RBC was justified in disclosing personal information about a former financial advisor, without her knowledge or consent, to further an investigation by her new employer, the Federal Court has ruled.
The advisor resigned from her position with the RBC Life Insurance Company in September 2017 and joined Sun Life Financial. Sun Life terminated her advisor’s agreement on Dec. 26, 2017.
The advisor said this termination was a result of RBC’s unauthorized disclosure of personal banking information to Sun Life. She sought a declaration that RBC’s actions were a breach of the federal Personal Information Privacy and Electronic Documents Act (PIPEDA), along with damages and costs.
What happened?
Throughout her employment with both RBC and Sun Life, the advisor maintained regular banking and investment accounts with RBC.
On July 28, 2017, she deposited a cheque for $18,850 into her personal RBC account. The cheque came from Genesis Project Management Consulting Inc., a company that she was the sole administrator and director for, and it was drawn on a BMO account.
Because the advisor was an RBC employee, no hold was placed on the cheque. It failed to clear. BMO told RBC the account the advisor withdrew the money from was closed in 2009.
By Sept. 13, 2017, her personal account at RBC was overdrawn by $14,641. Dora Simones-Pereira, manager of investigations with RBC’s Corporate Investigation Services, started an investigation into the circumstances surrounding the deposit of the cheque from Genesis.
The advisor had, within days of its deposit, made a number of withdrawals including:
- branch to branch transfer of $10,086
- etransfer of $2,500 for a Transat Holiday payment
- debit card purchases from retail outlets
- payments to Capital One Mastercard, Pay Today and Cash for You
- an unsuccessful attempt to withdraw $2,847.66 from the account with a Visa debit card.
RBC tried to contact the advisor about this activity, but she did not respond. Simoes-Pereira believed her conduct could be fraudulent and contrary to the criminal code. She reported the matter to Peel Regional Police on behalf of RBC.
Investigation and contact with Sun Life
On Sept. 15, Simoes-Pereira contacted RBC Insurance and informed it she was investigating a matter that made the advisor ineligible to work at RBC or sell RBC Life Insurance policies.
No details of her banking transactions were revealed at that time.
On Sept. 19, RBC Insurance reached out to a compliance manager of third party distribution at Sun Life. Sun Life was told that there was an investigation involving the advisor’s employment and her rehire status at RBC had been changed to “no/not eligible.” This meant RBC Life would not rehire the advisor, nor would it approve any applications for her to sell its insurance policies, including in her new role at Sun Life.
On Nov. 10, RBC discovered the advisor was soliciting a client from RBC. On Nov. 13, it sent an email to Sun Life asking if it was aware of this behaviour. Sun Life began looking into the matter and placed the advisor on its “restricted list.”
Cynthia Henry, a senior investigator with Sun Life, then reached out to Simoes-Pereira. Henry asked if RBC could share any information regarding its investigation. Simoes-Pereira said the investigation ” had to do with a personal banking matter” and may have also said it “involved a cheque.”
Henry generally confirmed that account, and said RBC did not provide her with dates, amounts or any financial information pertaining to her personal banking history. To her knowledge, nobody at Sun Life received specific information about the details of the advisor’s personal banking.
On Nov. 30, RBC reached out to Sun Life to state that the advisor had improperly taken “RBC property along with the personal information of clients and spreadsheets containing approximately 80,000 names and contact information, including leads.” RBC also told Sun Life the advisor had been sent a cease-and-desist letter by courier on Nov. 28.
On Dec. 7, RBC told Sun Life that despite various attempts, it had been unable to contact the advisor.
Meeting with Sun Life
That same day, the advisor was summoned to a meeting with Sun Life. The advisor and Sun Life had different recollections about that meeting.
The advisor says she was told by Sun Life that RBC had disclosed the fact she was being investigated for fraud, the details of her personal banking history and its intention to pursue criminal charges against her.
Sun Life’s Henry, though, said the advisor voluntarily disclosed the details of RBC’s investigation.
“I asked her about the personal banking matter that RBC was investigating. (She) initially denied knowing that she was under investigation. However, she then said that she had received a letter from RBC about an amount owing on her personal bank account. She described to me an issue with a cheque that had been returned after the funds had been spent by her, including the date and the approximate amount of the cheque,” said Henry.
