Ottawa moves to ban bank fees on account transfers

The federal government has released draft regulations that would ban federally regulated banks from charging fees to transfer investment and registered accounts to another institution, the Department of Finance said this week.

The proposal fulfils a commitment in the 2025 federal budget. The draft rules do not include a date for coming into force, according to The Logic, which first reported the draft on Nov. 4. The Financial Consumer Agency of Canada would enforce the ban.

The Financial Consumer Agency of Canada’s banking-fee review, released Oct. 23, found banks charge between $50 and $150 to move all assets out of a registered account, and between $25 and $75 for a partial transfer. The 2025 budget put the average at $150 per account.

For a saver who holds a registered retirement savings plan, a tax-free savings account and a first home savings account at one bank, a full move at those rates would cost between $150 and $450 before the ban. The ban would end those charges at federally regulated banks only. It does not yet cover provincially regulated institutions such as credit unions and some trust companies.

Michael Katchen, Wealthsimple’s co-founder and chief executive, said Canadians have been charged $73 million this year to move their savings to his company. He called the draft an important first step and urged provinces and the rest of the industry to follow. “Wealthsimple has never charged an exit fee,” he wrote on LinkedIn.

Wealthsimple has long reimbursed transfer fees charged by big banks to new customers. Finance estimates about 90 per cent of investment account transfers go to challenger banks like Wealthsimple, many of which reimburse such fees, The Logic reported. Our earlier coverage looked at the company’s $13.8-billion valuation.

Adriana Vega, executive director of Fintechs Canada, said exit fees can discourage switching and limit competition. “Canadians should not be charged to move their own money,” she said in a statement. Her group wants Ottawa to finalize the ban and provinces to extend it.

The draft would also set timelines for key stages of an account transfer, addressing delays as well as cost, Fintech.ca reported.

Until the regulations are finalized, the current fees still apply. Customers weighing a move can ask their new institution whether it reimburses transfer charges.

Sources: The Logic, Fintech.ca, iPhone in Canada, Financial Consumer Agency of Canada banking-fee review.

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