The Ontario Securities Commission (OSC) will hold a hearing next Tuesday to consider a no-contest settlement with another group of bank-owned firms that allegedly uncovered that they were overcharging certain clients.
In February 2015, Royal Bank of Canada (RBC) subsidiaries RBC Dominion Securities Inc., Royal Mutual Funds Inc. and RBC Phillips, Hager & North Investment Counsel Inc. self-reported “inadequacies in their systems of controls and supervision … which resulted in certain clients paying, directly or indirectly, excess fees,” according to allegations the OSC released on Thursday.
The alleged overcharging includes clients in fee-based accounts who held products with embedded trailer fees or mutual funds with negotiable service fees who ended up paying excess fees. In addition, clients were not advised that they qualified for a lower-cost version of certain funds.
The allegations note that: OSC staff are not alleging that there was any dishonest conduct by the firms; the firms are paying compensation to clients and former clients that were overcharged; and the firms are implementing “enhanced procedures and controls, and supervisory and monitoring systems designed to prevent” similar issues in the future.
The terms of the settlement will generally only be disclosed if the OSC approves the deal.
Firms associated with Bank of Nova Scotia, Canadian Imperial Bank of Commerce and Bank of Montreal reached multimillion no-contest settlements with the OSC in 2016 in connection with overcharging clients.
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