Transparency

Background

Transparency is a necessary feature of well-functioning markets. In the context of banking services, transparency refers to the clear and timely communication of information that is accessible in a manner that enables informed decision-making. Transparency serves several purposes:

• Reducing information gaps: Clear and timely information helps consumers understand the costs, features, and conditions associated with financial products and services.
• Supporting consumer choice: When fees and terms and conditions are easy to find and understand, consumers are better positioned to select products and services and use them in a manner that best aligns with their needs.
• Enabling competition: Access to comparable information allows consumers to assess alternatives across financial service providers, strengthening competitive pressures on pricing, product and service design, and service quality.

Jurisdictions around the world, including Canada, have established regulatory frameworks to support transparency through disclosure requirements. Global standard-setting bodies such as the G20/OECD and the World Bank have articulated principles and good practices that emphasize clear, comparable, and timely disclosure as a foundation for informed consumer decision-making (see Annex  2: UK regulatory history and Annex 6: G20/OECD High-Level Principles on Financial Consumer Protection and World Bank’s Good Practices for Financial Consumer Protection).

These requirements set expectations for the content, manner and timing of information provided to consumers.

Regulatory framework

In Canada, legislative requirements set expectations for the content, manner, and timing of disclosure information provided to bank consumers.

The Bank Act and its regulations set out disclosure requirements around plain language communication, standardized precontract disclosures, and ongoing disclosure throughout the life of a financial product or service. These include both general requirements for banks in their communications with their customers and the public, and requirements that apply to specific products and services.

Key requirements relate to the content, manner, and timing of disclosures, and include the following:

Content of disclosure

The Bank Act includes general requirements regarding what should be disclosed, including:

• the features of the product or service
• a list of all charges and penalties applicable to a product or service
• a person’s rights and obligations with respect to a product or service

Manner of disclosure

When disclosure is required, the legislation sets out how it should be disclosed. It includes requirements on:

• using language that is clear, simple, and not misleading
• providing information in writing, in a format that allows consumers to retain it
• displaying the information prominently in branches and on banks’ websites

Timing of disclosure

The legislation also sets out requirements to support consumers in making informed decisions throughout the lifecycle of a product or service, including requiring banks to:

• send electronic alerts when a consumer’s personal deposit balance falls below $100 (by default) or below a threshold set by the consumer
• notify consumers of any increase or new charges applicable to a personal deposit account at least 30 days before the effective date of the change

Effectiveness

Banks hold information, expertise, and control of product design and pricing over individual consumers. This reflects an inherent information imbalance that disclosure requirements alone cannot fully mitigate.

Research indicates that while disclosure requirements are an important component of transparency, consumers face multiple challenges to fully understand, compare and anticipate the costs of financial products (see Annex 7: Effectiveness of disclosure and limitations). This is particularly relevant because bank fees are complex, cumulative and contingent on usage.

The selection of a deposit account illustrates some of these challenges.

Selecting an appropriate account requires consumers to consider not only fees that are most prominently advertised or disclosed upfront, but also multiple other pricing elements, such as interest rates, transaction limits, overdraft charges, e-transfer fees, ATM access and digital banking features, and eligibility for fee waivers or discounts.

Comparisons may also involve additional variables, including bundled product features, time‑limited promotions, conditional fee waivers, and non-price attributes such as branch access or digital banking features.

The number and timing of transactions directly affect the total cost of the use of the account. These costs vary based on individual usage patterns and the mix of services used.

As a result, disclosure information about fees may not, on its own, provide a clear basis for assessing which account aligns most closely with a consumer’s expected usage, particularly when future usage patterns and financial circumstances evolve over time.

Recent initiatives to improve transparency

Recent policy initiatives in other jurisdictions and sectors have sought to address limitations in traditional disclosure frameworks, particularly when transaction‑level information has a material impact on the total cost of financial products and services over time.

In the European Union, the European Commission observed that consumers often received fee information at the transaction or point-of-sale level, which did not provide a clear picture of the total cost incurred over time, or support comparisons based on actual usage. As a result, consumers faced challenges in assessing value for money.

In response, the European Commission introduced a standardized annual statement of fees (see Annex 4: Overview of the European Commission’s Directive 2014/92/EU: Annual Statement of Fees), requiring banks and other payment service providers to provide consumers, free of charge, with an annual summary of all fees paid, including totals by service category. This measure provides consumers with a consolidated view of costs over the life of a product.

Similar challenges with existing disclosure requirements have been identified in Canada’s investment sector (see Annex 8: Recent disclosure reforms to the investment market in Canada). The Canadian Securities Administrators (CSA) found that existing disclosures did not always provide investors with a clear understanding of the fees and compensation associated with their investments.

The CSA addressed these issues through phased reforms:

• Phase 1 introduced requirements to report fees and compensation annually in dollar amounts, to provide clearer disclosure about their relationship with investors.
• Phase 2 expands disclosure to include ongoing fund expenses borne indirectly by investors, with firms required to report these costs in dollar terms alongside standardized cost metrics.

These measures represent an initial shift from point-in-time disclosure to a more complete, usage-based view of the cost of financial services.

Key findings and implications

Key finding 20: Point-in-time information does not always support price transparency

Banks are required to disclose all applicable fees in account agreements. For deposit accounts, they must also provide periodic statements and notify customers of changes to key terms, fees, or conditions. This approach does not provide a clear picture of the total cost incurred over time, based on individual usage patterns. This can limit consumers’ ability to compare products or assess how costs evolve over time.

Key finding 21: Usage-based, personalized disclosure could improve transparency

Some banks provide customers with access to tools and information to help them monitor their accounts, track transactions and fees, and manage their finances. Building on these practices, disclosure approaches that reflect actual usage could provide a more complete and personalized view of the fees consumers incur. Usage-based information could also support comparisons across products and help consumers assess how well their account features align with their needs.

Transparency could be further enhanced with a statement from banks that would support an assessment of product fit, including through like‑for‑like comparisons and, where available, information on alternative account options offered by the same bank.

Existing disclosure requirements (e.g., low balance alerts) could be adapted to provide timely notifications when consumers are nearing their transaction limits or incurring excess transaction fees. 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.

Key finding 22: Consumer-driven banking has the potential to improve transparency, which can support informed decision‑making and facilitate switching by making it easier to compare alternatives

From a transparency perspective, the implementation of consumer-driven banking in Canada has the potential to support a better understanding of how banking costs accrue over time (see the “Consumer-driven banking box” in the “Market dynamics” chapter of this report).

By enabling consumers to consent to sharing their financial data, new service providers could emerge to offer comparison tools and provide consumers with tailored insights—for example, the total fees paid over a given period, including account maintenance fees, overdraft charges, and transaction costs. This information would complement existing point-in-time disclosure requirements by enabling more tailored and usage‑based information to be generated and shared.

Enhanced access to data could also support comparisons across financial service providers. By using information that reflects their actual usage patterns, consumers would be better able to compare products and providers, which could help reduce switching frictions.