Why are banks continuously ripping people off?
Has this industry become so devoid of any sort of moral culpability where it is now becoming commonplace for multi-million dollar executives to force employees to rip off and mislead struggling Canadians without having to face any sort of retribution?
Revelations by CBC, who recently revealed in another article how workers were employing shady and fraudulent tactics to meet high sales targets, have now provided some context as to how far the rabbit hole really goes.
The new article outlines how our banks are putting the consumers’ financial interest last, some of whom are even purposely misleading them as a means to increase their own (banks) profits.
From the article:
Financial investment insiders are speaking out about what they say are weak regulations that allow the industry to ignore clients’ interests, steer them into expensive products and collect billions from people’s savings every year.
Go Public has heard from hundreds of people in the industry, most of them with the big banks, who say they’re pushing products and selling investments that protect their jobs, or pay the highest commissions to themselves and their employers.
One worker from the article was said to have quoted a man with ‘pre-approved mortgage rates to clients — rates he knew weren’t the best the bank could offer.’
Another women signed up ‘an 85-year-old customer who was in poor health into a mutual fund owned by the bank, after her manager urged her to do it for the sales revenue.’
This is what happens when banks are incentivized to maximize their own profits, due to their very financial structure, and our regulatory bodies have failed to hold them accountable.
Just to provide some context to the following; when banks offer higher mortgage rates, even though they know they can offer a lower rate – this can add up over the years. For example, just a 0.5% point extra rate on a $400,000 mortgage over a 5 year fixed rate, can add up to an extra $10,000.
Furthermore, as mentioned in a previous article, 2.5% annual commissions on mutual funds can erode your potential profits if your financial investor is getting around a 5% return on a per annum basis. There are obviously more efficient ways to make money; however banks have their own financial goals to meet, and they knowingly sign you up for that program, even though it’s likely not the best possible one.
Indeed it looks as if banks are getting away with pilfering average Canadians daily. It seems this new revelation however, will not manifest into anything more than sporadic outrage amongst the populace as banks in Canada practically seem to get away with anything and everything.
Over the past couple years banks have recently outsourced jobs, received a 114 billion dollar bailout during the crisis, fired thousands of employees, cut services and have hiked banking fees. Recent CBC revelations detail how they have now ventured into illegal territory by defrauding customers, and now have knowingly provided faulty advice to increase profits.
It’s been proven our financial regulator is a joke as proven by its past impotence when dealing with our big banks. For conducting malicious, illegal activity, banks are threatened to be subjected with a laughable $500,000 fine. Since its inception in 2003, none of the Big 6 banks have been prosecuted with any sort of wrongdoing. FCAC, our financial regulator, has only made 125 compliance rulings, and have failed to name any of the banks guilty for the actions.
Nonetheless, our banks rake in the highest percentage of profits in the world compared to other banks in the industrialized world. Indeed, they have already recorded record profits, amassing over $10 billion dollars throughout the 1Q of 2017 – yet executives still find it necessary to rob innocent Canadians.
The mandate of our banks should be increasing the wealth of those who need it the most. As previously argued, it is an inherently flawed model when our commercial banks, who have the power to create deposits, have a mandate to maximise their own profits. This creates a perpetual cycle of risky, highly-speculative and inorganic loans. It also leads to them cutting corners and committing acts such as these.
Simply said, it’s time for the banks to be held accountable for their actions. Currently, our debt-to-income ratio stands at a record 170%. As it is already, Canadians are struggling to pay off the loans imposed by these very banks, yet these executives still have the temerity to rip off and mislead these very same people, most of whom likely work honest, blue-collared jobs to support their family.
It would appear that they are conducting criminal behavior by committing fraud, embezzlement and through doing so, the case could be made for charges of racketeering to be laid. There is also enough pretense for them to be charged under Section 980 and 981 of the Bank Act.
Enough is enough. Robbing innocent Canadians by knowingly providing faulty advice along with gouging customers through unwarranted fees should be an indictable offense. Perhaps if we finally act and lay down the hammer it will provide that much needed incentive for banks to act responsible. New regulatory framework is also necessary to ensure this type of behaviour does not happen again.