FCAC mystery shopping report shows banks need to do more to ensure positive outcomes for all consumers

Financial Consumer Agency of Canada

Ottawa, Ontario

Today, the Financial Consumer Agency of Canada (FCAC) released the results of a mystery shopping exercise conducted at Canada’s 6 largest banks.

FCAC protects financial consumers by supervising the compliance of federally regulated financial entities, such as banks, with their legislative obligations, codes of conduct and public commitments, and by strengthening the financial literacy of Canadians. As part of its mandate, FCAC regularly examines industry practices that impact consumers of financial products and services.

FCAC’s mystery shopping exercise took place between October and December 2019. The main objective was to better understand how front-line bank employees sell financial products and services and how consumers experience the sales process.

The mystery shopping exercise followed FCAC’s 2018 Domestic Bank Retail Sales Practices Review, which found that a sharp focus on sales was increasing the risk of banks placing sales ahead of the interests of customers.

Key findings of FCAC’s mystery shopping exercise

A clear majority (74%) of shoppers described their overall experience as positive. At the same time, a notable percentage of shoppers who reported a positive experience also recorded a concerning sales experience. For example, even though they still rated their overall experience as positive, mystery shoppers reported encounters where:

  • an inappropriate product was recommended
  • information provided was not clear and simple, or was considered misleading
  • pressure was exerted
  • the employee did not seem knowledgeable or well-trained

New and enhanced consumer protections come-into-force on June 30

To address the issues raised by FCAC in its review of bank sales practices, the Government of Canada adopted legislation in 2018 to strengthen FCAC’s mandate and powers, and to introduce new and enhanced protections for Canadians when dealing with banks through a new Financial Consumer Protection Framework (the Framework) in the Bank Act.

The Framework will require banks to further empower and protect their customers. It includes new obligations on banks to:

  • strengthen their complaint-handling procedures so their customers get their issues resolved faster
  • offer and sell products or services to their customers that are appropriate for them based on their financial needs and circumstances
  • provide their customers with new disclosures about their day-to-day banking to help them make informed and timely decisions about their finances

Many of the concerns raised in FCAC’s mystery shopping exercise will be addressed through the new obligation on banks to offer and sell products and services to their customers that are appropriate.

FCAC will supervise the compliance of banks with the new and enhanced consumer protections in the Framework.

Good financial outcomes for all Canadians

Mystery shoppers who self-identified as visible minorities, Indigenous persons and students had more concerning experiences than other shoppers. FCAC’s National Financial Literacy Strategy emphasizes the need for an evolution of the financial ecosystem to be more accessible, inclusive and effective for all Canadians. It places the onus on the financial ecosystem, in which the financial industry plays an important role, to address barriers that can prevent vulnerable groups from achieving good financial outcomes.

For example, the National Strategy calls on the financial ecosystem to reduce barriers that prevent people from accessing, understanding, and using appropriate financial products, services, and information. To reduce barriers, the National Strategy advises the financial ecosystem to communicate in ways people understand, build and provide for diverse needs, and support increased digital access and literacy.

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