SKN | Bank of Montreal Fined $4 Million Over Fee Disclosure Failures

Takeaways

• Canadian regulators fined Bank of Montreal $4 million after more than 100,000 customers were overcharged on discounted banking plans.
• The issue spanned over a decade, highlighting weaknesses in fee disclosure, complaint handling, and internal controls.
• While financial impact is manageable for BMO, the case reinforces regulatory and reputational risks facing large banks. 

Regulatory Action Highlights Disclosure Lapses

Bank of Montreal has been fined C$4 million by the Financial Consumer Agency of Canada (FCAC) after regulators found the bank improperly charged customers monthly account fees that should have been waived or discounted.

According to the FCAC, the violations affected 101,091 customers between 2010 and 2024, covering a range of discounted banking programs. These included plans for newcomers to Canada, medical and dental students, Indigenous banking clients, and participants in a home financing promotion.

The regulator said customers were given incorrect or incomplete information about fee waivers and discounts, resulting in charges that should not have been applied.

Refunds Issued, But Negligence Cited

BMO has refunded more than C$3 million to affected customers and donated an additional C$600,000 representing amounts that could not be repaid directly. A bank spokesperson said BMO proactively identified the issue, reimbursed customers, and self-reported the matter to the regulator, adding that the bank holds itself to “the highest standards of conduct.”

However, the FCAC said the size of the penalty reflects the degree of negligence involved, noting that BMO received more than 500 customer complaints about the fees over the period yet failed to prevent or detect the issue earlier.

The regulator emphasized that proper fee disclosure and timely remediation are core consumer protection obligations for federally regulated financial institutions.

Investor Perspective: Manageable Cost, Broader Implications

From a financial standpoint, the penalty and refunds are modest relative to BMO’s earnings and balance sheet strength. However, the case underscores ongoing regulatory scrutiny of retail banking practices in Canada, particularly around transparency and customer treatment.

For investors, the more relevant consideration may be reputational risk and governance discipline, especially as banks face heightened oversight on consumer protection, pricing clarity, and complaint resolution frameworks.

Outlook

While unlikely to materially affect near-term earnings, the FCAC fine serves as a reminder that operational controls and disclosure standards remain critical for maintaining trust and avoiding regulatory escalation. As Canadian banks continue to balance profitability with compliance, enforcement actions like this may increasingly influence how investors assess long-term risk profiles.

For a confidential discussion on how regulatory enforcement, conduct risk, and consumer protection trends at major banks can be evaluated within a long-term financial sector allocation, contact our senior advisory team.