FCAC case shows how back-end errors can become compliance issues
The Financial Consumer Agency of Canada (FCAC) has fined Royal Bank of Canada $4.25 million after a credit card issue led to inaccurate customer statements, adding to recent enforcement actions tied to bank disclosure failures.
The penalty followed a March 18 notice of violation in which FCAC said RBC failed to meet Bank Act disclosure requirements for monthly credit card statements. While the case involved credit cards, it points to a wider issue for lenders: disclosure problems can come from back-end systems and account processes, not just from unclear customer documents.
According to FCAC’s summary of proceedings, the issue occurred between 2001 and 2024 and stemmed from RBC’s process for moving credit card accounts after fraud had been reported. The agency said RBC failed to transfer some credits from deactivated accounts to new accounts, leading to inaccurate monthly statements and additional charges for some customers.
FCAC said 227,947 accounts were financially affected. RBC transferred and refunded $22,427,774.30 to impacted customers and made a $299,000 charitable donation for customers who could not be located.
FCAC said the issue was caused by “inadequate and ineffective control and oversight procedures and operational challenges with processes and proper reporting.” The agency said the penalty reflected, among other factors, the significant harm to customers.
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Nathaniel Wallace, a spokesperson for RBC, says the lender takes its regulatory obligations seriously.
The RBC penalty follows other recent FCAC actions involving bank disclosure issues. In September 2025, FCAC announced a $5.5-million penalty against TD after the bank failed to provide accurate cost-of-borrowing disclosures to some customers with mortgage, home equity line of credit, personal loan, and small business loan accounts.
That case involved an error in the calculation of principal and interest payments after some customers requested a change to their loan payment frequency. FCAC said 160,658 loan accounts were affected, with a financial impact of more than $12.1 million.
Together, the cases show how disclosure failures can arise from internal systems, staff procedures, payment calculations, account changes, and controls that fail to catch errors over time.
That risk is relevant to mortgage lenders because federal rules require clear disclosure of key loan information, including the principal, interest rate, payment amount and frequency, amortization period, prepayment conditions, prepayment penalty calculation, default insurance charges, broker fees where applicable, discharge fees, and other non-interest charges.
FCAC has previously flagged similar issues in mortgage disclosure. In Decision #62781-952Q107, the agency found that the lender’s disclosure documents did not include all the information needed to calculate a charge. The institution later entered into a compliance agreement with FCAC and committed to updating its mortgage disclosure documents.
In its announcement on the RBC penalty, FCAC said accurate disclosure is a basic part of the consumer protection rules under the Bank Act. It also said federally regulated financial institutions are expected to review FCAC decisions and apply the findings to their own practices where appropriate.
