FAIR Canada has written an open letter to the Canadian Securities Administrators (CSA), calling on them to act on a timely basis to address sales practices at banks.
This call to action follows media reports that high sales targets set by banks are pressuring employees to sell products that customers don’t need. The Financial Consumer Agency of Canada, has recently announced it will be conducting a review of banks’ sales practices.
Mutual funds and other investment products
In its letter to the CSA, FAIR Canada (the Canadian Foundation for Advancement of Investor Rights) underlines that some of these complaints relate to mutual funds and other investment products. These products fall within the regulatory responsibility of provincial securities commissions, so FAIR Canada believes that the CSA should also be addressing the issue.
The open letter, dated March 31 and addressed to the CSA’s Chair Louis Morisset, states, “Securities regulators need to act to protect investors against performance targets, non-neutral grids, scorecards, sales targets and other compensation related practices which lead to consumers being placed in mutual funds or structured products that are not suitable for them, do not meet their needs or are sold without consumers being adequately informed about the risks and benefits (including costs, and charges embedded in the product).
Compliance oversight and enforcement
"FAIR Canada calls on securities commissions to advise Canadians the specific steps that they are taking to discharge their compliance oversight and enforcement responsibilities to ensure that current regulatory requirements are being met and investors are being protected," says the letter signed by Ermanno Pascutto, Chair of FAIR Canada and Marian Passmore, Director of Policy and COO.