Transfer-out fees

Background

Banks offer several types of registered products. These include:

• Registered Retirement Savings Plans (RRSPs)
• Registered Retirement Income Funds (RRIFs)
• Tax-Free Savings Accounts (TFSAs)
• First Home Savings Accounts (FHSAs)
• Registered Education Savings Plans (RESPs)
• Registered Disability Savings Plans (RDSPs)
• Locked-In Retirement Accounts (LIRAs)
• Life Income Funds (LIFs)

These products are established under federal legislation and are governed by rules related to eligibility, contribution limits, withdrawals, and applicable tax treatment. Registered products are typically used to hold savings and investments, including cash deposits, guaranteed investment certificates (GICs), mutual funds, and other eligible securities. Banks generally only offer accounts that hold cash deposits or GICs. Other investment accounts holding stocks, bonds, and other securities may be offered through a subsidiary of the bank.

Banks also offer investment products such as GICs and mutual funds for non-registered products (which would be subject to normal taxation rules). Banks may charge transfer-out fees when a consumer requests to move their assets from any of their registered or non-registered products to another financial service provider.

Registered and investment products are also offered by bank subsidiaries which are not part of the bank.

Transfer-out fees are charged by the relinquishing bank for each account moved, regardless of the account’s balance.^{Footnote 1} There are 3 broad categories to define the types of investment account transfers that occur between financial service providers:

In-kind transfers involve situations where securities and assets that are fungible between financial service providers are transferred in whole to the receiving provider, without liquidation. This is only possible in cases where both financial service providers support the products being transferred.

In-cash transfers involve situations where the only asset within the account is cash, or when all of the assets are liquidated into cash and then transferred. In-cash transfers may result in additional costs or tax implications for consumers.

Combination transfers or mixed transfers involve situations where an account being transferred contains both products that can be transferred in-kind and products that need to be liquidated prior to transfer.

Receiving financial service providers may offer to reimburse transfer-out fees, either in part or in full, often during time-limited promotions or subject to conditions such as minimum asset thresholds.

The Canadian Bankers Association has established Guidelines for Transfers of Bank Registered Plans.^{Footnote 2} Under these guidelines, banks commit to process transfers of registered plans within a maximum of 7 business days under normal conditions, and 12 business days during peak periods (i.e., tax-return season).

Fee structure

The Government of Canada announced in Budget 2025 its intention to prohibit certain transfer-out fees to help Canadians switch between financial service providers.

Disclosure

Banks are required to disclose all applicable fees in account agreements. Transfer-out fees are disclosed in account agreements and fee schedules. These disclosure requirements are intended to ensure that consumers are informed of potential charges and do not incur fees that were not disclosed.

Key finding and implications

Key finding 16: Transfer‑out fees can discourage account switching and weaken competitive pressure

Transfer‑out fees can act as a barrier to switching, even when consumers identify lower‑cost alternatives or products that better align with their needs. While receiving financial service providers may offer reimbursement of transfer-out fees, these offers are often conditional, time‑limited, or promotional, which can add complexity and uncertainty to switching decisions.

Transfer-out fees can act as a barrier to switching providers for consumers who hold multiple accounts. Because fees are typically charged per account, the cumulative cost of transferring several accounts can be substantial and, in some cases, prohibitive.

Furthermore, transfer-out fees can disproportionately affect consumers with lower account balances. These consumers may not be eligible for reimbursement from the receiving financial service provider if their balance does not meet the minimum amount to qualify. The flat fee represents a larger share of their savings, and they may need more time to recover the cost, which could offset the potential benefits of switching, such as lower fees or better account features.