Financial Post, Duncan Mavin, 10 August 2006
Bank of Montreal is at the centre of a multi-million-dollar class-action lawsuit alleging the bank charged unfair and undisclosed fees to customers with retirement savings plan accounts, it was revealed yesterday.
In a statement of claim filed with the Ontario Superior Court of Justice, it is alleged that BMO charges the fees for transactions that are not approved, and earned profits inappropriately at the expense of customers, depleting the funds in the customers' retirement or education funds.
It is not yet known how many BMO customers might be affected, and it is possible other Canadian banks could face similar legal challenges if they have not amended their systems since the tax act changes five years ago.
"It is our understanding that this issue may well go beyond BMO," said Odette Soriano, a lawyer with Paliare Roland Rosenberg Rothstein LLP, the firm that filed the claim on behalf of James MacDonald, a BMO customer.
The issue has arisen since revisions to the Income Tax Act which came into effect on June 14, 2001.
The changes permitted Canadians to hold foreign currency investments in their registered retirement savings plans, registered retirement income funds and registered education savings plans.
Ms. Soriano said the claim alleges BMO did not change its systems to allow for the fact customers could hold foreign currency investments in those savings plans. As a result, everything bought or sold in the account always goes through a foreign exchange conversion, making it very difficult for customers to make a profit while trading foreign securities in their savings plans. Customers are likely aware that they pay a fee for the initial conversion of their savings into foreign currency to invest in foreign securities, said Ms. Soriano. "But, if they are like Mr. McDonald, they aren't aware of the additional charges," she said.
The claim seeks damages of up to $100-million for "all the fees charged on unauthorized conversion of foreign currency to Canadian funds since the change to the Income Tax Act became effective."
Meanwhile, a spokesman for BMO said the bank does not comment on matters before the courts and has not yet filed documents in response to the claim. However, he said the bank does intend to file a statement of defence.
Bank of Montreal is at the centre of a multi-million-dollar class-action lawsuit alleging the bank charged unfair and undisclosed fees to customers with retirement savings plan accounts, it was revealed yesterday.
In a statement of claim filed with the Ontario Superior Court of Justice, it is alleged that BMO charges the fees for transactions that are not approved, and earned profits inappropriately at the expense of customers, depleting the funds in the customers' retirement or education funds.
It is not yet known how many BMO customers might be affected, and it is possible other Canadian banks could face similar legal challenges if they have not amended their systems since the tax act changes five years ago.
"It is our understanding that this issue may well go beyond BMO," said Odette Soriano, a lawyer with Paliare Roland Rosenberg Rothstein LLP, the firm that filed the claim on behalf of James MacDonald, a BMO customer.
The issue has arisen since revisions to the Income Tax Act which came into effect on June 14, 2001.
The changes permitted Canadians to hold foreign currency investments in their registered retirement savings plans, registered retirement income funds and registered education savings plans.
Ms. Soriano said the claim alleges BMO did not change its systems to allow for the fact customers could hold foreign currency investments in those savings plans. As a result, everything bought or sold in the account always goes through a foreign exchange conversion, making it very difficult for customers to make a profit while trading foreign securities in their savings plans. Customers are likely aware that they pay a fee for the initial conversion of their savings into foreign currency to invest in foreign securities, said Ms. Soriano. "But, if they are like Mr. McDonald, they aren't aware of the additional charges," she said.
The claim seeks damages of up to $100-million for "all the fees charged on unauthorized conversion of foreign currency to Canadian funds since the change to the Income Tax Act became effective."
Meanwhile, a spokesman for BMO said the bank does not comment on matters before the courts and has not yet filed documents in response to the claim. However, he said the bank does intend to file a statement of defence.
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Canadian Press, Rita Trichur, 9 August 2006
Bank of Montreal along with its BMO Nesbitt Burns and BMO Trust divisions are named 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 Registered Retirement Savings Plans, Registered Retirement Income Funds or Registered Education Savings Plans, 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.
"Mr. MacDonald saw some fees that were being charged to him for foreign-exchange conversions and he was concerned that what was happening was not required," said lawyer Margaret Waddell of Paliare Roland Rosenberg Rothstein LLP in an interview.
"And when he asked BMO about it, the answer he got was you have to change it, which he then found out was not in fact the case."
The claim alleges that in effecting those currency conversions, BMO levied "an undisclosed conversion fee" in addition to what they actually paid to buy or sell currency.
It further alleges "the reason for the defendants' failure to effect a change was so that they could continue to earn profits from the foreign exchange fees, at the expense of the class members," his lawyers said.
