Finance Committee on June 12th, 2017

[Raj Grewal, Liberal, Brampton East, ON]

No problem, Mr. Chair.

[Andrew Pilkington]

Thank you, Mr. Chair.

It does depend on the circumstances. If that customer is well known to the teller, if this is a small rural branch where all the clients and employees are very much on first-name terms, then that conversation probably wouldn't happen because they know the customer well.

If it was a newcomer to Canada who had come in and was in a busy metropolis, I would hope our people would look for opportunities to advise the clients and at least have the conversation with them to see if there's a way they have some needs that aren't being met.

[The Chair, Liberal, Wayne Easter]

Mr. Wambolt.

[Scott Wambolt]

Under the scenario you described, our tellers do not have sales targets. They're encouraged actively to get to know their clients and understand what's going on in their lives, and then to help position products and services that most appropriately meet those needs. In some cases, that would mean suggesting a client may want to make an appointment with a financial adviser. In some cases, it just means processing that client and seeing them on their way.

[Raj Grewal, Liberal, Brampton East, ON]

The issue I have is it's no secret that if you need a loan or investment advice, you can go to a bank. I don't think anybody across this country, whether that person is a newcomer, a Canadian who was born and raised here, an elderly person, or a student.... You know that if you're in need of investment advice, a student loan, or a car loan, you'll probably call your bank first.

That's why it's troubling that when customers come to a bank—they're just there to conduct their daily banking—that they're obviously bombarded with investment opportunities or opportunities they may not even know about.

The second question is this. Why do your banks and your institutions pre-approve clients who aren't asking for credit limit increases? That's a deceptive practice in itself. Why are you pre-approving people for a higher credit limit when they haven't even asked for it? What's the logic behind that at your banks? If it doesn't go to sales targets....

I'll give you an example. I walk into one of your branches, and I have a credit card with a legitimate limit. I don't need a higher limit, but I've been pre-approved. The person who brings it up to me is a teller who, in this case, I have just met for the first time. This person thinks he or she knows my financial history and profile well enough to offer me a pre-approval of a substantial increase in my credit line, my credit card, and a mortgage, by the first time I'm coming to deposit a cheque. That is very concerning.

Andrew, you mentioned that when you heard the news, you guys were shocked and awed. The funny thing is, on this side of the House, I was not shocked at all. I have friends who went through business school with me and who worked at a lot of your institutions. They all all know that if you perform, you do very well at the banks. Good for them, right? But if you don't perform, you're out really quickly.

I want to know why you guys think that pre-approvals of applications, when somebody is not coming to apply for credit, is a legitimate sales technique.

[The Chair, Liberal, Wayne Easter]

Let's go down the line.

Mr. Pilkington.

[Andrew Pilkington]

I think customers have a lot of choice in Canada. It is a highly competitive market, and they can choose to borrow or invest with many different institutions, and many Canadians do. If customers want to consolidate some of their debts or their investments, I think having pre-approvals means fewer institutions to work with. That's one of the reasons why we would have pre-approvals.

[The Chair, Liberal, Wayne Easter]

Mr. McPhedran.

[James McPhedran]

Yes, it's similar. Ultimately, we sit down with a customer and determine their needs. If there is a pre-approval on the file, the majority of customers would be pleased with that because they would see it as being good service.

[The Chair, Liberal, Wayne Easter]

Mr. Wambolt.

[Scott Wambolt]

The overarching theme we convey to our staff is to do what's right for the client. So first of all, CSRs do not have sales targets. Our tellers do not have sales targets, and they don't make the decision on whether somebody has a credit limit increase.

In our case, it's generally based on consumer behaviour and consumer buying habits. If somebody is constantly running up at the limit of their credit card, our CSRs would be coached to ask them if they would be interested in discussing an increase in their credit line. If so, then we would process that.

[Raj Grewal, Liberal, Brampton East, ON]

One of the other things that was concerning to me in my general conversations.... The one benefit of politics is that you get to meet a lot people. A lot of people talk to you. A lot of people in your industry talk to us, and they mention a few stories. I've heard on more than one occasion that an employee at one of the big six banks committed fraud in terms of using customers' lines of credit and putting the money back before anybody could recognize it, and then taking it from another customer and putting it back.

