The strengths of Canada's banks -- their deep pockets and broad range of customers -- are also just the things that make them attractive targets for class-action lawsuits, a new report by KPMG says.
Canadian banks are the subject of at least 81 class-action lawsuits, ranging from complaints over credit cards, mortgages, loans and fraud, as well as allegedly unpaid overtime.
The total claims stated by plaintiffs amount to $4.9-billion. But KPMG estimates that if all claims -- many of which do not state a dollar amount -- are included, plaintiffs are demanding between $8.8-billion and $12.4-billion.
The auditing firm points out that it is extremely unlikely the country's banks would lose every case and have to fork out this total. But the costs could still be "substantial," the report says, and can damage banks' reputations.
"It is common for the announcement, progress, and settlement of class actions to be reported in the media, with plaintiffs portrayed as David and defendant banks portrayed as Goliath," the report reads.
KPMG says Canadian bankers should watch what types of class actions banks are facing in the United States, where these cases are much more common. They should also monitor cases against their competitors at home, and comb through their own operations to mitigate similar risks, such as bank fees that have been targeted elsewhere for being unfair, the report says.
KPMG adds that banks should also consider offering voluntary restitution to customers who feel hard done by because of a bank error or policy -- before a class action is filed.