Investigation relates to reports of high-pressure sales tactics linked to mutual funds
The Ontario Securities Commission (OSC) and the Canadian Investment Regulation Organization (CIRO) have initiated a joint review of sales practices at Canadian bank branches.
"The review follows a public report of potential investor harm due to alleged high-pressure sales practices for mutual funds at some Canadian banks," the regulators said in their joint statement.
The first phase aims to build "an understanding of the sales culture and environment within Canadian banks, to identify and assess the scale of any potential issues."
That phase, focused on information gathering, is expected to continue over the coming months and into early 2025. The findings will determine the need for further regulatory steps.
Individuals with information about such practices are urged to participate in the review. The OSC’s Whistleblower Program offers protections for those who come forward, including confidentiality and safeguards against retaliation. The program also provides financial incentives of up to $5 million for tips that result in successful enforcement actions.
The OSC described its broader mandate as one to protect investors from unfair practices, promote confidence in capital markets, and contribute to financial system stability. The commission also encourages investors to verify the registration of financial professionals and utilize its educational resources.
CIRO, which is "the national self-regulatory organization that oversees all investment dealers, mutual fund dealers and trading activity on Canada's debt and equity marketplaces," stated that its involvement reflects its commitment to consistent and effective financial regulation.
The review highlights concerns about the relationship between sales practices and investor outcomes in Canada’s banking sector. High-pressure sales tactics, particularly those involving financial products like mutual funds, have drawn increasing regulatory attention.
By investigating these practices, the OSC and CIRO aim to determine whether systemic issues exist or if these allegations are isolated. The findings could lead to policy changes or enforcement actions to strengthen investor protections.
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