Four years into Canada’s client-focused reforms (CFR), securities regulators have surfaced two uncomfortable truths that point toward an ingrained institutional inertia.
First, their latest CFR compliance sweep found that many firms — including bank-affiliated dealers — still exhibit material weaknesses in core know your client, know your product and suitability practices. In several instances, non-compliance was significant enough to warrant further regulatory action.
Second, the July 2025 joint findings from the Ontario Securities Commission (OSC) and the Canadian Investment Regulatory Organization (CIRO) provided a rare, unvarnished look into the bank branch machinery. After surveying nearly 3,000 mutual fund representatives at Canada’s Big Five, the findings were staggering:
- One in four representatives admit clients are recommended products that aren’t in their best interests.
- Forty per cent believe performance scorecards actively distort their recommendations.
- One in three report that clients are receiving incorrect information.
- Thirty-two per cent agree that their compensation values sales volume over advice quality.
Commenting on these findings, OSC CEO Grant Vingoe was uncharacteristically blunt. While many prioritize quality advice, “it is also clear that sales pressures and incentivization may be driving concerning behaviours.”
He noted that the focus must be clients’ best interests, not “feeling heightened pressures to meet sales targets.”
Rhetorical obfuscation
In November 2025, the Canadian Association of Retired Persons (CARP) wrote to the Canadian Bankers Association (CBA) regarding these findings. The CBA response — speaking for its member banks — opens by touting that 99% of Canadians have bank account access.
While universal access is a social good, it also creates a massive, captive audience. For the millions of Canadians who trust these institutions, the branch often functions as a walled garden masquerading as an open ecosystem.
They enter expecting a competitive marketplace of ideas, and are met with a proprietary silo that prioritizes the bank’s bottom line. The question isn’t whether seniors can open accounts; it’s whether branch advice aligns with client interests or sales targets.
The CBA noted in its letter that 78% of representatives find the product shelf adequate. This is a startling admission — a Pyrrhic victory at best.
In any other professional field, a 22% failure rate in having the necessary tools to serve a client would be considered a crisis of competence. For the banks, it is offered as a success.
This reveals a fundamental disconnect in the industry’s culture. It views a mostly adequate shelf as sufficient, while the client-first standard demands that the recommendation be the optimal fit, not just a profitable one that happened to be on the shelf.
If a representative must refer clients elsewhere for better products, the system is designed to prioritize internal revenue over external outcomes.
Systemic risks
The CBA is ignoring a fundamental reality of professional advice: integrity requires unclouded judgment. When 40% of representatives admit that scorecards influence their logic, those metrics migrate from benign management tools to systemic compliance risks.
This is not merely a matter of incentive alignment. It is a question of intellectual and professional independence.
Under the CFR, firms are mandated to resolve material conflicts in the best interest of the client. If a scorecard is powerful enough to influence the reasoning of nearly half the workforce, it constitutes a permanent, material conflict that overrides the suitability process.
You cannot claim to put the client first while simultaneously measuring staff on how well they put the institution’s volume targets first. Where the scorecard begins, objective advice ends.
If regulators and banks are serious about reform, they must move beyond aspirational language and adopt a framework of evidence-based integrity:
- Transparency of outcomes: Banks should publish hard data: complaint volumes regarding branch advice, identified deficiencies and the specific remediation provided to seniors sold unsuitable products.
- The competitive shelf test: If a bank restricts its staff to proprietary products, it must be required to demonstrate those products are competitive on cost and performance against independent alternatives.
- De-risking the scorecard: Any performance metric that 40% of employees view as a conflict of interest should be abolished or fundamentally redesigned to reward client retention and portfolio health over new-money sales.
- Binding protections: CARP’s proposed senior investor protection framework must transition from a voluntary code to a set of binding obligations with real consequences.
- Alignment of title and duty: If a bank markets its branches as safe harbours and its staff as advisors, the legal duty of care must match that representation.
The CBA’s response — questioning methodology while reciting marketing platitudes — is classic damage control.
The public deserves proof of efficacy. If the industry’s reflexive response to evidence of a toxic sales culture is to attack the messenger, then it is time for regulators to stop accepting assurances and start demanding results.