Coercive tied selling
The Bank Act requires banks to inform clients, in plain language, that coercive tied selling is illegal. To comply with the law, we have provided the following information explaining:
- What coercive tied selling is
- What coercive tied selling is not
- How to contact us if you have any questions, complaints or concerns
On This Page:What is it? Preferential pricing Bundling Managing credit risk Contact us
What is it?
What is it
The Bank Act prohibits banks from practicing coercive tied selling. Put simply, you cannot be taken advantage of or unduly pressured to buy a product or service that you don’t want, from a bank or one of its affiliates, to obtain another bank product or service.
Here are two examples of coercive tied selling:
- Your bank's mortgage specialist tells you that you qualify for a home mortgage. However, you are also told that the bank will approve your mortgage only if you transfer your investments to the bank or its affiliates. You want the mortgage, but you do not want to move your investments.
- Your bank's credit officer tells you that you qualify for a Registered Retirement Savings Plan (RRSP) loan. However, you are also told that the bank will approve the loan only if you use the money to buy the bank's mutual funds. You want the loan, but you want to invest the money somewhere else.
Both of the above practices are against the law. If you qualify for a product, a banking representative is not allowed to take advantage of you, coerce you, or excessively pressure you to buy another unwanted product or service as a condition of obtaining the product you want.
Most businesses, including Canadian Western Bank, look for tangible ways to show their interest in your business and appreciation for your loyalty. Sales practices, such as preferential pricing and bundling of products and services, offer potential and existing clients better prices or more favourable terms. These practices should not be confused with coercive tied selling, as defined by the Bank Act. Many of these practices will be familiar to you in your dealings with other businesses and are an acceptable way to conduct business.
What is our commitment to you?
We expect all of our employees to comply with the law by not practicing coercive tied selling. We urge you to let us know if you believe that you have experienced coercive tied selling or have been taken advantage of in any dealings with us.
Preferential pricing is not coercive tied selling. It means offering clients a better price or rate on all or part of their business. For example, a printer offers a lower price for each business card if you buy a thousand cards instead of a hundred. A shoe store offers a second pair of shoes at half price.
Similarly, a bank may be able to offer you preferential pricing - a higher interest rate on investments or a lower interest rate on loans - if you use more of its products or services. Here are two examples of preferential pricing in banks:
- After approving your application for a home mortgage from the bank, your bank's mortgage specialist tells you that this mortgage would be available at a lower interest rate if you transferred your investments to the bank or its affiliates.
- After approving your application for an RRSP loan, your bank's credit officer offers you a lower interest rate if you use the loan to buy the bank's mutual funds.
These practices are acceptable. The approval of your mortgage and RRSP loan is not conditional on your taking another bank product or service. Rather, you are offered preferential pricing to encourage you to to do more business with the bank.
Products or services are often combined to give consumers better prices, incentives or more favourable terms. By linking or bundling their products or services, businesses are often able to offer them to you at a lower combined price than if you bought each product on its own. For example, a fast-food chain advertises a meal combination that includes a hamburger, fries and a drink. The overall price is lower than if you bought the three items separately.
Similarly, banks may offer you bundled financial services or products so that you can take advantage of package prices that are less than the sum of the individual items.
Here is an example of bundling of bank products and services:
- You plan to open a bank account that charges you for individual transactions. The banking representative offers you a package of services that includes a comparable bank account, a credit card with no annual fee and a discount on purchasing travellers cheques. The total price for the package is less than if you purchased each part of the package separately.
Bundling products in this way is permitted because you have the choice of buying the items individually or in a package.
Managing credit risk
Managing credit risk
To ensure the safety of their depositors, creditors and shareholders, banks must carefully manage the risk on the loans and credit cards they approve. Therefore the law allows us to impose certain requirements on borrowers as a condition for granting a loan - but only to the extent necessary for us to manage our risk.
Here is an example of how banks manage such risk:
- You apply for an operating loan for your business. To manage the risk associated with the loan, your bank requires your business to have an operating account with the bank as a condition for obtaining the loan.
This practice is legal and appropriate. Having your business' operating account at the bank allows your bank to assess possible risks associated with your business' cash flow and manage the risk associated with the loan.
At CWB, our requirements for borrowers will be reasonable and consistent with our level of risk.
We encourage you to raise questions or concerns with your banking centre or business area as soon as they arise. Each location is supported by a leader who has the decision-making authority to resolve most concerns. If your banking centre or business area does not resolve a matter to your satisfaction, you may elevate the matter to CWB’s Complaint Handling Office (CHO). You may also raise your concerns directly to the CHO:
Complaint Handling Office
Canadian Western Bank
Suite 3000, 10303 Jasper Avenue
Edmonton, Alberta T5J 3X6
Email: [email protected]
CWB’s complaint handling process, including how matters can be referred to CWB’s Office of Concern Resolution (OCR) and to independent dispute resolution service can be found in CWB’s Resolving Your Concerns brochure or at cwb.com/about-us/resolving-your-concerns.
You may also contact the Financial Consumer Agency of Canada (FCA) regarding CWB’s compliance with any consumer protection law, including the one(s) described in this brochure:
Financial Consumer Agency of Canada
427 Laurier Avenue West, 6th Floor
Ottawa ON K1R 1B9
(en français: 1.866.461.2232)
Toll-free fax: 1.866.814.2224