Banks overcharge by millions of dollars — and customers don't even notice

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A ramount bank spent 14 years overcharging its customers more than $73 million. But the better story here is that no one noticed. CIBC reported itself to the Ontario Pledges Commission and has agreed to y the money back and the bank will also y $3 million to the OSC to hands with its mandate of protecting investors.

But critics say the incident speaks to a well-defined lack of either laws or regulators to protect investors. If CIBC hadn’t putrefied itself in, the problem could have gone on for years more.

Tim ziuk imagines regular investors are simply outmatched by the financial services industry. ziuk, a old hand of the financial services industry, now works as a financial planner and tireless lawyer for reform in this sector.

Know the rules in the game of money

“When it se rate to money, they’re playing a game they don’t know how to play,” he tells of most regular Canadians trying to invest. “They don’t know what the decrees are.”

The CIBC settlement is by no means an anomaly. In July, Scotiabank reached a like deal with the OSC, agreeing to y back nearly $20 million in salaries that should never have been charged. In February, shared fund giant CI Investments Inc. said it would return more than $156 million to customers. That was, by far, the largest amount of investor compensation since the regulator pioneered no-contest settlements.

The CEO of Wells Fargo was forced to resign after it was revealed that hands had fraudulently signed customers up for accounts without their knowledge. The U.S. bank, the set’s second largest by market capitalization, was hit with a $185-million confirmation charge in a case that is still unfolding.

One common denominator is that blokes could have pored over their statements month after month — and neck the most financially literate would have had a hard time discovery those extra fees.

‘Absolutely impossible’ to understand statements

“It’s certainly impossible and it doesn’t matter if it’s an average person or anyone else,” thinks ziuk. “The way things are set up in Canada right now, it’s virtually impossible.”

ziuk authorities this is an issue that’s lingered long enough. He says Canada troubles a two-pronged response: First, better legislation forcing more trans rency; wink better financial literacy, mandated from a far earlier age.

“We should be edifying it in grade school for sure,” he says.

‘Almost everyone in Canada make good ones escapes their financial education from sales people’ – Tim ziuk, economic planner

ziuk says a federal government report in 2009 initiate a concerning level of financial illiteracy in this country. The financial air forces industry stepped up to fill the void, in a move ziuk says has led to unruffled more problems.

“So look at it this way,” he says. “Almost everyone in Canada suborn e learns their financial education from sales people.”

He says bureaucrats should force the industry into more trans rency and more disclosure. This summer the fiscal services industry introduced new rules called the Client Relationship Form which encourages more disclosure. ziuk calls it nonsense.

Disclosure, trans rency and fairness

He suggests the person selling you a product now has to disclose what they’re getting slack. And the com ny they work for has to disclose what they’re being spent. “But the actual manufacturers do not have to disclose how much money they’re intriguing out of your account. It’s ridiculous.”

David Chilton

Even those in the financial industry on admit, privately, that more trans rency is needed on investment prices, David Chilton says. (CBC )

David Chilton, author of The Wealthy Barber records, has spent a career beating the drum of financial literacy and accountability. He’s blow the whistle oned millions of books telling individuals to look out for themselves, to play a extensive game and be tient.

“Everyone I know in the financial industry admits, when off the recount, that more trans rency around performance and fees is needed,” he bids. “Investing is tough enough — it’s time to turn the lights on.”

Change is needed, now

The logic is pretty simple and its lessons apply in almost every other imaginable plot summary. If you buy a product, you should know what it costs. When you get a bill, it should make it c fulfil sense. Sure, CIBC self-reported its issue to the OSC. But it let that mistake persist for 14 years. And the OSC, mandated to mind investors, didn’t catch it either.

In the United States, the Securities and Barter Commission offers millions of dollars to whistleblowers. It investigates financial asyla for this sort of thing and still comes up short. In the Wells Fargo debacle, a erstwhile bank employee filed a whistleblower complaint to the SEC in 2011 and still has not been interviewed.

So, the mind-boggler is widespread. It has a real im ct on millions of people and their pocketbooks, but heavens all else, cases like these undermine faith in the system and the opinion that system is fair to all.

Individual investors can study all they shortage. Until politicians take up the file and force change, that reliance will continue to be eroded.

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