This has not been a good week for the reputation of our big banks in Canada!
On Monday the Globe and Mail published an article entitled “Persuasive sales culture at Canadian banks designed to push customers into high-fee products.” It was a very damning look at how front-line employees are compensated and what they do to achieve targets, usually at the expense of trusting customers.
Then on Tuesday, two news items were released from the banking regulator. First was that “CIBC under remediation orders to fix their mortgage underwriting lapses.” In speaking with someone at CIBC personally, when clients refinanced their mortgage and lines of credit were paid out, branch employees were in a habit of not closing the credit lines as directed, leading to some homeowners to have loans in excess of the total value of their homes!
After that, the regulator also announced that they are concerned with debt levels and increasing borrowing costs. As a result, it is forcing Canadian Banks to have more reserve capital on hand. This means that the banks need to hold more money as “insurance” against the financial downturn.
Now this is not the time or place for a diatribe about fractional reserve banking, or to discuss the possibility of Canadian banks failing like their US counterpoints. I would rather talk about an alternative way to build and protect your wealth that is not often talked about; that is insurance.
Over the coming weeks I am going to be discussing all types of insurance products and not just how they mitigate risk, but also how they can be utilized to save and grow your wealth safely, efficiently and with return rates that are more than competitive with bank products and mutual funds.
If you would like more information about what is happening in the Banking sector and how it affects you and your financial future, feel free to reach out to me at 647-302-0151 or follow me on Instagram @moneypuzzle.ca.