Bank fees cost Canadians billions, watchdog says, urges easier switching

OTTAWA · Canada's financial consumer watchdog says unclear fees from the country's six largest banks are costing consumers money and discouraging them from switching for better deals. The Financial Consumer Agency of Canada released a report Friday examining bank fees, barriers to switching institutions and other consumer concerns. The watchdog estimated that financial institutions made $2.45 billion in total revenue from nine fee categories in 2025. It said these cumulative costs likely disproportionately affect consumers with lower incomes and limited savings.

"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. The report looked at differences in fees, the clarity of fee information and how these costs add up for customers. Benzvy Miller said the report also allows the industry to examine how things have unfolded so competition can be real. More transparency, personalized information and fewer barriers to switching could better inform consumers and strengthen competition, the agency said.

The FCAC said some fees and processes actively discourage customers from changing banks. These include transfer fees that raise the cost of moving accounts, obstacles to comparing products between institutions and poor visibility of total banking costs over time. "We need financial institutions to remove the friction for switching," Benzvy Miller said. "It needs to be part of the competitive nature of the industry, where switching isn't complicated." When these barriers are high, banks can more easily retain clients and maintain profits even if competitors offer better prices, the report found.

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The agency provided a breakdown of fee revenue for 2025. Non-sufficient funds 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. The federal government limited NSF fees to $10 in March, down from a typical range of $35 to $50. The FCAC noted that customers often face higher costs when their account features do not match their banking needs. Many maintain legacy accounts with fees that are no longer valuable or necessary.

The watchdog highlighted examples of unclear costs, such as fees from using ATMs outside a bank's own network. In such cases, a customer can be charged by both the ATM owner and their own bank, often without realizing it. To combat hidden costs, the FCAC recommended that banks be required to provide customers with a standardized annual statement summarizing all fees charged. The report will inform the Ministry of Finance's future plans. "What I would say to Canadians is get yourself informed," Benzvy Miller said.

Open banking could help

The report found that open banking, which the federal government calls consumer-driven banking, could give consumers more transparency and control over their financial data. However, the FCAC said the full benefits will be limited unless the system makes it easier for people to switch providers. Canada has fallen behind global peers like Britain, which launched open banking in 2018, and Australia, which followed in 2020. Ottawa has set a timeline to introduce open banking legislation next year as part of its goal to increase competition in the financial sector.

The federal government directed the FCAC to prepare the fee report in its budget, which also proposed lowering banking fees and reducing barriers for smaller banks and credit unions. Ottawa committed to banning or increasing transparency on certain fees, including costs for transferring investment accounts between institutions. Fintechs and advocates have urged the government to speed up its timelines and avoid further delays in implementing an open banking regime. "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," Benzvy Miller said.

With files from The Globe and Mail