Canadian regulators probe mutual-fund sales practices at banks

financialpost.com:

Canadian regulators are conducting a co-ordinated probe of sales practices within bank branches, the latest such inquiry following a public report on “potential investor harm due to alleged high-pressure sales practices for mutual funds at some Canadian banks.”

The Ontario Securities Commission (OSC) and the Canadian Investment Regulation Organization will begin by gathering information on the sales culture and environment within Canadian banks in order to identify any issues and assess their scale, the regulators said in a news release Tuesday.

This phase is expected to conclude in early 2025, and the findings will inform any next steps.

The regulators are encouraging anyone with information or concerns to come forward, including through the OSC’s whistleblower program if the information is about potential violations of Ontario securities law.

A spokesperson for the OSC said the latest probe into mutual-fund sales tactics was prompted by a CBC Marketplace report last spring on bank sales practices, which used hidden cameras as well as interviews with current and former employees.

The OSC has previously looked at whether banks were giving preference to their own fund products over those of third parties after it was directed to do so by Ontario’s minister of finance Peter Bethlenfalvy.

The OSC spokesperson declined to say whether there is a connection between that probe and the latest one.

“(This) review is looking into the sales practices in bank branches, notably concerns raised in the report about high pressured sales environments,” the spokesperson said. “We are not planning to confirm more details about the review at this stage — this is to protect the integrity of the work and not prejudge the findings.”

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