Canada’s financial institutions watchdog fined Canadian Imperial Bank of Commerce (CIBC) $1.225 million because the bank failed to comply with five credit disclosure rules for more than 15 years.

Financial Consumer Agency of Canada (FCAC) found that CIBC had not properly followed Cost of Borrowing regulations in relation to credit card products. All five violations dated from February 2003 through mid-2018. The largest component of the fine involved failing to properly disclose over limit fees on initial disclosure statements to credit card borrowers. That failure lasted for 13 years and resulted in $42.4 million in over-limit fees, interest and opportunity costs incorrectly incurred by cardholders of more than 677,000 accounts. An interim solution in February 2017 automatically reversed erroneous charges, and a permanent solution was implemented in September 2018.

In making the ruling, FCAC noted that CIBC has “made every effort for full restitution” and has also communicated publicly with its customers. Other violations included failing to accurately disclose the date on or which interest accrues, and failing to properly disclose information about optional insurance services.

The violations relate to a change in CIBC account payment processing that occurred in 2003. The new system added a delay in payment processing between the receipt of payments and posting of those payments to the account. This delay meant information in standard card agreement language was not accurate and cardholders could be charged over-limit fees, insurance premiums and interest when they had every reason to believe their payment was made and received on time to avoid those charges. The FCAC summary noted that CIBC became aware of the impact of the issue in November 2016 in response to consumer complaints, and self-reported to FCAC in January 2017.

FCAC fined Canadian Western Bank $200,000 for failing to disclose application, renewal, appraisal and legal fees in agreements for line of credit, fixed-rate and variable-rate loans and mortgages, Subsidiary Canadian Western Trust was also fined $200,000 for similar non-disclosure of fees in fixed-rate and variable rate mortgage documentation.

All three financial institutions asked not to be identified in the announcements, but FCAC commissioner Judith Robertson wrote: “It is my view that publication of these facts will enhance the understanding of consumers that when errors occur, restitution is made, and appropriate standards are maintained.”

Consumers Council of Canada has advocated for a fair system of banking dispute resolution, one with the capacity to observe, highlight and enforce against “system issues”, and not merely treat consumer problems as case-by-case events when there are patterns of abuse sustained over a period of years. Its 2018 discussion paper reviews how three of Canada’s largest banks defected from the Ombudsman for Banking Services and Investments and evaluates the veracity of the reasons those banks cite for their choices.