Anthony Layton MBA, CIM

Chairman & CEO, Portfolio Manager

Peter Guay MBA, CFA

Portfolio Manager
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Tony's Take: BMO latest to announce excess-fee repayment

This week, BMO Nesbitt Burns Inc. and three other Bank of Montreal investment advisory units joined CIBC, TD Bank, Scotiabank and CI Investments in agreeing to repay over-charged fees to its clients. The Ontario Securities Commission (OSC) announced that BMO will compensate its clients about $50-million in excess fees that were not previously detected. The bank also will contribute $2.1 million to the OSC’s investor protection effort. The various settlements by the five financial institutions total over $320 million. OSC Press Release

As with previous agreements, this is a no-contest settlement. BMO did not admit or deny allegations of misconduct. The OSC said there were “inadequacies in the BMO’s systems of controls and supervision.”

The recent trend in voluntary disclosures to the OSC is not surprising.  Since CRM2 came into effect in July, all large financial institutions have been scrutinizing the fees they are charging, to avoid embarrassment when the new fee disclosure reports are mailed to clients in January 2017. That it required a change in regulation for this to happen is a sad comment on large financial institutions in Canada.

At PWL, we believe full fee disclosure is necessary. Advisors should be required to clearly disclose when they are incented to sell their firm’s own products or securities that their firm has underwritten – regulations that CRM2 is still lacking.

By: Anthony Layton | 2 comments