NDP seeks ban on so-called 'pay-to-pay' fees at banks

NDP MP Andrew Cash says he wants expanded code of conduct for banks that is not voluntary

OTTAWA – The NDP has called on Ottawa to ban so-called “pay-to-pay” fees charged by Canada’s big banks.

NDP MP Andrew Cash said Thursday that he wants an expanded code of conduct for the banks that is not voluntary.

“Offering the banks a voluntary code of conduct is like telling a cat to regulate its consumption of cat nip,” the NDP critic for consumer protection said.

Ottawa moved to block telecommunication and cable companies from charging fees for paper bills last year.

However, Cash said the banks were excluded from the legislation.

“You shouldn’t have to pay money to pay your bill; you shouldn’t have to pay money to pay your mortgage; you shouldn’t have to pay money to pay your student loan,” he said.

Finance Minister Joe Oliver said the government has taken action to improve access to low-cost and no-cost banking options.

“Our government believes with better information Canadian consumers can make informed choices which will be in their interest,” Oliver said in response to a question by Cash in the House of Commons.

In the federal budget this year, the government proposed a new financial consumer protection framework for banks. The changes include a requirement for clear and accurate advertising as well as a cooling-off period for financial products.

Canada’s large banks have all moved to raise some of the fees they charge customers in recent months.

However, the Royal Bank has attracted the most attention with its changes set to take affect June 1, including a new charge for pre-authorized and non-scheduled credit card, loan and mortgage payments under certain circumstances. The new fee applies to several different account types when customers exceed their allotted number of free debit transactions.

Royal Bank noted that 80 per cent of its customers either pay no monthly fee or receive a rebate on their monthly fee.

“On an annual basis, we review our products and services and sometimes adjust the pricing for some of them to reflect the cost of doing business,” the bank said in a statement.

Penelope Graham, editor of RateSupermarket.ca which allows users to compare bank fees and mortgage rates, said the big banks are raising fees to make up for the slim margins they are earning on mortgages.

“In Canada, these top five are such strong institutions and they’ve been around for so long and they have such great brand premium and they are so seemingly trustworthy to Canadian consumers that they do have the ability to charge a bit of a premium,” she said.

Graham said Canadians concerned about bank fees should educate themselves and not be afraid to shop around to find a better deal.

“I think a lot of consumers would be surprised to know that they do have considerable negotiating power with their banks, especially if you come in and you know your facts,” she said.