New RBC charges seen as double-dipping: Roseman

Canada’s largest bank is adopting new fees aimed at lower-income clients, arousing the ire of the media and NDP.

• Share on Facebook
• 

CHRIS SO / TORONTO STAR Order this photo

The gold Royal Bank of Canada tower and the TD CanadaTrust Tower. Chris So/Toronto Star

By: Ellen Roseman On Your Side, Personal Finance Columnist, Published on Tue May 05 2015

RBC, Canada’s largest bank, is drawing flak about a planned increase in service charges starting June 1.

While other Big Five banks have raised fees this year, RBC’s changes will affect lower-income customers — those who have accounts with low or no monthly fees and a limited number of transactions.

Andrew Cash, federal NDP MP for Dovercourt, has started a petition asking Canadians to stop the expansion of “pay-to-pay” fees. This refers to a practice by some companies to charge customers a fee to pay their monthly bills.

Back in 2012, Cash started a successful campaign to end $2 paper-bill fees by telecom providers. This led to a ban by Canada’s telecom regulator on Jan. 1.

“Banks are charging you extra just to pay things with your own money,” says the MP, who stood outside a bank on Bloor St. W. and Dovercourt Rd. on May 4 collecting signatures for the petition.

RBC announced many service fees and account changes at the same time. One change, in particular, has attracted attention.

“Some debit transactions that didn’t previously count as debit transactions will now count,” said RBC spokesman Andrew Block.

Customers who exceed their monthly limit of free debit transactions will pay a monthly fee of $1 to $2 for each RBC investment contribution and mortgage, loan or credit card payment they make from their accounts.

They will also pay fees for Interac Flash (or tap) point-of-sale debit transactions, which didn’t count against their monthly limit before.

Some affected accounts have no monthly fees — such as the Leo’s Young Savers account, which has 15 free debit transactions, and the Student Banking account, which has 25 free debit transactions.

Another affected account is Day to Day Banking, which has a $4 monthly fee. Starting June 1, these customers will get 12 free debit transactions a month (up from 10).

“Most of the account packages we offer include unlimited transactions, so this change would not apply,” Block pointed out. “Also, 80 per cent of our clients either pay no monthly fee or receive a rebate on their monthly fee.”

Here are other changes RBC announced to clients:

Seniors’ rebates on eligible bank accounts will be restricted to clients aged 65 and over (up from 60-plus). The change will not affect those who already receive a senior’s rebate.

Overdraft protection will cost $4 a month plus overdraft interest (if used). Before, clients would pay either $4 a month or overdraft interest, whichever was higher.

Stop payments done by phone or at branches will cost $20 each (up from $18).

Rebates will increase on some accounts, such as VIP Banking and Signature No Limit, for clients who have multiple products with RBC.

Business banking services, such as electronic deposits and credits, will go up to 75 cents (from 65 cents). Deposit account statements will be $3 each for paper statements with cheque image pages (up from $2).

Pricing changes are always a sensitive issue for clients, said Block. He encouraged clients to call or visit their branch to ensure they have the banking options and advice that best met their needs.

I can appreciate that interest rates are at historic lows, and aren’t expected to rise sharply any time soon. And competition is fierce, especially with branchless banks and mortgage brokers offering access to non-bank providers.

The Big Five banks have costly branch networks to support. Some have already made unpopular changes, such as TD’s decision to stop protecting former Canada Trust customers from higher fees.

However, banks should be fair and progressive in adjusting their service charges.

Is it fair for RBC to collect interest on loan, mortgage and credit-card debt and then charge extra fees to clients making their loan, mortgage and credit card payments once they exceed their monthly debit limits?

Is it progressive for RBC to give clients a large multi-product rebate if they also have mortgages, investments and credit cards with the bank?

In addition, RBC will limit its multi-product rebates to clients with active credit cards (those with an annual fee or with at least one transaction in the past 90 days) and active investments (those with a minimum balance of $500 or a pre-authorized contribution plan set up to the investment account).

Customers have choices. They can switch to banks or credit unions with lower fees, using the Financial Consumer Agency of Canada’s account selector tool. But some don’t want to bank online or go out of their way to visit a branch.

In a climate of low interest rates, I hope the federal government will adopt new rules for pay-to-pay fees by banks as it had done so decisively with telecom providers.

Ellen Roseman writes about personal finance and consumer issues. You can reach her at eroseman@thestar.ca or www.ellenroseman.com