Hardik Patel knew something was wrong when a Royal Bank customer service agent told him that there was only one way to access his online RRSP account: he would have to open a checking account, with monthly fees.
I knew it wasn’t true. Patel, who emigrated to Toronto from India four years ago, had already acceded to his RRSP many times.
Frustrated that he was being sold a product he did not need, he asked to speak to a manager.
Patel wanted to make sure RBC staff would not try to sell someone else, and also objected to a comment the agent had made about his accent.
“They were pushing me to buy something I didn’t need,” he told Go Public.
TARGET | Canada’s largest banks are more likely to sell racialized customers, according to the report:
Canada’s largest banks are more likely to sell racialized customers, the report suggests Go public
A Royal Bank customer says he was pressured into signing up for a checking account he did not need. His experience reflects the findings of a report on Canada’s six largest banks after Go Public exposed high-pressure environments that led to inadequate sales.
Patel’s experience reflects some of the findings of a recent, ongoing report from the Financial Consumer Agency of Canada (FCAC) that suggests that racialized banking customers often present inadequate financial products.
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The report was motivated in part by a Go Public investigation into high-pressure sales tactics within large banks.
Five years ago, following a story with three TD Bank employees who spoke of what they considered to be unethical sales pressure, more than 3,000 current and former employees of Canada’s largest banks told Go Public that they they were also under immense pressure to sell products and services that people did not need and often could not afford.
They described feeling desperate to reach ever-increasing sales targets and being under pressure to increase customer credit lines, push credit cards with high annual fees, and secretly open checking accounts for customers, among other things. things.
The FCAC conducted a national review in 2018, which found that the focus on sales targets increased the risk that banks would place sales ahead of customer interests.
He then hired a private company to send mysterious buyers to 712 branches of the six largest banks in all provinces by the end of 2019.
The resulting report says they tested how front-line employees of Bank of Montreal, CIBC, Scotiabank, National, TD Bank and RBC sell products and services and found “benchmark” experiences involving inappropriate recommendations, unnecessary product submissions, and confused communication.
Five years ago, more than 3,000 current and former employees of Canada’s largest banks told Go Public that they were under immense pressure to sell products and services that people did not need and often could not afford. (Dillon Hodgin / CBC)
“The mysterious buying exercise revealed worrying sales experiences,” Judith Robertson, FCAC commissioner, said in a press release.
An expert in business and economics says she is encouraged that the bank watchdog will detect these red flags.
“They have every right to care about this kind of sales culture,” said Caroline Shenaz Hossein, an associate professor of global development at Scarborough University in Toronto.
The report also says that undercover buyers who identified as racialized or indigenous presented more often financial products that were inappropriate and experienced unsolicited product proposals.
“This is not a shocking surprise to anyone who has been following the news,” said Shenaz Hossein.
“There is … systemic racism in Canada’s commercial banking system.”
Promoted ‘premium’ credit cards
During the Go Public survey in 2017, all major banks repeatedly denied using high-pressure sales tactics and said customers were always first.
But the Mysterious Buyer’s Survey found that nearly one-third of all credit card recommendations were for “premium” credit cards, which often have high annual rates and typically require a minimum individual or family income.
However, in 80% of cases, the staff of the bank that promotes them never asked the buyers about their income.
Questions about spending habits were also few and far between. Only 16 percent of employees who recommended a premium card asked about a buyer’s spending habits, the report said.
According to Shenaz Hossein, this is because these details would affect an employee’s ability to drive a sale, if he discovers that the individual is not a good candidate for the product.
“Once they go through that line, they have an obligation not to offer those product lines,” he said.
Caroline Shenaz Hossein, an associate professor of global development and political science at the University of Toronto, says there is “systemic racism” in Canada’s commercial banking system. (CBC)
The FCAC says in the report that banks “have a responsibility to ensure that front-line staff … make recommendations that meet the needs of consumers.”
Sales targets and incentives “should not conflict with these targets,” he said.
“Come, come, come”
Concealed buyers who identified themselves as racialized or indigenous were offered overdraft protection, which involves monthly fees and accrues interest, almost twice as much as other buyers.
They were also more than three times more likely to receive a balance protection insurance, which covers the minimum monthly payment of the outstanding balance of a card, but which involves high commissions and so many exclusions that it is often difficult to make a claim.
Bank employees “assume that black, racialized, and indigenous people are more likely to default or over-spread,” Shenaz Hossein said.
The regulator also considered the results problematic, saying in the report that “banks can do more to ensure that the highest-risk demographic groups are protected from sales-related practices.”
The report also says banks have a responsibility to “ensure that front-line staff are trained effectively,” citing cases where employees did not have the right knowledge to deal with buyers.
Shenaz Hossein says he blames the staff.
“What [the FCAC] One has to think is … why is there so much pressure to sell, sell, sell, that it actually compromises the integrity and commitment of the bank to take care of the financial health of Canadians? ”Said Shenaz Hossein.
It studies and defends banking alternatives such as credit unions, which are owned by members and have no obligation to make a profit.
TARGET | An economics expert talks about alternative banking options:
An alternative banking option
Caroline Shenaz Hossein, a business and economics expert, explains why she says the culture of commercial banks will be difficult to change and where Canadians could turn.
The findings did not surprise Duff Conacher, co-founder of Democracy Watch, a nonprofit citizen advocacy organization that focuses on government and corporate responsibility.
“The FCAC could have found out [racial discrimination] 20 years ago if they had done a survey of mysterious buyers, “he said.
He points out that US banks have been monitoring racial discrimination for years.
“For 40 years, banks have been required to track and disclose their loan and investment records for services by race, gender, income level and neighborhood, and disclose data, which demonstrates discrimination time and time again. another, “he said.
“They are obliged to take corrective action. And we [Canada] they are decades back “.
The Canadian Bankers Association did not respond to Go Public’s questions about the results of the survey, but said in a statement that the banks are “deeply committed to high ethical standards” and have worked hard to win. is the trust of millions of Canadians.
Agent Inappropriate Comment
Patel intensified his complaint to RBC, which confirmed in a letter that he should not have been told that he had to open a new checking account and that “proper training” had been done since then.
“I think they should have said more about what they’re going to do to prevent this from happening to someone else,” Patel said.
When Patel first complained about selling more and being subjected to racist commentary, RBC sent a letter saying it regretted the “unfortunate incident.” The letter included $ 25 gift cards to Tim Horton’s, Shoppers Drug Mart and Petro Canada. (Submitted by Hardik Patel)
The letter also said management had reviewed its call with customer service and determined that the agent’s comment about Patel’s accent was “inappropriate.”
RBC said it regretted the incident and that “appropriate measures” had been taken to prevent anything similar in the future, but did not explain such measures.
“What [the RBC agent] He said he was racist, “Patel said.” I want this to stop. So tell me what to do to make sure more people aren’t being treated that way. “
Dissatisfied, Patel filed a complaint with the Commission on Human Rights. Last month, he and RBC reached an agreement before their case was heard.
He is not allowed to discuss the details or comment on what happened, because the bank required him to sign a confidentiality agreement.
In a recent statement to Go Public, an RBC spokesman said: “Discrimination, in any form, goes against everything we stand for and is not tolerated.”
He also said the bank continues to provide training to employees “to deepen awareness of the concepts of diversity, bias and racism.”
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