Bank of Montreal along with its BMO Nesbitt Burns and BMO Trust divisions were named yesterday as defendants in a $100 million, class-action lawsuit over disputed foreign currency costs charged to certain registered accounts.

The proposed action was launched by Ontario retirement plan investor James MacDonald on behalf of all former and current BMO clients who held RRSPs, RRIFs or RESPs, and incurred foreign currency conversion charges on those accounts since mid-June 2001.

The statement of claim alleges the bank needlessly converted foreign currency to Canadian dollars in those accounts, despite changes to the Income Tax Act that came into effect June 14, 2001 allowing RRSPs, RRIFs and RESPs to hold foreign currency as an investment.

The statement of claim also alleges that in effecting all currency conversions, the defendants levied an “undisclosed conversion fee in addition to the amount that they actually pay to buy or sell currency.”

The claim alleges that the defendants failed to change their operational practices after the change to the Income Tax Act, which allows RRSPs, RRIFs and RESPs to hold foreign currency as an investment.

The claim further alleges that the reason for the defendants’ failure to effect a change was so that they could continue to earn profits from the foreign exchange fees.

The allegations have not been proven in court and the class-action has yet to be certified.

The claim seeks damages for all the fees charged in association with the unauthorized conversion and the repayment of all the hidden foreign-exchange fees on transactions where the customer did authorize a conversion of funds but did not agree to pay the hidden fee.