There are few things in life more irritating than paying banking fees – except perhaps trying to figure out why you’re being charged to access your own money in the first place. Perusing our monthly statements, we cringe at these service charges – the monthly account fee, ATM surcharges, foreign-exchange markups, etc. Individually, they may seem like pocket change but collectively over time, they can add up to a pretty hefty bill for services that we either didn’t ask for or seem overly expensive. 

If you feel you’re being squeezed by fees – you’re not alone. A recent report suggests that our largest banks charge more for these fees – an annual average of about $250 per Canadian – than do banks in Australia and the U.K. Last year alone, our six biggest banks (BMO, CIBC, NBC, RBC, Scotiabank and TD) reported a combined profit of $70 billion last year, with RBC and TD leading the way. Alain de Bossart, managing director of North Economics, which conducted the study comparing international service charges, summed up what we all suspected: “Canadian banks have done a very good job of extracting as many fees out of people as possible.”

Now, our federal banking watchdog is calling out the banks for imposing costly fees, that it deems as too confusing and entirely opaque. In its 130-page Review of Banking Fees in Canada,  released last week, the Financial Consumer Agency of Canada (FCAC) says the Big Six have set up bank-fee structures that are often so complex that their customers struggle to understand the true cost of their accounts – and, as a result, can’t do comparison shopping with the competition. The fees, the report concluded, “make costs harder to understand and compare, with implications for affordability and competition.”

The report examined a range of common charges, including account maintenance, excess transactions, ATM use, overdraft protection, NSF fees, currency conversion, cross-border debit and transfer-out fees. It found that banks often fail to provide customers “with the information they need, when they need it, to make informed decisions.”

Consider the venerable chequing account. Most banks offer a dizzying array of alternatives, each with its own features, transaction limits and fee structures – it’s a bit like choosing a cable package. Even those who seek clarity by calling customer service, will often hang up even more frustrated – and no closer to understanding what account best suits their personal financial situation. Figuring out the lowest-cost alternative is simply too much work.

And then there are the so-called legacy accounts: the one you opened decades ago and have never bothered to determine if it still works for you. Sure, it may have made perfect sense in your 20s but does it when you have retired? There may be newer, cheaper and more suitable alternatives available – but your bank isn’t rushing to tell you about them.

Snowbirds will be familiar with the fees for converting money – or maybe not. That’s because foreign-exchange markups are often embedded directly into the cost of a transaction, which makes it difficult to understand what we’re paying for the service. Perhaps another financial institution is offering a better deal – but how would we know it’s better than one we already have?

Which brings us to the biggest barrier of all, says the report: banks make it difficult to shop around or switch to a competitor. For example, if you decide that another financial institution is offering a better deal, there’s paperwork to fill out and transfer-out fees to pay, all of which can make the move to another bank time-consuming and costly. This friction often disincentivizes us from switching and creates a kind of banking inertia – even if there’s a better deal out there, the effort to move accounts is simply more trouble than it’s worth.

The FCAC report also highlights another common irritant: multiple fees that are charged on the same transaction. These add layers of cost that are difficult for consumers to anticipate or understand. And while the review doesn’t consider the onerous charges on investing – such as management expenses, embedded commission structures and sky-high mutual fund fees – it’s certainly a wakeup call for banks. “Canadians should be able to clearly understand what they are paying for banking services,” said Shereen Benzvy Miller, Commissioner of the FCAC. “When fees make the full cost harder to see, it affects both affordability and competition.”

The message of the report is straightforward: banks need to do a much better job explaining their charges and empowering consumers to choose whether they want to pay for their services. Unfortunately, unless the government makes legislative changes to the Bank Act regarding account fees, the FCAC review doesn’t carry any legal weight – it’s just another worthy Canadian initiative that the financial industry can choose to ignore. 

Maybe if enough of us start shifting our business elsewhere, perhaps to the lower- or no-fee options offered by non-traditional digital banks (EQ Bank, Tangerine Bank or Simplii Financial); fintech platforms (Wealthsimple or Koho) or the credit union in your neighbourhood, the Big Six might finally start listening.