It was caught on a rounding error, funnily enough, probably by somebody like my grandma who knows exactly what her balance is to the penny. They noticed that a penny was missing, and that employee was caught. That is legitimately the definition of fraud in the Criminal Code of Canada.

All that happened to that employee was that he was in breach of one of your codes of conduct, and he was let go. It was never public information, and it was never reported to the authorities. Is that the standard practice when you uncover fraud in your banks?

[The Chair, Liberal, Wayne Easter]

Who wants to start?

[Andrew Pilkington]

Let me tell you, not at all. It would depend on the circumstances, clearly, but we look very poorly at any type of fraud. Also, we would report the vast majority of fraud cases to the police, and an investigation would start.

[James McPhedran]

It's similar. A breach of our code, as I said, is absolutely non-negotiable in terms of how we would follow that up.

[Scott Wambolt]

Yes, it's similar. Fraud is absolutely something we would not stand for. If an employee were caught engaging in that behaviour, they would be terminated. If they were licensed under either MFDA or IIROC, we would inform the regulator. Also, in this instance you outlined, we would certainly involve corporate security, who would make the decision to involve law enforcement.

[Raj Grewal, Liberal, Brampton East, ON]

My last question—

[The Chair, Liberal, Wayne Easter]

I'm sorry. You are already beyond your last question. We have already gone over time.

We're turning to a five-minute round.

Mr. Albas.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair.

Thank you to our witnesses for your testimony today.

I would like to continue on some of the discussions we've had thus far.

When Ms. Tedesco came in, I asked her specifically if she had all the powers she needed to run a full investigation. She said, “Yes”, which is helpful to me. She also mentioned that each one of your CEOs had said that they would give whatever information was required so that she could do her job. I appreciate your being here so we can do ours, making sure that these agencies are doing the work they should.

I've heard that there are systems in check and that there are different levels of codes of conduct, etc., but given all those things, we still have reports—that are allegations but reports—on the news channel outlining that people have felt something is horribly wrong with their experience of your system. How can you square that, what you've told us here today about having scrupulous programs for rooting things out, with ongoing concerns where the only relief people feel is that they go to the media? I need to know why that exists.

Maybe we'll start from my left, and we'll move all the way down.

[Andrew Pilkington]

As I said at the beginning, when I heard the media allegations, I felt very troubled. I felt very troubled that those staff members felt the need to go to the media when we have multiple channels internally for them to go to that protect their anonymity and give them confidentiality.

As I said earlier, I went right across the country and asked people if this is the way they felt. Do they feel this pressure? Do they feel these goals? The vast majority of our employees feel that's just not the case.

We're not saying we're perfect. In fact, this is a good time for us to stop, pause, reflect, and see what else we can do to strengthen our controls so that we can absolutely mitigate the risk you're talking about.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Where are you starting? You said you're going to assess and then make some decision points, hopefully sooner. What areas are you looking to improve?

[Andrew Pilkington]

I think the code of conduct. We've all described our various codes of conduct. Our code of conduct at TD is public. It's on the website. As I mentioned earlier, everybody reads it and tests to it every year. I think we can do more to bring it to life on a weekly and monthly basis with our front-line employees. Through coaching of the front line, whether in the phone channel or in the branches—that's an area I'm currently looking at, so we can make this a bit more front and centre for people on a daily basis.

[James McPhedran]

I would pick up on what we've done in light of the stories. We've redoubled our efforts on a variety of fronts. One of them deals with the internal feedback channels. We call them “pathways to resolution”. We've been very vocal and communicative in that respect, so people know that the outlets that are available to them are confidential, if preferred, to tell us about these situations. We have launched global sales principles, which speak very clearly. They come from the code, but they speak more clearly to people in front-line advisory roles to, again, just make it very clear about the dos and don'ts.

I get weekly reporting now, from both our customer and our employee feedback channels on this particular topic. That is not something I had received before this.

This is an issue we take very seriously. To Andy's point, it's an opportunity for us to learn and to look at some of the areas where we may need to tune up, so that's exactly what we're doing.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Were you getting the report monthly before or were you getting it yearly? Why the change now?

[James McPhedran]

I was getting monthly reporting before. If I got weekly reporting on the various things that go on in our business, there would be a lot of reports. This is one that I've given particular attention. It's on my accountability that this is set right, so I put the weekly reporting in place.