Not long after the interview, Sun Life informed the advisor it was terminating her advisor agreement effective Dec. 26, 2017.
The advisor said she was told the termination was a result of the allegations raised by RBC, and the “personal financial and banking information they received from RBC regarding my affairs.”
Sun Life’s letter explaining decision to terminate
On July 10, 2019, Sun Life sent a letter to the advisor’s lawyer summarizing its reasons for termination. They were:
- failure to appreciate the gravity of her seemingly fraudulent actions
- her possible possession of unauthorized client personal information
- her overall lack of governability.
The letter went on to state:
When asked about the RBC investigation, (she) denied any knowledge that she was under investigation. However, later in the discussion, she admitted she had received a letter from RBC about an amount owing on her personal account and a cease and desist letter asking for the return of RBC property. She indicated that she had not read the letters and that some remained unopened.
With respect to the personal banking matter, (she) stated that in July she had deposited a cheque for an amount between $15,000 and $19,000 (she indicated she didn’t know the exact amount). She claimed the payment was for bookkeeping and other services she had completed for a friend’s business.
[…]
(She) went on to state that after she spent the funds, the payment was returned from the drawer’s bank. She indicated she did not know why the item was returned (if it was NSF or stopped or account closed, etc.) because she never opened any of the letters from RBC. She shared that the friend closed his business after making her payment. (She) stated her friend settled the missed payment by issuing another cheque that she deposited at another bank. In effect, she admitted that she had been paid twice and then disclosed that she did not pay the funds back to RBC. She claimed she offered to repay at $400 a month but RBC declined the offer. She chose not to take any further action because she did not have the means to repay the debt because she could not get a loan due to her poor credit rating.
With respect to the list of client names, (she) indicated that while she was at RBC insurance, she had purchased name lists of new business registrants from the City of Brampton and the City of Toronto for prospecting … (she) indicated that when she told RBC that she was leaving, she asked if she could take the lists, and was told that they were hers …
(She) claimed that she was unaware of any contractual obligation that prevented her from contacting her former clients.
Sun Life asked (her) to provide receipts confirming the purchase of the name lists and personal information from the City of Toronto and the City of Brampton. Sun Life did not receive any proof of purchased personal information.
Sun Life was not comfortable with the information provided by (her). It was concerning that she did not seem to appreciate that her depiction of the events surrounding the debt owing to RBC from her personal bank account could be viewed as fraudulent on her part. Sun Life was also concerned that she was possibly in possession of individual’s personal information the disclosure of which to her was potentially unauthorized. Sun Life was overall concerned about her governability from a compliance perspective and therefore her Advisor Agreement was terminated on two weeks’ notice in accordance with the termination provision.
Privacy complaint and criminal conviction
The advisor filed a privacy complaint with the Office of the Privacy Commissioner (OPC). on Aug. 6, 2019. On Feb. 26, 2021, the OPC said it had discontinued its investigation because RBC was entitled to share the information because the purpose of the disclosure was to investigate the breach of an agreement.
On July 14, 2021, the advisor was convicted of fraud over $5,000 by the Ontario Superior Court of Justice and given a conditional sentence of six months, a probation order of one year and a restitution order in favour of RBC for $14,641. She was also prohibited from working in a financial institution for a period of five years.
The Federal Court of Canada’s ruling
The Federal Court concluded that RBC disclosed her personal information to Sun Life without her knowledge or consent in furtherance of Sun Life’s investigation of her possible breach of an advisor agreement.
It was therefore authorized by s. 7(3)(d.1) of PIPEDA, it ruled.
“It should be noted that (she) does not challenge the much more extensive disclosure of her personal information to Sun Life by RBC Life and RBC Insurance.,” wrote Justice Simon Fothergill. “This is what prompted the investigation by Sun Life that ultimately led to her dismissal.”
It dismissed her application and awarded RBC costs of $2,500.
For more information. see Barrett v. Royal Bank of Canada, 2022 FC 1534 (CanLII).
