Decision — File #17115-443Q203

From: Financial Consumer Agency of Canada

Compliance issue

  • Cashing federal government cheques free of charge - Bank Act, s. 458(4)(a)
  • A bank charged a consumer $1.00 to cash a federal government cheque

Paragraph 458(4)(a) of the Bank Act provides that a bank shall not make a charge for cashing a cheque or other instrument drawn on the Receiver General or on the Receiver General's account in the Bank of Canada, in any bank or other deposit-taking Canadian financial institution incorporated by or under an Act of Parliament or in any authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2), in respect of its business in Canada.

Compliance measure(s) taken

  • Letter of ReprimandFootnote 1  noting one violation against the bank.

Compliance considerations

The violation was self-reported by the bank. The bank quickly corrected the situation and reimbursed the client. There were no previous violations of this particular provision noted against the bank.

Corrective measures taken by financial institution

  • Head office contacted the manager of the branch, who in turn informed the staff of the branch of this error
  • Reimbursed the customer
  • Sent out notices to employees reminding them that charging a fee to cash a government cheque is prohibited
  • Revised the bank's existing written policy to ensure that the section about cashing federal government cheques was clearer and easy to understand
  • Informed the Financial Consumer Agency of Canada (FCAC) that the software used by tellers for processing customer transactions is programmed in such a way as to automatically waive charges for government cheques
  • Added a question concerning cashing federal government cheques to the bank's internal verification process

Outcomes

Consumers have a right to cash their federal government cheques without being chargedFootnote 2 . This ensures that all consumers, no matter what their financial situation or banking habits, are able to access their Government of Canada funds. In this case, the customer was reimbursed. Making certain that consumers are able to cash federal government cheques is an important part of an overall effort to provide financial consumers in Canada access to basic banking services.

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