Consumer watchdog says banks charge unclear fees and uphold costs that hinder switching lenders

Canada’s financial consumer watchdog said unclear fees imposed by the country’s six largest banks are costing consumers more money, while some processes discourage customers from switching to a different financial institution for better rates and pricing.

The Financial Consumer Agency of Canada’s 130-page report released Friday takes aim at barriers to switching banks, excess transaction fees, foreign currency conversion markups, ATM costs and other concerns. The report is part of Prime Minister Mark Carney’s efforts to boost innovation and improve access to financial services.

The FCAC said its findings raise questions about whether the cumulative costs disproportionately affect certain consumers, particularly those with lower incomes and limited savings. Across nine customer fee categories, the watchdog estimated that financial institutions made $2.45-billion in total revenue in 2025.

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The FCAC’s report examined federally regulated financial institutions for differences in fees among products and services, the clarity of communication on fee information, and how the cumulation of these costs affect customers.

The country’s banking sector is dominated by the Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada, which together hold more than 90 per cent of market share.

“This report is intended to help Canadian consumers really think about what they’re spending on and how they’re choosing their products and services,” FCAC commissioner Shereen Benzvy Miller said in an interview. “It allows the industry to also look at how things have unfolded, so that competition can be real.”

More transparency and personalized information, as well as fewer barriers to switching, could help better inform consumers and strengthen competition, the watchdog said.

“Some consumers might get a discount on a chequing account because they already have a credit card or a mortgage at the same bank,” Ms. Benzvy Miller said. “That discount won’t be applied to people that aren’t holding a credit card or are not mortgage holders. These fees are not experienced the same way by all communities.”

Canadians have a long-standing reputation for sticking with the same bank for decades. Switching institutions is rare, in part because of the time and cost required to move a financial portfolio to another lender – even if the customer could save money by doing so.

The FCAC’s report found that open banking – which Ottawa refers to as consumer-driven banking – could provide consumers with greater transparency and more control over their financial data. However, the full benefits of the regime will be limited unless it allows consumers to switch providers more easily, the FCAC said.

The watchdog said some fees and processes could discourage customers from switching, including transfer fees that increase the cost of moving accounts, barriers to comparing products between institutions and limited visibility of banking costs that have accumulated over time.

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Fintechs and advocates have called on Ottawa to speed up timelines and avoid further delays to implementing an open banking regime.

Following repeated delays since the development of the regime began in 2017, Canada has fallen far behind its global peers. Britain launched open banking in 2018 and Australia followed in 2020.

Ottawa has set a timeline to introduce open banking legislation next year. It’s one part of the federal government’s goal to increase competition in the sector.

In its federal budget, Ottawa directed the FCAC to prepare a report on fees charged by banks. It proposed lowering banking fees and reducing barriers for smaller banks and credit unions. The federal government also committed to banning or increasing transparency on certain fees, including costs tied to transferring investment accounts between institutions.

The FCAC’s report found that consumers incur multiple costs when switching banks, including transfer-out fees, as well as indirect costs such as time, hassle and paperwork. When these barriers are significant, financial institutions can more easily retain clients and maintain profit margins, even if rivals offer better prices or quality of products and services.

“We need financial institutions to remove the friction for switching,” Ms. Benzvy Miller said. “It needs to be part of the competitive nature of the industry, where switching isn’t complicated.”

To avoid incurring hidden or excess costs, the FCAC said customers would benefit from more transparent disclosures.

Consumers could also face higher costs when account and product features do not align with their banking needs, according to the report. Customers tend to maintain legacy accounts that sometimes come with fees that, as time has passed, are no longer valuable or needed.

The FCAC compiled estimates on the total revenue generated across financial institutions through certain fees. In 2025, non-sufficient funds (NSF) fees accounted for about $1.04-billion, account maintenance costs contributed $493-million, transaction charges made up $374-million and overdraft fees totalled $210-million.

In March, the federal government limited NSF fees to $10, slashing the cost from the $35 to $50 range that lenders charge when a customer does not have enough money in a bank account to cover a withdrawal or payment.

The FCAC detailed cases where customers experience unclear costs. For example, many customers are unaware that using ATMs outside of the bank’s network cause them to incur withdrawal fees charged by the ATM’s owner, as well as their own bank.

The watchdog recommended requiring banks and financial institutions to provide customers with a standardized periodic statement at least once a year that summarizes the total fees charged.

The report will inform the Ministry of Finance’s future plans, among other measures.

“What I would say to Canadians is get yourself informed,” Ms. Benzvy Miller said. ”What I would say to the industry is read this and take whatever action you think competition requires you to take, and expose your value proposition.”