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Corner of Bay Street and Adelaide streets in Toronto, on July 25, 2013. The consumer watchdog charged with overseeing Canada’s banks is pledging to publish “initial findings” from a review of sales practices by the end of the year.

Gloria Nieto/The Globe and Mail

The consumer watchdog charged with overseeing Canada's banks is pledging to publish "initial findings" from a review of sales practices by the end of the year.

The Financial Consumer Agency of Canada (FCAC) launched a probe into banks' conduct in April, promising to zero in on issues such as consent, disclosure and sales incentives to find out whether consumers are being treated badly. The investigation is partly a response to allegations made anonymously to media by current and former employees.

The review is "now in full swing," said Lucie Tedesco, the FCAC's commissioner, appearing Monday before a parliamentary committee holding the first of three meetings to delve into worries about banks' conduct. News stories quoting unnamed bank staff suggested some employees felt such intense pressure to meet ambitious sales targets that they sometimes broke the rules. Those reports raised questions about the sales culture in Canada's banking sector and generated a measure of public outcry, coming relatively soon after U.S. bank Wells Fargo & Co. was rocked by revelations of widespread misconduct, which included staff opening some two million unauthorized accounts.

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Executives at Canada's largest banks have denied that they have any widespread problem with bad behaviour in pursuit of sales goals, citing their own internal reviews. Darren Hannah, a vice-president at the Canadian Bankers Association, told MPs that banks take the allegations "extremely seriously," but have clear policies to guard against wrongdoing.

"We need to satisfy ourselves that there actually is a problem," Ms. Tedesco told the committee, but later added: "If we discover violations of the law, we'll investigate further and we'll do what it takes, including imposing penalties against the financial institutions."

The FCAC hopes to get to the bottom of the allegations by interviewing consumers, reviewing banks' incentive targets and internal controls, and even "mystery shopping" at branches. A second phase of the review is expected to be finished by June, 2018. In the meantime, the FCAC is bolstering its "bench strength," creating a new enforcement unit and adding resources to its supervision group, Ms. Tedesco said.

Yet under questioning from MPs, the FCAC repeatedly acknowledged the limits of its jurisdiction, as banking activities and consumer protection issues are provincially regulated.

On Wednesday, the parliamentary committee expects to hear from new witnesses, at least some of whom are former bank employees. Representatives from each of the company's six biggest banks – Toronto-Dominion Bank, Royal Bank of Canada, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada – have been invited to appear at a third and final meeting next week.

"If there [are] practices going on that shouldn't be going on, then we'll have to figure out how to deal with that," Wayne Easter, a Liberal MP who chairs the Standing Committee on Finance, said in an interview. "But if a practice is taking place by a manager in one branch, you can't paint the whole system with that brush."

The committee's hearing into banks' sales practices was launched after motions from both the NDP and the Liberals, but it remains an open question whether the committee has any real authority to compel changes to the system. It can make recommendations and shed light on any issues, Mr. Easter said, but "this is not an inquiry, as such."

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On Monday, some MPs raised concerns about alleged misconduct among staff who say they made changes to customers' accounts, or added new products, without permission. But those claims have yet to be tested.

"I think we have to be careful, because we haven't heard our testimony yet from those who have been directly involved in it," Bernard Généreux, a Conservative MP, said at Monday's meeting.

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