Wealthsimple Slams Big Bank Exit Fees, Pushes Ottawa to Step In

Canadian fintech Wealthsimple is taking aim at the fees big banks charge when customers move their money.

The Toronto-based company told Ottawa in this week’s budget consultation that transferring savings from accounts like RRSPs or TFSAs has become expensive. A decade ago, those charges were often nothing or capped around $75. Today, some banks ask for as much as $150 per account.

The six largest banks in Canada — including RBC and TD — control most of the sector. That dominance, Wealthsimple argues, leaves customers stuck paying steep costs just to switch. To attract new users, the company says it helps cover some of the exit fees.

“If the government were to take action, it would make it easier for clients to overcome that friction,” said Jessica Oliver, Wealthsimple’s head of government and regulatory relations, to BNN Bloomberg.

In its submission, Wealthsimple asked regulators to review bank transfer practices and called for changes to the Income Tax Act that would put limits on exit and transfer charges. The firm said its own customers have paid nearly $30 million in these fees while moving to its platform.

“There is no reason why financial institutions should be permitted to levy high, hidden exit fees on the rapidly growing number of registered plans,” the company wrote.

The Financial Consumer Agency of Canada said it couldn’t comment on pre-budget talks, and the parliamentary finance committee confirmed the submission hasn’t yet been circulated to members.

The Canadian Bankers Association responded that banks must make all fees clear to clients. Analysts say the rise of online players like Wealthsimple and EQ Bank may eventually force the big banks to rethink their fee models.