In the business lexicon I think polite somehow equals naive or stupid. Neil Macdonald examines some of the hi-jinks our corporate leadership in Canada feels it can get away with.
“A letter arrived last week from TD Bank. “In order to continue to meet your banking needs …” it began.
Try to guess what came next. Hint: I’m a customer at a Canadian bank.
Sure enough, “We sometimes need to adjust our pricing.”
Unsurprisingly, the prices being adjusted were not being adjusted downward.
As of March, the bank’s “non-TD ATM fee” is being raised 33 per cent.
Fees for cancelling an Interac e-transfer and for holding a post-dated cheque at a branch are going from free to $5. And the fee for transferring a tax-free savings account to another bank is going from free to $75.
These are huge increases, far in excess of growth or individual spending power.
Now, it’s important to understand TD’s position. The bank’s profits were $8.02 billion last year, up only slightly from $7.88 billion the year before.”
Our banks do this sorta shit all the time. Hmm..bottom line looking a bit thin? Let’s put the screw to our customers, they’ll smile and say ‘thank-you’.
“It’s worth noting, though, that in the U.S., where TD is now a serious player, with more branches than in Canada, the bank plans to impose no fee increases on customers come March.
“Totally different environment,” a TD spokeswoman told me.
Translation: There’s a lot more competition there, and if TD tried charging the sorts of fees it imposes on the bank’s supine Canadian flock, some other U.S. bank would be in there siphoning off business before you could say “special offer.”
Up here in Canada, TD’s letter advises customers that if they don’t want to accept the fee hikes, they are free to close their accounts, “without cost or penalty.”
Generous, that.”
It is really as simple as that? Because we in Canada don’t allow the wild west capitalism that typifies our good neighbours to the south we have to accept the fact that the fox is in charge of the henhouse?
“It’s all part of being Canadian. The equation is simple: Canadian consumers and workers are protected from certain free-market excesses, but that coddled security comes with a price: oligopolies, in which a few firms dominate, and all the behaviour that flows from that.”
If this is the price we have to pay to be able to weather the financial shit-storms that brew in the US, I might be able to accept that – but I think that the cost benefit analysis is still up for debate.
“If you want a really depressing bit of Canadian reading, go look at the Canadian Competition Bureau’s policy on “price maintenance,” something most of us know as “price-fixing.”
Certain companies, especially in the luxury trade, try to see to it that their products never go on sale. Rolex is one. Canada Goose, the world-famous Canadian parka-maker, is another.
This offends capitalism: in a free market, one of the few responsibilities of government is to monitor and punish efforts to deaden competition”
Looking at you telecoms :/
“In fact, “price maintenance behaviour” was a criminal act in Canada, until Stephen Harper’s Conservatives changed the law in 2009 (though some forms of price-fixing still remain a crime).
The new law reduced price maintenance to a non-criminal offence, and even at that, it now has to be proven that “price maintenance conduct has had, is having or is likely to have an adverse effect on competition in a market.”
In other words, the government has to prove that price fixing results in fixed prices.”
Another gifted poison pill from our beloved former conservative government. It is shit like this that ruins their airs toward being business friendly and being friends of the market and all of the other hooey they exude from their weaselly mouths. They lay down on market policy that hugely distorts the market – and in the end makes Canadians pay more – and then have the audacity to make ‘sad face’ and shrug their shoulders laying the blame on the ‘free market’. Conservative economic policy is made of pure unadulterated rannygazoo from top to bottom.
“After trying to make sense of the gibberish on its website, I asked the Competition Bureau how many times it’s gone after companies for what it calls price maintenance since it issued its new “enforcement guidelines” in 2014.
The answer: None. Zero.
“Nevertheless,” said a spokeswoman in an email, Canadians should rest assured the bureau remains vigilant: “The Competition Bureau will not hesitate to take appropriate action where it believes price maintenance has occurred.”
Okay. Good to know.”
*sigh* – WTG Competition Bureau. :/
bleatmop
Mystro
Dead Wild Roses 
8 comments
February 24, 2016 at 11:17 am
VR Kaine
Conveniently the CBC writer wants to blame things on Harper (as you do), but the fact is banks screwing us up here have been the norm since long before. The banking monopoly is party-agnostic and has always been..
“If this is the price we have to pay to be able to weather the financial shit-storms that brew in the US I might be able to accept that – but I think that the cost benefit analysis is still up for debate.”
There is no debate. Equating higher service charges with bank stability is total bullshit. It is a misleading play (among many) by banks to get you to drink their kool aid.
