Decision #42715-441Q303

File: 42715-441Q303

Compliance issue

Coercive Tied Selling – Coercing a person to obtain a product or service as a condition of receiving another product or service
Bank Act, s. 459.1

A bank agreed to provide a customer with a line of credit and a mortgage loan. When the customer chose to obtain the mortgage loan at another institution, the bank withdrew approval for the line of credit stating that the approval was conditional upon accepting the mortgage with the bank.

Section 459.1 of the Bank Act stipulates that a bank cannot impose undue pressure on, or coerce, a person to obtain a product or service from the bank or any of its affiliates as a condition for obtaining another product or service from the bank.

Compliance measure(s) taken

Letter of Reprimand^{Footnote 1}  noting one violation against the bank.

Compliance considerations

The complaint was self-reported to the Financial Consumer Agency of Canada (FCAC), and was determined to be an isolated incident. The bank provided appropriate redress promptly when alerted to the problem by the customer. The bank had no prior violations noted against it.

Corrective measures taken by financial institution

• Provided redress to the customer, including renewing the offer for a personal line of credit.
• Provided direct guidance to staff in the branch.
• Ensured that relevant compliance information was available to staff and to customers.
• Delivered an enhanced training session to front-line staff.

Outcomes

In this case, after identifying the problem, the consumer was given the option to obtain a personal line of credit without having to obtain another product or service. Consumers need to be free to make informed decisions about their personal finances. Prohibiting coercive tied selling enhances consumers’ bargaining power when dealing with their financial institutions. By ensuring that consumers are protected from undue pressure, FCAC and the financial institutions can work together to build confidence in the marketplace.