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BMO, RBC customers brace for wave of new banking fees
 May 4 2015     Posted by

BMO, RBC customers brace for wave of new
banking fees
By Jamie Sturgeon Consumer Affairs Reporter Global News
Some customers of Canada’s big banks are beginning to notice the wave of higher monthly fees
that’s about to hit them.
Jeff St. Pierre, a London, Ont.-based psychologist and long-time Bank of Montreal customer
says he feels betrayed by BMO after the bank notified him last month the terms of his account
were being changed, and those changes would amount to potentially hundreds of dollars in new
St. Pierre was sent a letter on March 16 telling him his no-fee Pay-As-You-Go plan was being
eliminated on May 1, and that the bank was automatically shifting his account to its “Practical”
plan, a no-frills account that will carry a new $4 charge each month starting May 1.
The plan also dramatically restricts the number of free transactions before St. Pierre is charged
for subsequent times he moves money in or out of the account each month—to pay for bills for
example or make a mortgage payment.
Pay to pay
The practice is known as “pay to pay” because customers literally pay a fee in order to make a
Last September, the federal Conservatives banned pay-to-pay fees for big wireless and Internet
providers who wanted to charge customers as much as $6 for sending them their bill by
mail. Banks should have been included in the ban, according to Andrew Cash, the federal NDP
critic for consumer protections.
“They didn’t include banks in their ban. And now we’re seeing pay-to-pay on steroids from
banks,” Cash, the MP for Davenport in Toronto, said by phone on Thursday.
BMO is capping its Practical plan at 12 transactions a month. After an account holder exceeds
that, BMO will charge them $1.25 (another hike of $0.25 on May 1) for any subsequent
St. Pierre’s old Pay-As-You-Go plan had unlimited transactions, something he can only get now
by moving to a more expensive bank plan, or by carrying a $1,500 balance at all times.
By his count, St. Pierre makes 45 transactions a month, a number that will amount to $41.25 in
fees each month ($495 annually). He’s switched to a more expensive plan, he says, that allows
for unlimited transactions.
Not alone
BMO isn’t alone among the banks in introducing new pay-to-pay fees while lifting costs on
customers in others ways (like the $1 across-the-board increase on common “Everyday” plans
that kicks in tomorrow as well).
On June 1, customers at RBC face new pay-to-pay fees for routine banking duties, too. Some
RBC account holders will be charged $5 for making a mortgage payment, or $2 for making a
payment on another loan as part of a series of changes to account policies.
TD Bank introduced revised rates on April 1, while CIBC and Scotiabank – the remaining two of
the country’s “Big Five” banks – were the first to change account terms earlier in the year.
The moves will help pad the hundreds of millions in annual revenue the five banks generate from
such charges, experts say, but lifting day-to-day banking costs for customers in the process.
“Now you’re paying a fee to pay your mortgage, you’re paying a fee to pay your student loan.
You’re paying a fee to pay your credit card bill, you’re even paying fee on a kids savings
account when you put money into it,” Cash said.
Get proactive
Though not happy about the new fees, the charges aren’t the main rub, for St. Pierre. It’s the
manner and message in which BMO delivered the changes – telling the customer of 20 years that
the Practical plan would “better serve” his banking needs.
After heading to his branch to air his grievances, he’s paying $15 a month for unlimited
transactions – still more than his old no-fee account but well below what he would’ve been
dinged had he been less inquisitive.
‘It’s important to not be a complacent consumer.’
St. Pierre says he wonders how many BMO customers in his shoes “ignored a mass mailing I
happened to read by chance.”
“It’s important to not be a complacent consumer. It’s common for people to have a chequing
account with their home bank and not be aware of the fees associated with it,” Penelope Graham,
editor of ratesupermarket.ca, a site that tracks interest rates and fees at financial institutions.
“You might have an annual fee or a monthly fee you know of, but you might not know where
else you’re getting dinged.”
Voluntary code
Canada’s Big Five banks have each agreed to “Voluntary Commitments and Codes of Conduct”
that govern their behaviour and dealings with customers. The non-binding rules and guidelines
have been developed by the industry, according to the Canadian Bankers Association.
Cash said the slew of new fees that are about to hit bank customers go against the spirit of the
voluntary code, and shows that binding rules should replace self-regulation.
“These should be prohibited. The government should bring in an expanded code of conduct and
it should not be voluntary,” he said.

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