Legislation, not service charges, has the most to do with bank stability and on that front the government has done well. The banks and government have good dialogue and relations there, and many banks work to fall beneath the government “safe” limits (i.e. “too big to fail” tests) in order to keep government off their backs, which is great and how it should be.
But service charges have to do with profitability, and that’s where the monopoly comes in and every government – long before Harper – fails miserably. Canadian banks gouge because they can, and can get away with it. You can be free to go to another bank, but conveniently they all do it equally.
Of course, they’ll deny any collusion. Why admit it? Yet I could be at my desk at the bank in Calgary at 6am Monday morning, and get an email announcing a rate increase that morning yet colleagues at two other banks got the same announcement for the same rate increase at exactly the same time, and NOT tied to a Bank of Canada rate increase? Nope, nothing to see here, move along.
And Canadian banks need to stop with their “holier than thou” routine compared to US banks. They are no saints, either, as far as crises are concerned:
http://www.torontosun.com/2015/12/15/cibc-ripped-for-handling-of-enron-lawsuit-costs.
So they want to tell you that their service charges shield them from the 2009 financial crisis. Bullshit. They should really say, “Since we’ve been gouging you and strangling small business, we at least don’t go under when we make bonehead decisions in other countries that ultimately Canadian customers to pay for.” Plus, most of the problems they had in 2009 were caused by government guaranteeing sub-prime lending, which allowed banks to sell anything to anybody. If they had followed proper credit-scoring guidelines much if not all of the crisis could have been avoided. The debt-swapping and all that which made the crash really hurt occurred after-the-fact.
Just as with airlines, the Canadian government should level the playing field and allow allow foreign competitors to come in and compete so we can have the benefits of true capitalism instead of the drawbacks we see now in the aviation and banking industry of crony capitalism. Same with TV, too – I shouldn’t have to pay $150/mo for crap Canadian channels with crap Canadian content, but I digress.
Glad we at least agree on the fact that Canadian banks being able to raise their rates just because they’re protected by both government and a monopoly to do so, and that it is bullshit, Arb.
So nice when we agree. :)
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February 25, 2016 at 7:30 am
robert browning
Arb, Your piece is well presented and typical of corporations’ collusion with government in any industry and by any political party ( Kane shows signs of objectivity but is still drinking the kool aid while thinking it’s champagne: capitalism, “true”, free market or “crony”, is driven by profits and growth; It has few winners; It uses deep pockets to take any advantage; It is the nature of the beast. ) Until government represents society as a whole and the average citizen, there is no over sight of corporate greed. Without ethical, diligent control of money influencing policy in government, ” you just can’t kill the beast”.
Your Canadian Competition Bureau reminds me of West Virginia’s Department of Environmental Protection which is, in practice, really just a shield between people and the plundering fossil fuel industry.
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February 25, 2016 at 12:56 pm
VR Kaine
Mr. Browning,
“Kane shows signs of objectivity but is still drinking the kool aid while thinking it’s champagne: capitalism, “true”, free market or “crony”, is driven by profits and growth; It has few winners; It uses deep pockets to take any advantage; It is the nature of the beast. )”
With respect Mr. Browning you leave out a key part of the capitalism equation and what I’m actually referring to – and that is “competition”. What I call for when I say the “benefits of true capitalism” is an arena where the big players are not protected and even promoted by government. Plus, not everyone participating in capitalism has deep pockets, and in fact it’s more the opposite whichever side of the border you have to be on – that most in the market do NOT have deep pockets and cannot take “any advantage”.
Did you just happen to skip over small business when forming your views on capitalism? It would appear so, even though SME’s represent the bulk.
As for West Virginia, I don’t entirely disagree. Capitalism needs to have limits placed on it by government to temper the killer of ALL economic systems: human greed. Rest assured I am far from the “Abolish the EPA” crowd, especially in your State.
http://grist.org/business-technology/in-appalachia-the-coal-industry-is-in-collapse-but-the-mountains-arent-coming-back/
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February 25, 2016 at 6:33 pm
robert browning
VR Kane, Respect returned. I didn’t skip over small businesses: the merchant class, farmers’ markets, etc (btw, all part of a system of democratic socialism- capitalism does not have an exclusive on commerce. I think the real subject here is the big players, the high dollar entry level industries, the nation wide and world wide players in resources and finance where few competitors and much collusion bring abuse and inequality.
