Decision #61710-680Q203

From: Financial Consumer Agency of Canada

File: 61710-680Q203

Compliance issue

Cost of Borrowing — Failure to disclose the nature and amount of all non-interest charges in the initial disclosure statement
Bank Act, s. 452(2)(c)
Cost of Borrowing (Banks) Regulations, s. 12(1)

A bank failed to disclose the foreign conversion fee charged to consumers who used their credit cards for transactions in a foreign currency.

Paragraph 452(2)(c) of the Bank Act and subsection 12 (1) of the Cost of Borrowing (Banks) Regulations stipulate that a bank that enters into a credit agreement for a credit card must provide the borrower with an initial disclosure statement that includes the nature and amounts of any non-interest charges.

Compliance measure(s) taken

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

Compliance considerations

Exchange rates consist of a corporate reference rateFootnote 2  and a foreign conversion fee. The nature and the amount of any non-interest charge, such as a foreign conversion fee, must be disclosed in the initial disclosure statement as per the Cost of Borrowing (Banks) Regulations. The violation was determined to be systemic. There were no previous violations of these Regulations noted against the bank.

Corrective measures taken by financial institution

  • Modified all applications for card membership to include the foreign conversion fee with the disclosure of other non-interest charges.
  • Altered initial disclosure statements to show the foreign conversion fee as a percentage.
  • Revised the card holder agreement to describe how the foreign conversion fee is applied to foreign charges.
  • Included a special message on monthly billing statements advising all existing active and inactive card holders of the foreign conversion fee.
  • Provided training to all existing representatives on the foreign conversion fee adjustment.
  • Updated training materials to include foreign conversion fee training for all new call centre representatives.
  • Added a Questions & Answers section to the internal Intranet site to assist staff when handling inquiries about the foreign conversion fee.


The action plan carried out by the bank makes certain that consumers are aware of the additional fees added to foreign charges on their credit cards. Ensuring that consumers are provided with information about the nature and amount of any non-interest charges for credit products puts them in a better position to choose the financial institution and financial product or service that best suits their needs and banking habits. Facilitating comparison-shopping encourages healthy competition between financial institutions and promotes growth and innovation in the marketplace.

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