Royal Bank of Canada has been fined $4.25 million after federal regulators found the bank overcharged nearly 228,000 credit card customers in violation of the Bank Act.The Financial Consumer Agency of Canada said 227,947 accounts were financially affected by the bank’s handling of credit card accounts after customers reported suspected fraud.“The root cause of the violation was inadequate and ineffective control and oversight procedures and operational challenges with processes and proper reporting,” the agency wrote in a notice of violation.Blacklock's Reporter says RBC previously refunded $22,427,774 in excess charges and made a $299,000 charitable donation for customers who could not be located.The agency said the size of the penalty reflected “the significant harm to customers.” It is the largest fine imposed on RBC to date.The violation involved RBC’s process for deactivating a customer’s credit card account and moving the customer to a new account after fraud was reported.Regulators found the bank failed to transfer certain credits from the deactivated accounts to the new accounts. As a result, affected customers received inaccurate monthly credit card statements, while some were charged additional fees.The issue stretched across a 23-year period.RBC had previously been fined $250,000 in 2021 for breaching Negative Option Billing Regulations and $350,000 the same year for failing to obtain consent from customers before applying pre-approved credit card limit increases.Other penalties against federally regulated banks for consumer protection violations since 2021 include $12.4 million against Toronto-Dominion Bank, $9.8 million against Canadian Imperial Bank of Commerce, $4 million against Bank of Montreal, $600,000 against National Bank and $80,000 against Bank of Nova Scotia..For years, the Financial Consumer Agency declined to publicly identify banks found in breach of regulations.In 2018, then-commissioner Lucie Tedesco said publishing a bank’s name would be “of no benefit to consumers” and would “only cause customers to worry.”Cabinet changed that approach in 2020, directing the agency to advance consumers’ rights and interests by publicly naming institutions that violate the rules.The RBC notice involved misconduct discovered in 2024.Eleanor Ryan, then-director general of financial institutions at the Department of Finance, told the Commons finance committee in 2018 that Canadians had a right to know which banks were operating outside the Bank Act.“Legislation would require the naming if there is a violation and a penalty,” Ryan said.
