Bank of Montreal intends to compensate clients in the amount of $49,885,661, as part of a settlement with the Ontario Securities Commission over “excess” fees the bank charged some clients.
The OSC approved a no-contest settlement Thursday with four subsidiaries of Bank of Montreal, which stipulated that Canada’s fourth-largest bank would also pay $2,100,000 “to advance the OSC’s mandate of protecting investors,” plus $90,000 toward the costs of the OSC investigation.
BMO, like a handful of other Canadian banks and money managers, ‘self-reported’ the issue to regulators after discovering it had been charging excess fees to clients.
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A no-contest settlement, relatively new for Canada’s largest capital market regulator, allows cases to be settled without an admission of wrongdoing. In the BMO settlement, the bank “neither admitted nor denied the accuracy of the facts and conclusions” of staff at the regulator.
“This settlement follows allegations by OSC staff that there were inadequacies in the BMO registrants’ systems of controls and supervision, which resulted in certain clients paying… excess fees that were not detected or corrected in a timely manner,” the regulator said in a statement. “OSC staff do not allege, and have found no evidence of dishonest conduct.”
The OSC statement said bank representatives gave “prompt, detailed and candid co-operation” to staff at the regulator after reporting the situation. The settlement involved four units of the bank: BMO Nesbitt Burns Inc., BMO Private Investment Counsel Inc., BMO Investments Inc., and BMO InvestorLine Inc.
“The BMO registrants have also implemented additional controls and supervision to prevent a re-occurrence of this matter,” the OSC said.
Jeff Kehoe, director of enforcement at the OSC, called the no-contest settlement a “strong enforcement tool,” and said it has so far resulted in nearly a quarter of a billion dollars in compensation being paid to consumers through seven settlements.