They were fully aware of how they were operating and didn’t bother to do anything to address the problems until they were exposed for it. It’s time to stop being the customers of the big banks and investment companies and to become the shareholders that they are looking out for. I will show you how.
The scandal of overcharging
Canadian banking customers have been systematically overcharged by the banks for years. Back in 2014, it emerged that Toronto Dominion (TD) bank had been directly and indirectly overcharging customers for financial products. They claimed that ‘internal errors’ had led to a situation where they failed to inform clients when they qualified for lower fees on their investment products. This resulted in some 10,000 customers being overcharged over a period of 14 years.
If a client gets recommended to a fund, they can expect to pay higher fees initially if they have a small investment. If they add to their assets over time, by selling or inheriting a house or a business for example, they should qualify for a product with lower fees due to their larger investment amount.
What was TD’s reason for overcharging? It was not any more work for them. When they finally admitted it, they didn’t do so out of altruism, they did it because they knew they were guilty. It took them 2 years to report it to the OSC in the first place. So, they didn’t rush! The bank eventually agreed to repay more than $13.5 million to clients and $650,000 to the OSC as a settlement cost.
The other ‘errors’ the banks have been brought to account for is so-called ‘double dipping’, where customers were effectively charged fees twice on their investments. Clients had originally been sold an investment product with an embedded fee (or MER), then later as their account grew, they were moved to a part of the bank that charges a fee based on a percentage of what you have in your account. This should be a good thing for clients, as technically, the more money you have in your account, the less you should pay in fees. But if the new sales rep has been a bit lazy and doesn’t reorganise the old investment, the client can end up still paying the embedded fee and a fee on the new money added. Companies are supposed to get an embedded commission or a percentage of the account, not both.
The OSC found that between 2000 and 2014, TD clients had been overcharged by $1.7 million. Another bank, CIBC agreed to repay $73 million dollars to over 80,000 clients who had been charged double fees on their investments since 2002.
These banks scammed millions out of clients yet they expect us to believe that these huge amounts of money were simple ‘oversights’. They expect us to believe that somehow, these big corporations with their huge IT systems and Compliance departments missed these errors for 15 years!
Every product sold is checked by a branch manager and a compliance manager to check that everything is suitable. Why did nobody say anything? Simply, it suited them not to.
The banks aren’t working for you
Are the banks suddenly feeling ethical by voluntarily repaying overcharged fees? Of course they aren’t. If 2008 taught us anything it’s that the big banks don’t work for us. They claim to have cleaned up their act, then scandals such as these just serve to prove that they haven’t. They act as if they are untouchable and have a blatant disregard for their clients. They do what they like and assume that you are too naive and trusting to notice. They give you statements on your financial products which are long-winded and confusing. Don’t think that this is by accident. They want to keep you in the dark and they make you feel like you are stupid if you ask questions. How many more ways will Canadians be fleeced by an industry who simply does not serve the best interests of its clients?
Work with a financial planner who will put you first
The big banks won’t change; in fact, they do anything to resist it. If you want things to change, you need to bring it about yourself. It’s time to stop being apathetic and putting your trust in the big banks. Instead, take control and seek advice from a financial planner who truly works for you and represents your family’s best interests. I will tell you the truth. You pay me for the advice I provide, not for a product I’m trying to sell you. Whether you are rich or poor is of no significance; someone with $50k could have more complicated needs than someone with $500k and whether you’re the former or the latter, you will struggle in the present system that makes it hard for people with a small account to become wealthy and rips off the person with the big account. It’s your money, you need transparency and you need answers. I can help.
Call me for a complimentary 30-minute appointment to find out more. 306 535 2255 firstname.lastname@example.org