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February 25, 2016 at 7:42 pm
The Arbourist
@Vern
Vern, you are messing with my head. This streak of civility and reasonableness is threatening your mantle as my conservative troll/mansplainer. :)
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February 26, 2016 at 12:37 am
bleatmop
Vern – I’m going to have to disagree with much of what you said. You seem to think a freer market is the solution to many of the issue that you present and I would argue the opposite, that we need a more regulated market. One simply has to look to our neighbours to the south to realize that the problems that you are presenting when it comes to oligopolies is the natural realization of capitalism shortly before a total monopoly forms.
And that’s the gist of it. The end result of capitalism unfettered is a monopoly. Even in our regulated market we are now facing oligopolies simply because that is how these corporations are working to maximize control of the market. What is lacking is not more competition, because we know the end result in a totally free market is the complete lack of competition, but instead it is the lack of regulators actually regulating the market.
What needs to happen is for Canada’s regulators to actually regulate. In the face of an oligopoly they need to proceed with criminal investigations and then nail these guys to the wall. Our legislatures need to legislate these loopholes that these corporations are finding out of existence. Is this a forever dance that we will forever have to fight? Yes. But it’s one worth fighting.
In the end, if none of that works then perhaps we need to do the cleansing by fire that Standard Oil underwent.
My other big issue right now is that we have set up corporations that their first and only responsibility is to the shareholder. They are legally bound to find every loophole, every sneaky way around every legislation in order to maximize profits. They must not only offshore jobs, but they must also lobby the government to let them offshore jobs. This is complete bullshit. I think we should be rewriting the mandate that a corporation must hold. To me, while I haven’t parsed this all out, it should read something like a corporation must act in service to better the country and it’s people in which it operates. It’s simply really, we give corporations extraordinary powers to do business therefore they should be obligated to help Canada and Canadians, not be required to actively work against us.
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February 26, 2016 at 8:55 am
VR Kaine
“…because we know the end result in a totally free market is the complete lack of competition, but instead it is the lack of regulators actually regulating the market.”
Hi Bleat, thanks for the comment. More competition can be the answer, just like we saw with Wind Mobile vs. Rogers, Bell, and Telus. We also see local, smaller banks like ATB and Credit Unions competing with some of the bigger banks like TD, and in the case of Credit Unions members do at least get something in the way of dividends to offset service charges.
I think the problem here is that we’re trying to characterize both our problems and the solutions as simply one or the other – that I’m somehow advocating more players in the market and less protection or that you’re advocating more protection and less players as the solution, when in fact I believe we need less government backing of large corporations AND more protection for consumers at the same time. You just heard me bitching about the collusion by big banks which ultimately resulted in LESS competition and the customer being screwed. I was in it – I know. The big banks get to do it because the government lets them – plain and simple – in the same way airlines are still getting to charge a “fuel surcharge” even though gas is 50% of where it was when the surcharge was allowed. Why don’t they get called out on this? Because the airlines are huge employers, that’s why, and they are huge lobbyists.
So in theory I am not against less advocacy or protections for citizens, but I am against government getting involved too much on both sides, which it too often does and in doing so creates a conflict of interest that consumers always lose out on because of it.
Do you honestly think it’s because of Harper watering down competition regulations that we’re being screwed over by big banks? Or as another example, do you honestly think it’s because of a city’s “concern for passengers” that Uber is being blocked in most cities? And yet people will stay so focused on protection issues that they neglect the other side of the equation: that government being in bed with business is the thing which causes all this harm. Address both.
On the issue of corporate stewardship, you said:
“They must not only offshore jobs, but they must also lobby the government to let them offshore jobs. This is complete bullshit.”
Totally agree. BIG corporations do exploit the loopholes but who do you think allows the lobbyists and keeps those loopholes intact? Ultimately you and I are. Want to change the corporation laws? Bitching about companies alone won’t do it, yet that’s all you see from the left.
Instead, you have to address both sides of the equation. You can’t on the one hand tell companies they can’t offshore while on the other hand tell government to impose new tax laws and regulations which are too restrictive (note that I said “too” restrictive). Look at California. Sounds nice, but goes too far. Same with the bank act here “We want to make sure we don’t have a market crash like we did in the U.S.” or the Health Act (“We want to make sure all Canadians have access to quality health care”) but it (always) goes too far.
Look at all the unnecessary red tape California has, and then try building a factory in California today vs. 20 years ago. Look what the egregious union rates did for creating jobs in Nevada, or keeping factories in Washington. I agree that it’s not thousands are now out of work but profits were protected so it’s now OK, but it can’t be wages were “protected” but now thousands are out of work, either. It’s gone too far on both sides and it needs to get back to the middle.
