A joint regulatory review by the Ontario Securities Commission (OSC) and the Canadian Investment Regulatory Organization (CIRO) found that mutual fund advisers at Canada's Big Five banks face significant pressure to meet sales targets, potentially leading to recommendations not in clients' best interests and incorrect information being provided. The review was prompted by media reports and highlights concerns about compensation models and "scorecards."
Big banks’ sales targets may influence mutual fund advisers’ product recommendations, review finds
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TL;DR: Key points with love ❤️A joint regulatory review by the Ontario Securities Commission (OSC) and the Canadian Investment Regulatory Organization (CIRO) found that mutual fund advisers at Canada's Big Five banks face significant pressure to meet sales targets, potentially leading to recommendations not in clients' best interests and incorrect information being provided. The review was prompted by media reports and highlights concerns about compensation models and "scorecards."
Trending- 1 2017: CBC investigation into bank sales practices.
- 2 2018: FCAC review found bank branches acted like stores selling advice/investments.
- 3 2021: Ontario's Finance Minister called on OSC to review banks halting third-party fund sales.
- 4 Early 2022: OSC review on third-party funds completed (findings not public).
- 5 June 2023: The Globe and Mail examined sales culture at Canadian banks.
- 6 2024: CBC media report revealed potential investor harm from high-pressure sales.
- 7 End of 2024: OSC and CIRO conducted survey of 2,862 mutual fund representatives.
- 8 Wednesday (prior to article): OSC and CIRO issued joint statement on review findings.
- 9 Ongoing: Regulators will continue to examine sales practices in a second review.
- Risk to retail investors' interests
- Potential for clients to receive unsuitable products or incorrect information
- Calls for banks to assess their sales environments and training programs
- Ongoing regulatory scrutiny with a second review planned
What: A joint regulatory review by the Ontario Securities Commission (OSC) and the Canadian Investment Regulatory Organization (CIRO) found that mutual fund advisers at Canada's Big Five banks face high pressure to meet sales targets, which can lead to recommending unsuitable products or providing incorrect information to clients. The review identified sales pressures, compensation models, and performance tracking "scorecards" as contributing factors.
When: Wednesday (joint statement), end of 2024 (survey conducted), 2024 (CBC media report), 2018 (FCAC review), 2017 (CBC investigation), June 2023 (Globe and Mail examination), 2021 (Ontario Finance Minister called for OSC review), early 2022 (OSC review completed).
Where: Canada, Ontario, Bay Street.
Why: The review was prompted by media reports (CBC in 2024, CBC in 2017, Globe and Mail in 2023) alleging high-pressure sales practices and potential harm to investors. Regulators believe sales environments, compensation, incentivization, and performance tracking contribute to these concerning behaviors, where advisers prioritize sales targets over clients' best interests.
How: The OSC and CIRO conducted a survey at the end of 2024 involving 2,862 representatives from all five bank-affiliated mutual fund dealers in Ontario. They found that 24% of advisers reported recommending unsuitable products "sometimes," and 33% reported providing incorrect information. Over half said "scorecards" added significant sales pressure, and 40% said scorecards influenced recommendations.