated review of bank sales practices amid worries about “potential investor harm due to alleged high-pressure sales practices for mutual funds at some Canadian banks.”<\/p>\n

To start, the regulators said they intend to “build an understanding of the sales culture and environment” at the banks and to identify potential issues.<\/p>\n

“This phase of the work is focused on information gathering and will take place over the next few months, and into early 2025. The findings from this will inform any next steps,” the regulators said.<\/p>\n

Several of the banks, which were contacted for comment on the regulators’ announcement, referred questions to the industry trade group, the Canadian Bankers Association (CBA).<\/p>\n

In a statement, the CBA defended the industry’s compliance with prevailing regulations and the banks’ commitment to customer service.<\/p>\n

\u201cBuilding and maintaining strong customer relationships is of fundamental importance for banks in Canada. Canada\u2019s banks are steadfast in their commitment to providing advice that is clear, transparent and aligns with helping customers reach their financial goals,” the CBA said.<\/p>\n

The association added that banks and their employees “embrace the responsibility of putting customer needs at the centre of all product and service recommendations” and “look forward to building on the strong partnership” they have with industry peers and regulators.<\/p>\n

The planned review is the regulators’ latest effort to address persistent concerns about the growing dominance of the big banks in the Canadian investment industry.<\/p>\n

At the behest of the Ontario government, the OSC reviewed concerns about bank-owned dealers excluding third-party investment funds from their product shelves<\/a>\u00a0and largely selling proprietary funds \u2014 limiting investor choice and restricting competition.<\/p>\n

That review followed recommendations from the provincial Capital Markets Modernization Taskforce, which called for action to address concerns about the narrowing of banks’ product shelves and the potential exclusion of independent products.<\/p>\n

While nothing seemingly came of that review, in its latest draft statement of priorities \u2014 which was released earlier this month \u2014 the OSC said it will “continue to focus on the information investors receive about their investment products, the sales practices to which they are subject and their ability to make informed life-cycle decisions about competing products and services.”<\/p>\n

This is not the first time that retail sales practices at Canadian banks have come under fire.<\/p>\n

In 2018, the Financial Consumer Agency of Canada (FCAC) issued a report that flagged concerns about a culture among frontline personnel at the big banks that’s focused on selling products, rather than prioritizing clients’ needs \u2014 and posed an increased risk of mis-selling as a result.<\/p>\n

That review began with the agency examining thousands of customer complaints and more than 100,000 pages of internal bank documents on areas such as training, sales, compliance and risk management to “identify the drivers of sales practices risk and assess the controls and governance frameworks established to mitigate such risks.”<\/p>\n

The agency then conducted interviews with hundreds of bank employees to test the findings of the document review.<\/p>\n

Ultimately, the FCAC didn’t find widespread mis-selling at the banks, but it did conclude that the sales culture that prevailed in the industry increased the risk of mis-selling and that the banks’ governance and controls to guard against these risks needed improvement.<\/p>\n","protected":false},"excerpt":{"rendered":"

Regulators cite concerns about high-pressure sales tactics in bank branches<\/p>\n","protected":false},"author":147314,"featured_media":491408,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[2312,2324],"tags":[2783,2948,2496,2361,2368,2572,2394,2355],"yst_prominent_words":[12,82008,32035,22272,16250,10204,7532,6914,6646,6014,5939,4727,4711,4036,10,14,16,1384,2177],"acf":[],"_links":{"self":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/497479"}],"collection":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/users\/147314"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/comments?post=497479"}],"version-history":[{"count":4,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/497479\/revisions"}],"predecessor-version":[{"id":497507,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/497479\/revisions\/497507"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/media\/491408"}],"wp:attachment":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/media?parent=497479"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/categories?post=497479"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/tags?post=497479"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/yst_prominent_words?post=497479"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}