Hardik Patel knew something was not right when a Royal Bank customer service agent told him there was only one way to access his RRSP account online – he would have to open a checking account with a monthly fee.
He knew it was not true. Patel, who had moved to Toronto from India four years ago, had already reached his RRSP several times.
Frustrated that he was being sold a product he didn’t need, he asked to speak to a manager.
Patel wanted assurances that RBC staff would not try to humiliate anyone else, and also objected to a comment made by the agent about his accent.
“They were pushing me to buy something I didn’t need,” he told Go Public.
Patel’s experience mirrors some of the findings of a recent report by the Financial Consumer Agency of Canada (FCAC), which found that racially-banked customers are often given inappropriate financial products.
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The report was prompted by Go Public’s investigation into high-pressure selling tactics inside large banks.
Five years ago, in the wake of the story of three TD Bank employees who felt there was unethical sales pressure, more than 3,000 current and former employees of Canada’s largest banks told Go Public that they were also under immense pressure to sell. There were products and services that people did not need and often could not afford.
He felt desperate to meet ever-increasing sales goals and was under pressure to increase customers’ credit lines, push credit cards with higher annual fees, and secretly open checking accounts for customers, among other things.
The FCAC conducted a national review in 2018, which found that focusing on sales targets was increasing the risk of banks selling ahead of their customers’ interests.
It then hired a private company at the end of 2019 to send mystery shoppers to the 712 branches of the big six banks in each province.
The resulting report said they tested how frontline workers at Bank of Montreal, CIBC, Scotiabank, National, TD Bank and RBC sold products and services, and “relatedly” related to inappropriate recommendations, unnecessary product pitches and confusing communications. “Get the experience.
“Mysterious buying practice reveals sales experiences that raise concern,” FCAC commissioner Judith Robertson said in a news release.
An expert in business and economics says he is glad the banking watchdog detected those red flags.
“They have every right to be concerned about this kind of sales culture,” said Carolyn Shenaz Hossen, an associate professor of global development at the University of Toronto Scarborough.
The report also noted that undercover shoppers who identified as racial or indigenous often offered financial products that were inappropriate and experienced unwanted product pitches.
Shenaz Hussain said, “It is no surprise to anyone who is following this news.”
“There is … systemic racism happening in Canada’s commercial banking system.”
Pushed ‘Premium’ credit cards
During GoPublic’s investigation in 2017, all the big banks repeatedly denied that they used high-pressure selling tactics and said that customers always come first.
But the Mystery Shopper investigation found that nearly a third of all credit card recommendations were for “premium” credit cards—which often have hefty annual fees and typically require minimal personal or household income.
Yet in 80 per cent of the cases, the bank employees who promoted them never asked the shopkeepers about their income.
Questions about spending habits were few and far between. The report said that only 16 percent of employees who recommended the premium card asked about a buyer’s spending habits.
According to Shenaz Hussain, that’s because those details will affect an employee’s ability to drive sales, should they find that person isn’t a good candidate for the product.
“Once they go down that line, they have an obligation not to offer those product lines,” she said.
The FCAC said in the report that “it is the responsibility of the banks to ensure that the frontline staff … make recommendations that meet the needs of the consumers.”
Sales targets and incentives “should not conflict with these objectives,” it said.
‘sell, sell, sell’
Undercover buyers who identified as racial or indigenous were offered overdraft protection, which includes a monthly fee and earns interest at nearly double the rate of other buyers.
They were also three times more likely to be offered balance protection insurance – which covers the minimum monthly payment on card balances, but which comes with high fees and so many exclusions that it is often difficult to make a claim. Is.
Shenaz Hussain said, “Bank employees are “making the assumption that black, racial and indigenous people are more likely to default or overextend themselves.”
The regulator considered the findings troublesome, saying in the report that “more could be done by banks to ensure that high-risk demographic groups are protected from experience related to sales practices.”
The report also said that it is the responsibility of banks to “ensure effective training of frontline employees”, citing examples when employees lack proper knowledge to deal with shopkeepers.
Shenaz Hussain says that the staff is wrongly blamed.
“what [the FCAC] Why is it that there is so much pressure on them to sell, sell, sell, that it actually compromises the integrity of the bank and its commitment to care for the financial health of Canadians?” Shenaz Hussain he said.
She studies and advocates for banking alternatives such as credit unions, which are member-owned and not mandated to make a profit.
The findings also failed to surprise Duff Konacher, co-founder of Democracy Watch, a non-profit civil advocacy organization focused on government and corporate accountability.
“FCAC could find [racial discrimination] 20 years ago if they had done a mystery shopper survey,” he said.
He notes that American banks have tracked racial discrimination for years.
“For 40 years they have required banks to track and disclose their service loan and investment records by race, gender, income level and neighborhood, and disclose data that repeatedly proves discrimination,” he said.
“They need to take corrective action. And we [Canada] Decades behind.”
The Canadian Bankers Association did not respond to GoPublic’s questions about the survey’s findings, but said in a statement that the banks have a “deep commitment to high ethical standards” and have worked hard to earn the trust of millions of Canadians. is of.
Agent’s comment ‘inappropriate’
Patel escalated 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 “appropriate coaching” had taken place since.
“I think he should have said more about what he would do to prevent this from happening to anyone else,” Patel said.
The letter also said that management reviewed their calls with customer service and determined that the agent’s comments about Patel’s pronunciation were “inappropriate.”
RBC said it regretted the incident and that “appropriate measures” were taken to prevent anything like this in the future – but did not state those measures.
“what [the RBC agent] Said was racist,” Patel said. “I want this to stop. So tell me what action you are going to take to ensure that more people are not treated like this.”
Dissatisfied with this, Patel lodged a complaint with the Human Rights Commission. Last month, he and RBC had reached a settlement ahead of the hearing of their case.
He is not allowed to discuss details or comment on what happened, as the bank is required to sign a non-disclosure agreement.
In a recent statement to Go Public, an RBC spokesperson said, “Discrimination – in any form – is against what we stand for and is not tolerated.”
It also said that the bank continues to provide employee training to “raise awareness of the concepts of diversity, prejudice and racism”.
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