If my password is "aBc123De" I can log in by entering the password "ABC123DEFOOBARBAZ".
If my password is "aBc123De" I can log in by entering the password "ABC123DEFOOBARBAZ".
I'm using TD Canada, not sure if they've maybe updated since you tried?
edit: after updating my password it's now case sensitive, and allows special chars. As the sibling comment suggests, it looks like they have two different authentication routes and updating your password moves you onto the newer one.
I just tried with all lower case letters and it rejected it. Prior to changing my password however, I experienced everything you described. They must have 2 systems and setting a new password must switch you to the new system. Can't fathom why they don't just mandate everyone changing their passwords.
[1]: http://stackoverflow.com/questions/2179649/are-passwords-on-...