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What Did TD Bank Do Wrong?

Over the course of the past week, a spotlight has been firmly fixed on the sales practices of Toronto-Dominion Bank (TD). A number of current and former employees have come forward to expose TD for putting excessive amounts of pressure on employees to either meet sales targets or lose their jobs.

In this article I intend to provide my assessment of the facts from the CBC article published March 6.

In Their Own Words

I read through the article and amid the hyperbole I noticed one thing: Despite allegations that pressure has become intense for employees, I did not find any evidence that TD–whether at the management level or otherwise–had coerced employees into breaking the law. In fact, when examining the actual quotes from the disgruntled employees, one gets the sense that these individuals were acting entirely on their own.

Consider the following three quotes:

  • “When I come into work, I have to put my ethics aside and not do what’s right for the customer.”
  • “You don’t know what it’s like to go to bed at night, knowing your job is now to set people up for financial failure.”
  • “Customers are prey to me… I will do anything I can to make my [sales] goal.”

What really stands out to me is that those who said these things–we are left to wonder who it may have been as the sources chose to remain anonymous–need to seriously consider the line of work they have chosen. TD operates in financial services which is a hotly contested, competitive sales environment. Beyond that, one must remember that when working in a public-facing role, putting one’s ethics aside or looking at customers as prey is not the way to operate.

Likewise, I would be interested to know where the idea came from that the job of a TD employee is to set people up for financial failure. Quite the opposite, actually; the true responsibility of a bank employee is to provide financial services that meet the needs of customers. It is imperative to be proactive and recognize opportunities.

The fact of the matter is that the vast majority of consumers have a very poor understanding of the financial products out there. Consequently, these same consumers rely heavily on professionals to be knowledgeable and provide proper advice.

Front-Line Advisers

Within the article it is noted that the role commonly recognized as a “bank teller” has been renamed “front-line adviser”. While the employees depict this as a negative change, I fail to see the deception in this. Bank tellers–by any name–are the first line of contact for most customers. The role is, first and foremost, to satisfy the need of the customer. This may involve cashing a cheque, accepting a deposit, or any other number of basic banking functions.

From there, the teller does behave as an adviser both in terms of offering value-added services such as overdraft protection, credit cards, or otherwise making a referral to another staff member who may have greater experience or qualifications to offer more sophisticated product offerings.

The cynicism of the following quote speaks volumes, “We’re now called front-line advisers… [T]hat would be funny, if it wasn’t so sad.” In an industry where automated tellers (ATMs) and mobile banking has continued to take on more of the everyday transactions, I actually find it an intelligent shift for TD and other banks to find additional ways to offer advice on the front-line. As the volume of these face-to-face interactions decrease, the importance of making each one count increases.

As part of the case presented against TD, it is stated that the teller screens highlight sales prospects such as auto loans and lines of credits for which the customer may qualify. As much as this is presented in a negative light, I would actually be more surprised and disappointed as a shareholder if the company was not using the wealth of data it has on customers to provide more opportunities to grow their business and to present this information at-a-click to the tellers. If anything, I consider this simply smart business and it positions the tellers to easily see what they have to offer the customer right from the beginning of the transaction.

As far as upselling goes, I would not find it a nefarious trick for the customer service representative at my local breakfast drive-thru to offer me a pastry when ordering a coffee. As a consumer I have come to expect this. What I also expect is an honest salesperson who is upfront about the costs of my purchase. For this reason, I find the following quote exceptionally troubling: “There are elderly customers who have fought for us – they have an army pension… [A]nd here I am, setting them up with all these service fees and they don’t have a clue what’s going on.”

Not only is it unethical at the most extreme level to do what this individual admits to having done, I am confident it violates the law. Customers must be given full disclosure when signing up for financial services. From what I can tell of this statement, the employee has engaged in this practice entirely on his or her own. As with previous quotes from the article, there is no actual connection between the employee’s decision and TD itself.

Profitable Banks Are a Good Thing

One of the common tactics of the media when writing about the banks is to declare how they have earned record profits. Without explicitly telling the reader that the profits may have been earned through unsavoury business practices, the suggestion hangs in the air awaiting recognition.

It begs the question though: What is wrong with notching record earnings? It is those same high-quality earnings that allow for the healthy Tier I capital reserves that the Canadian banks now enjoy.

Looking back at the financial crisis which remains fresh in my mind, I have to say that as a Canadian I was thankful to be blessed to live in a country with a strong financial sector. Despite the carnage all around, I was unconcerned about the solvency of the institutions I entrusted to hold my life savings. I never did and do not now take that for granted.

Why This Struck a Chord For Me

As a historian of the financial universe, I am certainly well versed on the mistakes banks have made to cut corners and find profits through questionable means over the decades. By and large, the industry has in many ways earned its reputation for earning ransom-like paydays on the backs of the average working stiff. However, I did work at one of the Big Five Banks quite a few years back and I know firsthand that it is indeed possible to go to work with the customer’s best interest at heart and still do well.

In fact, I would say that putting myself in the shoes of the customer when dealing with them each day made me far better at my job than I otherwise could have been. Throughout all interactions I consistently tried to find ways that I could make their life easier. Whether that meant opening a new account that could offer value or by closing an old one that simply did not make sense for them any longer, building trust always meant treating each customer as a friend and considering their needs as I would if they were a family member.

With respect to TD’s business practices, there are rules and regulations in place that I believe all companies must abide by. Not just the letter of the law, but the spirit as well must be respected. I believe we are crossing a line, though, when we tell a company how to manage employees and whether it is okay to look to organically increase its profits. From what I can tell of the article in question, TD did not transgress any boundaries. As much as a company should have the ability to increase sales targets, employees similarly have a choice to make as to whether they would like to work in a sales-driven industry or not.


When a company breaks the law or leads employees to do so, it is desirable for them to be punished both to penalize them and to deter others from doing the same thing. Based on my analysis of the situation with TD, however, I am unable to connect the dots between employees not enjoying the sales environment of their employment and actual corporate wrongdoing. In my dealings with TD over the years I have been pleased by the level of customer service and professionalism overall. What disappoints me about all of this is that all employees now stand to be painted with a negative brush.

With that said, I would like to be clear that my goal here was never to downgrade or patronize the concerns the employees brought forth. My intention has been to offer a balanced counter to the onslaught that TD has faced in the wake of this news coming out. Should additional details come to light which substantiate actual wrongdoing, I will certainly not shy away from re-evaluating my stance.

I am currently a shareholder of three of the Big Five Banks. I have held my TD position since the first-half of 2009 and near the market lows. I intend to continue holding this position as I remain steadfast in my belief that this is among the best run banks in the world with plenty of runway to grow.

Thank you for reading.


What are your thoughts on the recent news with TD?

Full Disclosure: Long TD

Pictures courtesy of pixabay.com

2 thoughts on “What Did TD Bank Do Wrong?

  1. Good analysis on TD Banks mishaps. It is important to keep their reputation intact and move forward.
    Money Grower UK recently posted…Two Year Self Invested Stocks ISA Account Performance Review – Still Beating The MarketMy Profile

    1. MG UK,

      I think the important thing about all of this is to keep in mind is that from what I’ve read, TD didn’t actually do anything wrong. I would be surprised if they faced any fines – you never know, though.

      Take care,

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