Federal watchdog says bank fees lack transparency, can add up quickly

The Financial Consumer Agency of Canada says many banking fees are hard for consumers to see or anticipate, and the costs can add up quickly over time. The federal watchdog released a report Friday reviewing how Canadian bank fees are structured and disclosed. It found a general lack of transparency in how banks charge customers, with complex structures leaving little wiggle room. "Canadians should be able to clearly understand what they are paying for banking services," said Shereen Benzvy Miller, commissioner of the FCAC.

The report examined common fees for deposit accounts and services like account maintenance, ATM use, non-sufficient funds and overdraft protection. It says many fees can be combined depending on the transaction, and consumers may not fully understand how costs will add up before completing them. "When fees make the full cost harder to see, it affects both affordability and competition," Benzvy Miller said. The agency suggests banks offer personalized, usage-based information to customers.

Specific issues highlighted include fees that accumulate when a customer exceeds account limits, multiple fees on a single ATM withdrawal, and fees on prepaid payments that reduce the available balance. The report notes consumers may find it difficult to monitor transaction usage throughout a billing cycle and anticipate excess fees. "Banks are not required to notify consumers when they are approaching or have exceeded their transaction limits," the report says. It suggests requiring banks to provide notifications when customers are nearing limits.

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"Repeated reminders would increase the salience of these costs and may prompt consumers to reassess their account usage or consider alternative options that better align with their needs," the report adds. Earlier this year, the federal government capped the fee banks can charge for non-sufficient funds at $10. Deciding which bank to use can also be a challenge, the report says, noting many banks make comparing products and services too complex. Some banks have fees or processes that may discourage consumers from switching accounts, including transfer-out fees to move money. Barriers also make it difficult to compare products across institutions, including limited visibility into total banking costs over time. "More transparency makes it easier for consumers to compare options and save money, and financial institutions have stronger incentives to compete for their business," Benzvy Miller said.

BNN Bloomberg reported that FCAC commissioner Shereen Benzvy Miller said in an interview that banks are well established and solid. "We would really like them to play an active role in reducing fees and ensuring that consumers are well served by the banking community," she said. The review outlined ways banking fees can be difficult to see, such as when multiple fees apply to a single transaction or when foreign exchange fees are embedded. "We would benefit greatly from better consumer information, not just generally about fees and not just at the beginning of your relationship with that product or service or institution, but throughout the life of your usage and on a regular basis," Benzvy Miller said. The review says certain customers may be disproportionately affected by cumulative fees, particularly those with lower incomes or greater reliance on daily banking.

The report was conducted on request by the federal government in Budget 2025. Ottawa said in that budget it would work with banks to bring more transparency to fees for sending money abroad. Anthony Ostler, chief executive of the Canadian Bankers Association, said Canadians trust banks to provide financial services and advice. "When money is put in a bank in Canada, deposits are insured and the bank is overseen by regulators who ensure Canadians are treated fairly and their money is secure," Ostler said in a statement. The FCAC report comes amid an ongoing lawsuit and pending settlement alleging CIBC unfairly charged non-sufficient funds fees multiple times for the same transaction. A similar settlement involved TD Bank in 2024.

With files from The Canadian Press, Global News and BNN Bloomberg