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When you sign up for a discounted banking account — one marketed specifically to newcomers, students or Indigenous clients — you expect the fee waiver to work as promised. For more than 101,000 Canadians, it didn't.
The Financial Consumer Agency of Canada (FCAC), the federal regulator that protects users of financial products, applied a $4 million penalty against Bank of Montreal (BMO) for charging monthly plan fees that should have been waived or discounted (1).
While the bank conceded that the overcharged fees were due to the bank's billing errors, the FCAC investigation and February 2026 ruling highlight how a systemic failure took more than decade — and over 500 consumer complaints — before regulators stepped in.
Here's what happened, who it affected and what you should do if you think you're owed money.
What BMO did wrong — and for how long
The error traces back to 2010, when BMO launched discounted banking programs for four groups: newcomers to Canada, medical and dental students, Indigenous banking clients and participants in a home financing promotion. Customers who enrolled received written confirmation, but the document listed an incorrect start date for the fee waiver (2).
That single clerical error had a 14-year tail. Because the disclosure was wrong, BMO continued charging monthly plan fees to customers who qualified for a waiver or discount. Between 2022 and 2024, the bank compounded the issue by failing to clearly communicate when fees would begin (3).
Part of the issue, according to the FCAC investigation, is that BMO employees did not consistently follow the correct procedures, and that the bank's internal controls failed to catch the error — even as complaints accumulated.
As a result, the $4 million penalty reflects the degree of BMO's negligence in failing to prevent and detect the problem (4).
The Canadians who were affected by BMO’s negligence
The four groups enrolled in BMO's 2010 Discounted Banking Programs were:
- Newcomers to Canada
- Medical and dental students
- Indigenous banking clients
- Participants in BMO's home financing promotion
If you opened an account under any of these programs at any BMO branch after 2010 and were charged a monthly plan fee, you may have been part of the 101,091 customers the FCAC confirmed were financially impacted (5).
What BMO paid back
BMO issued refunds and interest to affected accounts totalling close to $3.03 million. For the portion that could not be returned directly to accounts or accountholders, the bank made a charitable donation of just over $600,000 (6).
BMO spokesperson Jeff Roman said the bank proactively reimbursed customers and self-reported the matter to the FCAC.
Does BMO owe you a refund?
If you were in one of the affected groups and have not received a refund or any communication from BMO, here's what to do:
- Review your statements from the time you enrolled. If you were charged a monthly plan fee on an account that should have been discounted or free, document it
- Contact BMO directly and reference FCAC Summary of Proceeding #4, published February 2, 2026. Ask whether your account was part of an affected program and confirm whether a refund was issued
- If a refund was not applied to your account and BMO indicates a charitable donation was made in lieu, ask for a full accounting of what amount was calculated for your account
- If BMO does not respond or resolve your concern, file a complaint with the FCAC at canada.ca/en/financial-consumer-agency
Your rights when your bank bills you incorrectly
Under the Bank Act, federally regulated banks are required to clearly disclose all fees before charging them — and to keep those disclosures accurate. The BMO case is a reminder that disclosure failures can persist for years without triggering correction, even when customers are actively complaining.
If you believe your bank has been charging you incorrectly, you don't need to accept the outcome. Every federally regulated bank must have a formal complaint-handling process. If that goes nowhere, customers can escalate to the Ombudsman for Banking Services and Investments (OBSI), an independent body that resolves disputes between consumers and financial institutions at no cost.
Fee waivers and discounted banking programs are only as useful as the systems behind them. Checking your statements periodically — particularly in the first year after enrolling in any promotional account — is a simple way to catch an error before it runs for a decade or more, costing you thousands in out-of-pocket expenses.
For more information about details on these topics, feel free to contact me anytime at 647-701-1486 or email me at info@homesbyic.com
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial, investment, or tax advice. While we strive to provide accurate information, tax laws are subject to change and vary by jurisdiction. You should consult with a qualified CPA, tax attorney, or financial advisor before making any decisions based on the content of this blog. Inder Chawla Real Estate Inc. is not responsible for any financial losses or tax penalties incurred.