Standing Senate Committee on National Finance (NFFN) (May 28, 2024)
ISSUE: Caps on bank fees (Budget 2024)

Key points

• In Budget 2024 the government announces its intent to cap the NSF fees charged by banks to $10 per instance, as well as:
  • requiring b    anks to alert consumers that they are about to be charged an NSF fee, and providing a grace period to deposit additional funds to avoid the fee;
  • prohibiting multiple NSF fees when the same transaction reoccurs;
  • restricting the number of NSF fees that may be charged to one in every 72-hour period;
  • prohibiting NSF fees for small overdrawn amounts under $10.
• The government will release draft NSF fees regulations in the coming months.
• FCAC welcomes this move to better protect financial consumers and is working with the Department of Finance to better understand how this aligns with the provisions of the Financial Consumer Protection Framework.

Additional messages

• FCAC monitors and conducts research on trends and emerging issues that may have an impact on consumers of financial products and services. However, FCAC does not formally track the fees that financial institutions charge consumers.
• Research findings: During the COVID pandemic, FCAC conducted a monthly survey on Canadians’ Use of Bank Products and Services, which showed that a third of Canadians (31%) incurred bank fees related to COVID-19, including overdraft fees, late payment fees, and other fees. The survey was conducted from July 2020 to April 2021.

Q&As

1. Of the complaints that FCAC tracks/receives, how many are related to bank fees?

Banks’ disclosure obligations

• As part of its mandate, FCAC oversees the compliance of federally regulated financial institutions with regulations that relate to the disclosure of charges and fees.    
• This includes disclosure obligations set out in the Bank Act and associated Financial Consumer Protection Framework Regulations.
• These disclosure obligations require banks to disclose in writing to consumers all charges that apply to personal deposit accounts, including those relating to overdraft charges.
• These regulations help to ensure consumers receive accurate information to help them make informed financial decisions.
• The application of NSF fees, for example, can vary depending on the terms and conditions associated with each product.
• Consumers should also read the terms and conditions of their financial products and services and carefully reviewing any charges or fees that apply.
• While FCAC oversees the disclosure of fees, we do notsupervise specific pricing of fees and charges imposed by banks.

Complaints

• In 2022–2023, FCAC received over 6,000 complaints directly from consumers through its Consumer Services Centre.
• Of those, only a small percentage (201) were related to consumer protection measures that FCAC oversees.
• Complaints about fees are not among the top 5 categories of complaints received by the Agency.