Finance Minister reviewing Bank Act right now – 24,000 sign petition calling for creation of financial consumer group, making FCAC and Ombudsman actual watchdogs, audits of profits and lending, and increasing minimum penalties
Financial Consumer Agency of Canada (FCAC) made big mistake tipping off banks that they will be inspected in April – has only prosecuted 2 banks since 2003
Big bank profits up to $10.5 billion already this year – were $37.35 billion in 2016 ($2 billion higher than in 2015, and more than double their 2010 profits) – higher than comparable banks in all other countries
FOR IMMEDIATE RELEASE:
Thursday, March 16, 2017
OTTAWA – Today, in response to CBC’s reports of employees at all of Canada’s big five banks breaking the law, and the Finance Minister Bill Morneau’s current review of the Bank Act and other financial sector laws, Democracy Watch formally launched it’s 2017 Bank Accountability Campaign and Change.org petition that 24,000 people have signed in the past week calling for 10 key changes to stop bank gouging and abuse that would:
- Require banks, trust and insurance companies to promote in their mailings and emails to customers that they can join a national Financial Consumer Organization (FCO – as recommended by the MacKay Task Force, and the House Finance and Senate Banking committees);
- Strengthen key consumer protection rules, and require the Financial Consumer Agency of Canada (FCAC) to do unannounced, mystery-shopper audits to find violations, and to identify violators and fine them (the FCAC hasn’t done unannounced audits in a decade, and has just tipped off the banks about their upcoming audit);
- Require all banks to be covered by the Ombudsman for Banking Services and Investments (the Conservatives let TD and Royal leave OBSI in 2012 and choose their own complaint judges);
- Require the FCAC or Competition Bureau to conduct regular independent audits of the profits in each banking division, and savings from withdrawal of services, and require banks to lower prices and interest rates wherever excessive profits are found (i.e. profits higher than 15% annually in any division);
- Require the banks to disclose detailed information annually about their service and lending records (as the U.S. has required banks to do for 30 years), and require corrective action whenever banks discriminate against customers, and;
- Given the big banks each make billions in profit annually, increase the meaningless maximum fine of $500,000 for violations to $50 million.
According to Finance Canada, Canada’s big banks control 93 per cent of all banking assets, and are more profitable than comparable banks in other countries, small banks in Canada, and Canada’s corporate sector overall. Their control of the market essentially allows them to gouge and abuse customers with excessive fees, high interest rates (especially on credit cards), and government action is the only thing that will stop them.
Canada’s big banks paid their CEOs about $10 million each in 2015, and gave them bonuses that totalled more than $10 million (51% higher than in 2008).
“Will the federal Liberals continue to protect big bank executives and their multi-million salaries or will they make real changes to protect 30 million bank customers from gouging and abuse, especially by requiring banks and insurance companies to promote a national financial consumer group in their mailings and emails to their customers,” said Duff Conacher, Co-founder of Democracy Watch. “At little or no cost to the federal government or the financial services industry, financial consumers across Canada can be given a very easy way to band together to help and protect themselves through joining a national financial consumer organization they fund and run – all the federal government has to do is require the banks and insurance companies to inform their customers about the group.”
The federal government bailed out the banks with $114 billion in mortgage purchases during the financial industry fraud crisis in 2009. It hasn’t required the banks to do anything in return for that bailout, or for the protections from foreign competition that the government gave the banks in 1967, and continues to maintain.
Incredibly, the Financial Consumer Agency of Canada (FCAC) announced yesterday that it will inspect the banks’ selling practices in April. “The FCAC has made a big mistake announcing an inspection a month in advance as they have just tipped off the banks and given them time to cover up and clean up their wrongdoing,” said Conacher. “It's as bad as the police giving advance notice that they are setting up a speed trap on a highway -- you don’t catch anyone violating the law that way.”
The FCAC has a very weak enforcement record since it was created in 2003. It has made only 125 compliance rulings, is prohibited from naming a law-violating bank unless it prosecutes the bank, and it has has only prosecuted 2 banks (neither of them a Big 6 Bank).
“The fact that the media revealed the latest wrongdoing by the banks instead of the Financial Consumer Agency of Canada shows that the agency is a lapdog not an effective watchdog, and the banks are not even required to be covered by the Ombudsman for Banking Services and Investments,” said Conacher. “The FCAC must be required to conduct unannounced mystery-shopper audits regularly, and all banks must be covered by the OBSI, and both agencies must be required to identify and penalize banks that violate the law with multi-million dollar fines”.
According to the Bank of Canada, the banks currently have about $1.3 trillion in business loans. That makes the recently announced, so-called Canadian Business Growth Fund of (eventually) $1 billion a sad joke as it will amount to only 0.1% of total bank lending. Given that the fund is a joint initiative of Finance Minister Morneau and the big banks, it is clear that the federal Liberals are trying to fool Canadians into applauding the banks for this largely meaningless initiative.
“Instead of helping the banks promote a very small loan fund to help grow entrepreneurial businesses, the federal government should do what the U.S. government did 30 years ago and pass a community reinvestment law requiring the banks to disclose detailed information that will allow the public to judge whether they are discriminating against borrowers such as women entrepreneurs, and requiring the banks to take corrective action whenever discrimination is found,” said Conacher.
“Every dollar of excessive profit for the banks, and every person and business the banks unjustifiably cut off from credit, costs the Canadian economy because it means that the banks are overcharging for their essential services and loans, and choking off spending and job creation,” said Conacher.
FOR MORE INFORMATION, CONTACT:
Duff Conacher, Co-founder of Democracy Watch
Tel: (613) 241-5179
See more details about the federal government’s negligence in ensuring banks serve
everyone fairly and well at fair prices and interest rates in this 2012 news release
Democracy Watch’s Bank Accountability Campaign