The Bank of Montreal was fined $4 million after “erroneous charges” for monthly plan fees affected more than 100,000 customers, the Financial Consumer Agency of Canada says.
Citing violations of consumer provisions in the Bank Act, the Financial Consumer Agency of Canada (FCAC) said in a Feb. 2 news release that the bank failed to properly disclose details about monthly plan fees that “should have been waived or discounted for certain personal deposit accounts.”
BMO did not disclose all charges applicable to certain personal deposit accounts from 2010 to 2024, and also failed to “clearly disclose” information about when monthly plan fees would begin between 2022 and 2024, FCAC said.The agency noted that a total of 101,091 customers were financially impacted by the violations. BMO has issued more than $3 million in refunds and redressed interest to impacted customers. The bank also donated more than $600,000 to charity for the amount that it could not refund to accounts.
The violations were related to BMO’s discounted banking programs in 2010, which aimed to offer “special benefits” to newcomers to Canada, medical and dental students, indigenous banking clients, and participants of BMO’s home financing promotion.
BMO’s customers from these groups who applied in-branch for the discounted banking programs received a written confirmation with an incorrect start date for the fee waiver, the summary said. The customers were then charged monthly plan fees that “should have been waived or discounted.”
“The root cause of the violations relates to inconsistencies in employee adherence with procedures for applying the correct start date for the fee waivers and BMO’s monitoring measures and controls failing to detect this issue,” FCAC said in the summary.
“The total penalty amount of $4M reflects, among other criteria, the degree of BMO’s negligence in failing to implement adequate controls and effective monitoring measures to prevent and detect the error, despite receiving over 500 customer complaints about the monthly plan fees charged,” the agency added.
The Epoch Times reached out to BMO for comment but didn’t hear back before publication time.
FCAC said in the news release that accurate disclosure is “a foundational element” of the consumer protection provisions in the Bank Act, adding that consumers must be provided information that is “accurate and, at a minimum, meets legal requirements.”
The agency ensures federally regulated entities, such as banks, comply with their legislative obligations, codes of conduct, and public commitments to “protect financial consumers.” It publishes a summary of proceeding once a regulated entity pays a penalty, and is therefore deemed to have committed a violation.
The agency said the violation related to an error in the bank’s calculation of the principal and interest payment amounts after certain customers requested a change to their loan payment frequency. The issue impacted 160,658 loan accounts between Sept. 1, 2001, to Feb. 22, 2024.
FCAC said the penalty reflected the bank’s “negligence in failing to implement controls and effective compliance monitoring measures to prevent and detect the error” for more than 20 years.
