As critical intermediaries, financial institutions play a key role in society as they allow businesses and individuals to access essential economic opportunities through a broad range of financial products and services, including facilitating transactions, providing credit and loan services, savings accounts, and investment management. Financial institutions have therefore a responsibility to ensure their business operations, practices, policies, products and services do not cause adverse impacts on non-white stakeholders and communities of colour.
A report from the Financial Consumer Agency of Canada studying frontline practices of Canadian banks, including National Bank, suggests that racialized or Indigenous bank customers are subjected to discriminatory practices.1 Compared to other customers, visible minorities and Indigenous customers were more likely recommended products that were not appropriate for their needs, were not presented information in a clear and simple manner and were offered optional products, such as overdraft protection and balance protection insurance.
A December 2020 academic review commissioned by the British Columbia Securities Commission estimates unbanked Canadians (no official relationship with a bank) ranged from 3%-6%, and underbanked Canadians (who rely on fringe financial institutions like payday lenders) ranged from 15%- 28%.2 The review found under/unbanking has a disproportionate effect on Indigenous peoples, and that “financial access has been cited by researchers as an endemic problem in ‘low-income communities of color.”
Canadian financial institutions, including National Bank, have a responsibility to address financial discrimination and provide greater access to credit and other financial services to ensure all communities become economically resilient.
In recent years, National Bank has been subject to negative media coverage, including allegations of racial discrimination.3 Such controversies may be indicative of systemic racial equity issues in the Company’s operations.
National Bank’s Inclusion and Diversity commitments are insufficient to identify or address potential/existing racial equity issues stemming from practices, policies, products and services.4 National Bank’s three-year action plan for 2020-2023 focuses primarily on workplace diversity, equity, and inclusion issues—and National Bank has no meaningfully plans to identify, address, or mitigate racial equity in its practices, policies, products and services, including but not limited to the racial wealth gap, unfair discrimination stemming from its use of AI, or racial profiling.
Racial equity issues present meaningful legal, financial, regulatory, and reputational business risks. A racial equity audit will help National Bank identify, prioritize, remedy, and avoid adverse impacts on non-white stakeholders and communities of colour beyond the workplace. We urge National Bank to assess its behaviour through a racial equity lens in order to obtain a complete picture of how it contributes to, and could help dismantle, systemic racism.
1 https://www.canada.ca/en/financial-consumer-agency/programs/research/mystery-shopping-domestic-retail- banks.html2 https://bcbasicincomepanel.ca/wp- content/uploads/2021/01/Financial_Inclusion_in_British_Columbia_Evaluating_the_Role_of_Fintech.pdf3 https://globalnews.ca/news/4275234/racial-discrimination-human-rights-complaint-national-bank/4 https://www.nbc.ca/content/dam/bnc/a-propos-de-nous/responsabilite-sociale/pdf/inclusion-and-diversity- booklet-2021.pdf