Canadian banks continue to nudge customers towards premium credit cards with higher annual fees, according to new research published by the nation’s financial consumer watchdog.

The findings are based on the results of more than 700 “mystery shopping” exercises at branches of Canada’s six major banks. The Financial Consumer Agency of Canada (FCAC) conducted the study as a followup to a 2018 review of sales practices, which documented that banks’ focus on sales objectives were turning branches into “stores” and “increasing the risk of banks placing sales ahead of customers’ interests.”

The research was conducted in the final months of 2019 at branches in small and large communities across the country, but the findings were only published in late May 2022. The research found continued “concerning sales experiences” which included inappropriate product recommendations, unclear or misleading information, sales pressure and poorly trained employees.

FCAC cited the emphasis on premium credit card sales as an example of the inappropriate product recommendations. Premium cards require a personal income of $60,000 or more or a household income of $100,000. The required minimum income and relatively higher annual fees mean they are not appropriate for all consumers. They may provide ‘benefits’ such as travel rewards that are not suitable, and merchants pay higher fees to accept premium card payments.

Data showed that 80% of shoppers offered premium credit cards were not asked about their income at any point in the conversation, and that in more than a third (35%), shoppers would not have met the qualifications. Only 16% of bank employees who recommended a premium card asked about the customer’s spending.

The report also highlighted consumer acceptance (or perhaps acquiescence) of these sales-driven practices. A clear majority (74%) of shoppers gave an overall grade of “positive” to their overall experience. This included 32% of chequing account shoppers and 45% of credit card shoppers who reported that employees provided an inappropriate product recommendation.

The research also found that bank responses to shoppers who self-identified as visible minorities or indigenous persons also differed from the general population. In particular, they were more frequently provided with inappropriate production recommendations, unclear information and more frequently offered optional products such as overdraft protection and balance protection insurance.