Summary of proceeding #1

On April 11, 2023, National Bank of Canada (NBC or Bank) paid the penalty proposed in the Notice of Violation dated March 9, 2023. As a result, the Bank is deemed to have committed two violations of the Cost of Borrowing (Banks) Regulations, as they read at the time the violations occurred (Regulations). The Bank committed the violations between September 1, 2001 and November 18, 2018. During this period, 920,529 personal loans were affected, representing a total financial impact of $772,748.70. Affected clients were reimbursed and received an additional compensation of 10% and a contribution to charity was made where customers could not be identified. The total amount of the penalty proposed by staff of the Supervision and Enforcement Branch of the Financial Consumer Agency of Canada (FCAC Staff) and paid by the Bank is $600,000.

The two violations relate to fixed and variable rate personal loans and both were caused by the failure of NBC’s systems to process interest payments on non-workdays which resulted in the charges over the course of the loan to not match the charges in the initial disclosure statements on the cost of borrowing. In proposing the penalty amount, FCAC Staff alleged the Bank to have been negligent in failing to ensure accurate reporting, including a failure to implement controls and effective compliance monitoring measures to prevent breaches of its legislative and regulatory obligations. In addition, FCAC Staff alleged significant weaknesses in the Bank's internal investigation process, the management of compliance files and breaches, and the thoroughness and accuracy of the information the Bank provided to the FCAC. The problem persisted for nearly 17 years, from 2001 to 2018, despite being identified in 2010 and having put corrective measures in place at that time.