Canada’s Banks Under Fire for Aggressive Sales Tactics

It all started a few weeks ago, when the CBC interviewed a number of current and ex-Toronto Dominion Bank (TSX:TD)(NYSE:TD) employees.

These folks did not have good things to say about the bank, saying it put enormous amounts of pressure on employees to meet unobtainable sales goals. This forced employees to sign customers up for products they didn’t need.

One teller said "customers are prey to me. I will do anything I can to make my [sales] goal."

The CBC report was so damning TD was forced to enlist the help of an outside company to review its sales practices. The CEO also made his rounds in the media and atone for TD’s problem. The stock fell nearly 5% and hasn’t really recovered.

TD isn’t the only company under fire. Both Scotiabank (TSX:BNS)(NYSE:BNS) and Bank of Montreal (TSX:BMO)(NYSE:BMO) have also publicly defended their sales practices.

Scotiabank’s CEO Brian Porter spoke at the company’s annual meet on Tuesday, saying "we have over eight million customers in Canada, we did over 400 million transactions last year and we had only eight customer complaints about sales practices."

BMO CEO Bill Downe echoed Porter’s sentiment, saying "with respect to our bankers, I have confidence that they know we’re not in business to push products."

Ultimately, with Canada’s five largest banks commanding more than 80% of the market, this controversy is unlikely to have a significant impact on their bottom lines. They’re just too entrenched. It will, however, make customers a little less trusting the next time they walk into a branch.