Understanding Tied Selling
The Bank Act requires banks to inform customers in plain language that coercive tied selling is illegal. To comply with the law, DCBank is providing this information explaining:
- what coercive tied selling is, and
- what coercive tied selling is not.
What is Coercive Tied Selling?
Coercive tied selling is prohibited under Section 459.1 of the Bank Act. More specifically, it is against the law for a bank to “impose undue pressure on, or coerce, a person to obtain a product or service from a particular person, including the bank and any of its affiliates, as a condition for obtaining another product or service from the bank.”
You cannot be unduly pressured to buy a product or service that you don’t want from a bank or one of its affiliates, in order for the bank to agree to provide another bank product or service to you.
The following two examples will help to explain coercive tied selling and what is not allowed.
- 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 loan, with which you did not intend to buy investment products. However, you are also told that the bank will approve your loan only if you use the money to buy the bank’s investment products. 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 unduly pressure you to buy another unwanted product or service as a condition of obtaining the product you want.
Our Commitment to our Customers
We expect all employees at DCBank to comply with the law by not practicing coercive tied selling. We provide our employees with information and training programs on acceptable sales practices. We urge you to let us know if you believe that you have experienced coercive tied selling in any dealings with us.
What is Not Coercive Tied Selling?
Most businesses, including DCBank, 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 customers 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.
What is Preferential Pricing?
Preferential pricing means offering customers a better price or rate on all or part of their business. For example, a shoe store offers a second pair of shoes at half price.
Similarly, a bank may be able to offer you preferential pricing if you use more of its products or services. The following two examples will help to explain 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.
The above practices are acceptable. You are offered preferential pricing to encourage you to give the bank more business.
What is Bundling of Products and Services?
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.
Bundling products in this way is permitted because you have the choice of buying the items individually or in a package.
How can you contact us?
Please let us know if you have any questions, complaints or concerns about your dealings with DCBank. While most questions can be answered by a knowledgeable and friendly DCBank representative by calling1.844.836.6040, if you are not satisfied with how your question or complaint has been handled, click here to review our dispute resolution process