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Trudeau Liberal Finance Minister Freeland still breaking 2021 election promises to stop gouging and abuse of bank customers

All five promises must be fully kept, and six other key measures enacted (some of which U.S. enacted decades ago), to stop bank gouging, discrimination and abuse and ensure banks pay their fair share in taxes

Big Six Banks gouged out $58 billion in profits in 2023 (almost triple their 2010 profits), paid their CEOs an average of $12 million each, and gave out $21 billion in total bonuses to employees

Tuesday, December 19, 2023

OTTAWA – Today, Democracy Watch called on the Trudeau Liberal Cabinet and Finance Minister Chrystia Freeland to keep all five of the Liberals’ 2021 election promises to increase bank accountability in Canada.  The Liberals have only partially kept two of their five election promises, and they have broken their other three promises, leaving Canadians still vulnerable to bank gouging, discrimination and other abuses.

Democracy Watch called on all federal parties to work together to make all the key changes needed to stop bank gouging, discrimination and abuse, as called for by 120,000+ voters who have signed on to Democracy Watch’s letter-writing campaign or petition, some of which the U.S. enacted decades ago (See Full List of Key Bank Accountability Changes).

The Liberals are still breaking their 2021 election promises to enact the following three key bank accountability measures, measures called for by 120,000 voters (all five promises were also listed in Minister Freeland’s mandate letter):

1.  Empower the Financial Consumer Agency of Canada (FCAC) to “review the prices charged by banks and impose changes if they are excessive” (including reviewing interest rates, as Australia did in 2017).

Instead, the Liberals have not given the FCAC the power to review or change any gouging interest rate or fee, and are only reviewing one gouging bank fee and consulting on low-cost, small-value credit;
(See Backgrounder on Weak Enforcement of Financial Consumer and Investment Protection).

2.  Require financial institutions to offer options to delay consumer debt payments when needed.

Instead, the Liberals have only issued unenforceable mortgage guidelines and an unenforceable Mortgage Charter.

3.  Review closing tax loopholes to prevent banks and other financial institutions from pretending to make their money in low-tax countries in order to lower the taxes they pay in Canada.

The Liberals promised to close the tax loopholes, not just to review them, and the review has not been completed.

“As usual, the Trudeau Liberals spouted half-truths with their 2021 election promises, and since then have proposed half-measures that only partially keep two of their five bank accountability promises while breaking the other three promises,” said Duff Conacher, Co-founder of Democracy Watch. “Finance Minister Freeland continues to protect the big bank’s gouging profits and their executives’ excessive multi-million salaries instead of making the changes needed to stop banks from gouging billions from their 30 million customers and to protect bank customers from discrimination and other abuses.”

“Every dollar of excessive profit for the banks, and every person and business the banks unjustifiably refuse to loan to, costs the Canadian economy because it means that the banks are overcharging for their essential services and loans, and choking off job creation and spending,” said Conacher.

The following additional six key measures, which 120,000 Canadians have called for, are needed to actually stop gouging and abuse, to stop discrimination in bank lending and service, and ensure the banks serve everyone across Canada fairly and well at fair prices and interest rates (See the Full List of Key Bank Accountability Changes):

1.  Require banks to cut credit card interest rates in half now, and allow people renewing their mortgages to re-renew without a penalty at a lower interest rate if interest rates decrease over the next few years, and require banks to lower all their interest rates the same time as the Bank of Canada lowers its interest rate over the next few years;

2.  Require banks and insurance companies to promote a national financial consumer organization, and a national individual investor organization in their communications with individual customers and investors (as recommended in 1998 by the Liberal-controlled MacKay Task Force, House Finance and Senate Banking committees);

3.  Require the banks to disclose detailed information annually about their lending and service records (as the U.S. has required banks to do for 30 years, including the U.S. banks that 4 of Canada’s Big 6 Banks own), categorized by race, gender, income level and neighbourhood, and require corrective action whenever banks discriminate against customers;

4.  Require the banks to re-open basic banking branches in every neighbourhood that offer low-interest rate, small-value lines of credit to everyone (especially people who have a bad credit rating because of a past predatory loan) to stop predatory lending across Canada (including through partnering with Canada Post outlets for postal banking, as TD started to do in November 2022 but then paused and then cancelled);

5.  Require the Financial Consumer Agency of Canada (FCAC) to do unannounced, mystery-shopper audits to find violations of consumer protection laws, and to identify all violators and fine them a minimum of $1 million for every violation (and the maximum $50 million for systemic violations, and;

6.  Require the Big Banks and other financial institutions to cut the pay of their CEO and top executives to no more than 40 times their lowest paid employee (as in some European countries).

The Liberals have only partially kept only the following two of their five 2021 election promises to increase banking accountability and fairness:

1.  They imposed a temporary excess profits tax on banks and insurance companies that earn more than $1 billion a year (of 15%, but for one year only in 2022), and an increase in their annual tax rate of 1.5%.

But the Liberals promised they would impose a higher 3% increase in the annual rate (England imposed a more than 8% tax hike on banks in 2011, and Australia increased its bank tax rate in 2017).

2.  They will, as of November 1, 2024, require all banks to use the Ombudsman for Banking Services and Investments (OBSI) as the complaint-appeal entity.

But banks will not be required to use OBSI until November 2024, and the Liberals are breaking their promise to give OBSI “the power to impose binding arbitration.”

Canada’s Big 6 Banks reported, yet again, excessively high annual profits totalling $58.3 billion in 2023 and record total profits of $61 billion in 2022, almost triple their 2010 profits, all reaped through gouging their customers with excessively high credit card and other credit interest rates and mutual fund and other banking fees.

Four of Canada’s Big 6 Banks are listed in Fortune’s Global 500 for 2023 (based on 2022 profits), and TD, RBC, Scotiabank and BMO were also in the top 35 most profitable financial institutions in the world in 2022 (more profitable than most other larger banks) and two banks are among the five most profitable Canadian companies in the Global 500.

Canada’s Big 6 Banks also paid their CEOs a total of $73.3 million in 2022 (an average of $12.2 million each – 55% higher than in 2008) and in 2023 handed out $21.2 billion total in bonuses to their employees. The Big Bank CEOs and employees were given these huge salaries and bonuses even though customer complaints about bank interest rates fees and poor service increased in 2023. See Canada’s Big Banks Backgrounder.

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Duff Conacher, Co-founder of Democracy Watch
Tel: (613) 241-5179
Cell: 416-546-3443
Email: [email protected]

Democracy Watch’s Bank Accountability Campaign