BMO Penalized After Years of Incorrect Fee Disclosures

Key Takeaways

• Penalty Paid in Full: BMO paid a $2.92 million penalty (CAD $4 million) in April 2025 after FCAC issued a Notice of Violation.
• Programs Meant to Help Customers: The violations stemmed from discounted banking programs for newcomers, students, Indigenous clients, and certain mortgage customers.
• Errors Spanned More Than a Decade: Incorrect disclosures and fee waiver start dates persisted from 2010 to 2024.
• Controls Missed Clear Signals: FCAC cited weak monitoring and controls, despite more than 500 customer complaints.
• Customer Redress Completed: Over $2.21 million was refunded to customers, with additional funds donated to charity where refunds were not possible.

Deep Dive

Canada’s financial consumer watchdog has shed more light on a long-running fee disclosure breakdown at the Bank of Montreal, saying internal control gaps allowed erroneous charges to persist for more than a decade and affect over 100,000 customers.

The regulator confirmed that BMO paid a $2.92 million administrative monetary penalty (CAD $4 million) on April 22, 2025, following a Notice of Violation issued the previous month. Under the Bank Act, payment of the penalty means the bank is deemed to have committed the violations.

The enforcement action centers on BMO’s 2010 Discounted Banking Programs, which were intended to provide fee waivers or discounts to specific customer groups, including newcomers to Canada, medical and dental students, Indigenous Banking clients, and customers participating in a home financing promotion.

FCAC found that customers who enrolled in these programs in branch received written confirmations showing incorrect start dates for their fee waivers. As a result, monthly plan fees were charged when they should have been waived or discounted.

From 2010 to 2024, BMO provided inaccurate disclosures related to these fees. The bank also failed, between 2022 and 2024, to clearly disclose when monthly plan fees would begin, an omission the regulator said undermined consumers’ ability to understand and manage their banking costs.

Controls Failed Despite Mounting Complaints

According to FCAC, the root cause was not a single system error but a combination of inconsistent employee adherence to procedures and monitoring measures that failed to catch the problem.

Those weaknesses persisted even as warning signs accumulated. FCAC noted that BMO received more than 500 customer complaints related to the monthly plan fees but still did not implement adequate controls or effective monitoring to prevent or detect the issue.

The $2.92 million penalty (CAD $4 million) reflects, among other factors, the regulator’s assessment of BMO’s negligence in failing to address those shortcomings over an extended period.

More Than $2.2 Million Returned to Customers

BMO estimates that 101,091 customers were financially impacted. To remediate the harm, the bank refunded and redressed interest totaling approximately $2.21 million (CAD $3,027,956.44).

For amounts that could not be returned directly to customer accounts, BMO made a charitable donation of about $439,000 (CAD $601,570.17), according to the regulator.

FCAC said accurate and complete disclosure is a foundational requirement under the Bank Act and stressed that all federally regulated financial institutions are expected to review enforcement decisions and apply the lessons to their own practices.

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