Trump, as much as I dislike him, is nailing this in (the good parts) of his rhetoric. Look at the trade deficits American runs up with other countries. How can that be OK? Yet we continue to allow the offshoring of factories and even entire businesses in the US. And what about here at home? While the left was overoccupied with “dirty oil” and pipelines they let that same energy industry become essentially foreign-owned. Neither side can afford to just look at one side of the equation.
“It’s simply really, we give corporations extraordinary powers to do business therefore they should be obligated to help Canada and Canadians, not be required to actively work against us.”
Sure – sounds great, but the problem is both your side and my side have left the devil in the details. We should be supporting the Canadian solar industry, perhaps? Well Canadian Solar is Chinese, and sure, our energy companies are “Canadian” but effectively they are owned by corporations based in Canada even though the shareholders are from overseas. (BC corporations, for instance, don’t have foreign ownership restrictions like Alberta companies do.)
Want jobs for “Canadians’? Well your side’s demand for job quotas or for lax immigration policies allow for the fast-tracking of unskilled immigrants from 3rd world countries to become citizens here, and then my side hires them because they won’t bitch about – or even report on – lack of overtime being paid or the shit minimum wage that they’re getting.
To combat this, your side then pushes for “fair” minimum-wage laws, but then my side gets your government to buckle because thanks to those new so-called “fair” minimum wage laws, I hire far less which causes your government’s tax base and job creation #s to go down which your side doesn’t like and eventually forces you to vote that person out of office, so in the end my side will get lax immigration laws or some nice ‘off the record’ government favor to compensate for this, and it keeps going round and round.
That, I think, is the ultimate problem – my side lacks the conscience your side thinks we should have in order to not exploit those profiteering loopholes or to peddle our influence on government, and your side lacks the ability to think past your pie-in-the-sky ideology and into the hard math or “on the ground” reality of what it is that you’re actually asking for (and are actually getting in the end). A little less of the one and more of the other might help.
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February 26, 2016 at 7:18 pm
bleatmop
Vern – Thank you for the reply too. Let me be clear about one misconception you seem to have though, I do not have a side. I am a pragmatist at heart and I despise identity politics. I am not a lefty or a righty. I am in favour of evidence based decisions and doing what is best for Canada and Canadians. That includes the poor ones. The fact that evidence seems to have a Left wing flavor in many things does not mean that has always been so. I remember the ends days of the Chretien-Martin Era where every lie was gleefully being told in order for the LPC to hand onto power just as I remember the same thing at the end of Harper’s regime. I have also, on this blog, outright slammed Mulcair and his brood many times, especially with his dipshitted idea of “Dutch Disease” that belied a fundamental misunderstanding of how economics work. So no, I’m not on one side of every issue and you are on the opposite. I think we probably are closer to agreeing on some of the issues just as we may be diametrically opposed in other issues.
As far as what you are saying about economics I think we are saying similar things in different ways. I do think having a market that is protected to Canadian interests is a good thing. Supply management of milk is a good thing in my opinion. Does it mean somewhat higher prices for Canadian consumers, sure. But what is good about it is that we can then keep our milk producers accountable to us. They also have a vested interest in keeping the milk standards high because they will also have to be drinking the same milk. And lets make no mistake here, Canadian milk is of high quality, especially when you compare it to the unregulated market you see in the USA. Not to mention if we start letting China export us milk we are almost guaranteed to start getting lead or radioactive materials in our milk and then we will have zero recourse to fix the issue because our milk producers would have died off.
When you talk about the banks, you see the need for competition. I see the need for our regulators to enforce the competition. Simply adding more banks does nothing to add competition if they simply join in with the other banks in their price fixing schemes. Same goes with Telecoms. And the biggest problem with “adding competition” in both those markets is that there is a prohibitively high start-up cost for a new company that ensures only other large companies can get in, companies that have already learned the benifits of anti-trust and price fixing.
So do I think it’s because of Harper watering down the competition regulations that we are getting screwed by the big banks? No. We were getting screwed by them before Harper because the LPC was as much in bed with them as the CPC was. However, Harper watering down those regulation are why they are becoming more brazen with their corruption. If our regulators had teeth, used those teeth, and those who collude against the public started going to jail then I’m pretty sure the competition that we have in place would begin to work again. No need to move towards a Wild West deregulated market that blows market bubbles up faster than you can say great depression.
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