Canada's Banking Watchdog Says Unclear Fees and Switching Barriers Cost Consumers Billions
A 130-page report from the Financial Consumer Agency of Canada found that unclear fees and barriers to switching banks cost consumers money and hinder competition, with federally regulated institutions generating $2.45 billion in revenue from nine fee categories in 2025.
Canada’s financial consumer watchdog has concluded that unclear fees imposed by the country’s six largest banks are costing consumers more money and discouraging them from moving to better-priced institutions. The Financial Consumer Agency of Canada (FCAC) released a 130-page report on Friday addressing barriers to switching banks, excess transaction fees, foreign currency conversion markups, and ATM costs.
The report is part of Prime Minister Mark Carney’s efforts to boost innovation and improve access to financial services. Across nine customer fee categories, the FCAC estimated that financial institutions made $2.45 billion in total revenue in 2025. This included $1.04 billion from non-sufficient funds (NSF) fees, $493 million from account maintenance costs, $374 million from transaction charges, and $210 million from overdraft fees.
Canada’s banking sector is dominated by RBC, TD, Scotiabank, BMO, CIBC, and National Bank of Canada, which together hold more than 90 per cent of market share. FCAC commissioner Shereen Benzvy Miller stated that some consumers receive discounts on chequing accounts for holding other products like credit cards or mortgages, meaning fees are not experienced equally across communities. The cumulative costs disproportionately affect consumers with lower incomes and limited savings.
Switching banks is rare in Canada due to the time and cost required to move financial portfolios, even when customers could save money by doing so. Barriers to switching identified by the FCAC include transfer fees, difficulty comparing products between institutions, and limited visibility of accumulated banking costs. High switching friction allows financial institutions to retain clients and maintain profit margins despite competitor offers.
The FCAC found that open banking, also known as consumer-driven banking, could provide greater transparency but its benefits will be limited unless it allows consumers to switch providers more easily. Canada has fallen behind global peers in implementing open banking; Britain launched it in 2018 and Australia in 2020, while Ottawa has set a timeline to introduce legislation next year. Delayed implementation keeps Canada behind global peers in financial service innovation.
In March, the federal government limited NSF fees to $10, reducing them from the previous range of $35 to $50. To further address the issues outlined in the report, the FCAC recommended requiring banks to provide customers with a standardized periodic statement at least once a year summarizing total fees charged.