An Ontario trust company has been fined $1.6 million for not disclosing a $100 fee to mortgage customers.
“It serves the dual purpose of allowing customers to make informed financial decisions and provides them with the ability to hold their lenders to account in the event fees are charged inappropriately,” she added.
The decision notes that the Community Trust Company (CTC), based in Mississauga, did not disclose the fee to customers over a 10-year period.
A customer complaint to the Ombudsman for Banking Services and Investments in 2021 started the FCAC investigation.
In the FCAC decision, it noted that 3,428 customers were charged the $100, equaling $341,326 in total for the trust company.
While Ms. Robertson noted the number of customers impacted was low, she said the length of time the trust company failed to comply with regulations impacted the decision.
“The long duration of the violations elevates the impact of the breaches and supports the conclusions regarding the shortcomings of CTC’s control framework and compliance oversight.”
She also noted the impact the trust company actions had on the reputation of Canada’s financial system.
“It is damaging to confidence in the financial system, and the reputation of CTC, if breaches of disclosure provisions are allowed to remain undetected and unremedied for extended periods,” she wrote.
FCAC noted that the company undertook a “remediation program” and contacted 997 customers it could identify and refund them. The average refund rate was $138, FCAC said.
The $1.6 million fine is among the largest issued in the past year, according to Blocklock’s Reporter.
Other companies fined include The Canadian Imperial Bank of Commerce on Oct. 27, 2022, for $5.6 million for failing to disclose all loan fees as required.
“Following an internal investigation, CIBC confirmed that credit transactions for some deactivated lost or stolen cards were not transferred in a timely manner during the period of 2003–2021 and that credit transactions for some defrauded cards were not transferred in a timely manner during the period of 2018–2020,” Ms. Robertson wrote in a May 1 decision.
“Until the credit transactions were transferred from the deactivated account to the active account, the supplementary statement for the active account did not accurately reflect all transactions, as required,” the commissioner wrote.
“The account balance, amount due, credit limit available, and estimated time to pay were also incorrect. In addition, the credit transfer delays resulted in some customers being improperly charged interest, over-limit fees, and/or insurance premiums.”
The National Bank was fined $600,000 in June for lack of disclosure on loan fees.
