Weekend Reading: More Banks Behaving Badly Edition

BMO will pay back almost $50 million to clients who were overcharged on their mutual funds and investment accounts. The settlement was worked out by the Ontario Securities Commission, which said BMO “self-reported” the problem and there was no evidence of dishonest conduct by BMO.

But something fishy is going on when the OSC has already settled similar voluntary cases with CIBC, which agreed to repay $73 million to more than 80,000 customers, three Bank of Nova Scotia divisions, three subsidiaries of TD Bank, and with mutual fund giant CI Funds, which repaid $156 million to 360,000 clients.

Banks behaving badly

All eyes are on fees in the wake of CRM2, the latest regulations that are supposed to provide investors with greater transparency about the cost and performance of their accounts. It makes you wonder if the big banks and investment firms, who have been overcharging Canadian investors for decades, are avoiding greater scrutiny by discovering these “accidental” problems and making regulators believe they are serious about protecting their clients.

BMO stick-up

But let’s be honest, until bigger steps are taken, i.e. banning embedded commissions and imposing a best interest standard of care, Canadian investors will continue to be at the mercy of a system designed to screw them over.

This Week’s Recap:

On Monday I looked at budgeting and how best to save for large purchases.

On Wednesday Marie listed five things that might be missing from your retirement budget.

And on Friday I enthusiastically posted my 2017 financial goals.

Over on the ModernAdvisor blog I shared some of the best financial advice I ever got.

Weekend Reading:

In honour of a new Star Wars film opening this weekend, CBC’s Peter Armstrong writes a fun piece on the economic argument against blowing up the Death Star:

“The costs of destroying the Death Star would be staggering, requiring an enormous, galactic-wide bailout to the tune of 15-20 per cent of the economy.”

Big Cajun Man Alan Whitton shares some Christmas advice on how to deal with Uncle Frank the financial “expert”.

No one knows who owns nearly half of Vancouver’s priciest homes.

Would-be buyers are finding it ever more difficult to get a mortgage from mainstream financial institutions. Is greater regulation driving them into the shadows?

Carl Richards on a retirement plan with less golf but more satisfaction:

Globe and Mail columnist and Millennial advocate Rob Carrick did an Ask Me Anything interview over on Reddit.

Here are 3 solutions for would-be buyers dismayed by Canada’s hot housing market.

According to a new study, the cost of child care is outpacing inflation in Canada’s largest cities.

Episode 2 of the Canadian Couch Potato podcast is out. Dan talks with fee-only advisor Sandi Martin about the difference between financial planning and investment management:

“If you’re asking which ETFs you should use before you’ve got a savings plan and clear investment objectives, you’re getting the process backwards.”

Michael James wonders why investor advocates focus on how advisors are paid instead of just lobbying for lower cost mutual funds.

Ben Carlson on how the 1973-74 bear market changed how people judge investment performance.

An investor took his broker’s advice to sell two stocks, which subsequently rose sharply in value. He writes John Heinzl to ask for advice on how to cope with the loss.

Chalten Fee-Only Advisors have a terrific blog and this article looks at two crucial success factors that often elude investors.

“Most investors, both amateur and professional, fall victim to psychological pitfalls and stray from their discipline precisely at the moment they need it most, usually around market peaks and troughs.”

There are tax issues if you earn dividends inside your tax free savings account. Dan Bortolotti explains the penalty for holding dividend stocks in a TFSA.

Investor advocate group FAIR Canada shares its 2017 wish list. Sounds good to me!

Ed Rempel offers up some case studies on delaying CPP and OAS until 70.

My Own Advisor Mark Seed shares some year-end tax tips and financial housekeeping.

Empire shares plummeted 17 percent after a 70 percent drop in earnings last quarter. The interim CEO laughably blamed poor sales on its loyalty parter Air Miles for ticking off customers.

Finally, grab a second cup of coffee and check out these 75 charts every Canadian should watch in 2017.

Have a great weekend, everyone!


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  1. Big Cajun Man (Alan W.) on December 18, 2016 at 6:33 am

    Christmas should be a time of fun, family and sharing, not a time to discuss investing or politics, keep that in mind.

    Thank you for including me this time around, and a Merry Christmas and a Happy New Year to you both from the staff at The Canadian Personal Finance Place (yeh, just me, the Big Cajun Man). 🙂

    • Echo on December 18, 2016 at 3:52 pm

      I wonder if I’m the “uncle Frank” of our family gatherings…?

  2. Big Cajun Man (Alan W.) on December 18, 2016 at 6:36 am

    Christmas should be a special time for families, so leave the politics and money talk for the deck on the summer.

    Merry Christmas and a Happy New Year from the staff at the Canadian Personal Finance Place (OK just me, the Big Cajun Man)

  3. John on December 18, 2016 at 9:20 am

    ” It makes you wonder if the big banks and investment firms, who have been overcharging Canadian investors for decades, are avoiding greater scrutiny by discovering these “accidental” problems and making regulators believe they are serious about protecting their clients.”

    Quite true. It also makes you wonder if they confessed to ALL the accidents over the years. Will the OSC do an audit to find out? (Not likely).

    In the meantime, the overcharges that the banks admit to add up to $379,000,000. How did institutions which make their living dealing with numbers and money miss such a large amount? These overcharges may well be part of the bank’s business plan.

    However, if these “accidents” were legitimate, it proves banks are very incompetent. So can they also be incompetent in other areas too (like keeping your data safe from hackers)? And can we be sure the authorities keep a watchful enough eye on these outfits to safeguard clients’ interests?

    • Echo on December 18, 2016 at 3:53 pm

      Hi John, there’s definitely more to the story than what we are seeing here in these backroom confessions and “voluntary” fines.

  4. My Own Advisor on December 18, 2016 at 9:42 am

    Read that Vancouver housing article… “Of the 100 most expensive homes that study author Adam Ross looked at, 46 homes — worth a combined $1 billion or more — had unclear ownership.”

    Houston, we have a (major) housing problem.

    Thanks for the mention man – hope you have a great holiday with family and friends.

    • Echo on December 18, 2016 at 3:55 pm

      Hi Mark, there’s going to be major problems if and when that bubble finally bursts.

      Hope you have a great Christmas, too!

  5. FritoPaw on December 18, 2016 at 9:45 am

    So how are these investors getting repaid? I’m a long time BMO investor in BC and have heard nothing of this. Surely Ontario branches have the same processes as the rest of the country.

    • Echo on December 18, 2016 at 3:57 pm

      Hi FritoPaw, great question and it is not clear from the OSC documents just how these clients were identified and selected for reimbursement. It sounds like most of them were in fee-based accounts and being double-charged (paying the advisor 1% AND paying the 2% MER when they should have qualified for lower cost funds).

  6. Echo on December 18, 2016 at 3:51 pm

    I had the wrong link for Carl Richards’ post. It has now been updated. Thanks!

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