Witness the power of consumer backlash: Royal Bank of Canada announced today that it is reversing some of the new banking fees they planned to launch on June 1. The lender, which is the largest in Canada, will not be implementing a "pay to pay" fee structure, which would have classified all account payments - including those made on mortgages, credit cards and savings contributions - as debit transactions. As a result, customers who didn't have unlimited debit transactions as part of their banking plans would be charged a fee to make one of their regular payments - on top of the interest, they were already paying.
Consumers were incredulous at the new fee structure, which was widely regarded as nickel and diming and double-dipping by the bank. In addition to their complaints, the fees were widely covered in the media and even prompted the NDP to approach Ottawa with a mandate to ban "pay to pay" altogether.
The pressure has paid off. The bank states on their website, “We had recently announced some changes, including making RBC loan and mortgage payments count toward monthly limits for free debit transactions. But we’ve heard and understood your concerns with the changes."
However, the bank still plans to roll out other changes to its products, such as reducing their special rates for seniors and students. And they're not the only lender to do so; each of the nation's five largest banks announced earlier in May that changes were coming for everyday banking costs. While the changes differ from bank to bank, they will generally include:
- Monthly and annual fee increases for everyday banking products like chequing and savings accounts
- Reductions to bank account rebates for special groups (children, students and seniors)
- Increased fees for excessive transactions or services outside of a banking plan, such as debit transaction overages
- Increases to minimum balances required to waive fees
A History of Discontent
Bank fees have long been a point of contention with consumers, and there's plenty of stats to prove it. A Leger Marketing for PC Financial reveals 71% of survey takers say fees are the biggest lender turnoff. The 2012 Canadian Retail Banking Customer Satisfaction Study found consumer sentiment has been dropping for years, with hidden fees as the main culprit.
Complacency Will Cost You
While consumers have a right to be frustrated by the banks' widespread fee changes, there appears to be a silver lining - the incident seems to have shed fresh light on Canadians' no-fee banking options - PC Financial and Tangerine, both of which offer no-fee chequing and savings, have been championed amid the big bank fallout.
Perhaps this will spark a movement among consumers willing to ditch their bank bias in search of more competitive features and interest rates - particularly as blind lender loyalty has been proven to cost the average banking customer between $759 to $1,617. The same study put out by the Bank of Canada, also found that 67% of Canadians took their mortgage out from the same bank as their chequing account - at an average premium of 66 basis points.