The allegations have not been proven in court and the class-action has yet to be certified.
MacDonald, who lives in Stouffville, Ont., north of Toronto, filed his complaint in Ontario Superior Court on Aug. 2, but BMO was officially served Wednesday.
"We've not filed any documents in response yet, but we intend to defend the action," said bank spokeswoman JoAnne Hayes.
According to the filing, the bank has 20 days to respond.
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.
BMO's shares lost two cents to $63.43 on the Toronto stock market.
Bank of Montreal along with its BMO Nesbitt Burns and BMO Trust divisions are named 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 Registered Retirement Savings Plans, Registered Retirement Income Funds or Registered Education Savings Plans, 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.
"Mr. MacDonald saw some fees that were being charged to him for foreign-exchange conversions and he was concerned that what was happening was not required," said lawyer Margaret Waddell of Paliare Roland Rosenberg Rothstein LLP in an interview.
"And when he asked BMO about it, the answer he got was you have to change it, which he then found out was not in fact the case."
The claim alleges that in effecting those currency conversions, BMO levied "an undisclosed conversion fee" in addition to what they actually paid to buy or sell currency.
It further alleges "the reason for the defendants' failure to effect a change was so that they could continue to earn profits from the foreign exchange fees, at the expense of the class members," his lawyers said.
The allegations have not been proven in court and the class-action has yet to be certified.
MacDonald, who lives in Stouffville, Ont., north of Toronto, filed his complaint in Ontario Superior Court on Aug. 2, but BMO was officially served Wednesday.
"We've not filed any documents in response yet, but we intend to defend the action," said bank spokeswoman JoAnne Hayes.
According to the filing, the bank has 20 days to respond.
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.
BMO's shares lost two cents to $63.43 on the Toronto stock market.
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Bloomberg, 9 August 2006
Bank of Montreal, Canada's fourth- biggest bank by assets, was sued by a retirement plan investor claiming he was charged fees on unnecessary currency conversions.
The proposed class action, filed by Ontario resident James MacDonald in Ontario Superior Court, seeks at least C$110 million ($98 million) for all investors in Registered Retirement Savings Accounts, the Canadian version of 401k accounts, the Toronto law firm Paliare Roland Rosenberg Rothstein said today in a statement. The plaintiff also wants to bar the bank from charging undisclosed fees on any foreign exchange transactions.
The complaint, filed Aug. 2, challenged the bank's practice of charging foreign exchange fees on stock trades in the accounts. MacDonald claimed he was charged a fee when he bought Tyco International Ltd. shares in U.S. currency in 2003. He was billed a second time when he sold the shares two months later after the proceeds were converted back to Canadian dollars, the complaint said.
``The foreign exchange fee is not and has never been disclosed to MacDonald and the other class members,'' his lawyers said in the complaint. ``The foreign exchange fee is and was intentionally hidden and kept secret from the class members, in breach of the defendants' contractual and fiduciary duties.''
Spokeswoman Joanne Hayes said in an e-mailed statement that Bank of Montreal will defend the suit. It has 20 days to file a statement of defense.
Visa, MasterCard Claims
Last month, Visa International Inc., MasterCard Inc. and banks including Citigroup Inc. said they agreed to pay $336 million to their customers to settle antitrust lawsuits over currency conversion fees charged on foreign transactions.
MasterCard said it will pay $72.5 million as its share of the settlement. Bank of America Corp., JPMorgan Chase & Co's Bank One Corp. and Chase Manhattan Bank and Washington Mutual Inc. are also defendants in the case.
The suits involved claims the credit card companies failed to disclose fees of up to three percent on purchases made in foreign currencies, said Merrill Davidoff, a lawyer for the consumers.
The case is Between James Richard MacDonald and BMO Trust Co., Ontario Superior Court of Justice (Toronto), Case No.: 06- CV-316213CF.
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Bank of Montreal, Canada's fourth- biggest bank by assets, was sued by a retirement plan investor claiming he was charged fees on unnecessary currency conversions.
The proposed class action, filed by Ontario resident James MacDonald in Ontario Superior Court, seeks at least C$110 million ($98 million) for all investors in Registered Retirement Savings Accounts, the Canadian version of 401k accounts, the Toronto law firm Paliare Roland Rosenberg Rothstein said today in a statement. The plaintiff also wants to bar the bank from charging undisclosed fees on any foreign exchange transactions.
The complaint, filed Aug. 2, challenged the bank's practice of charging foreign exchange fees on stock trades in the accounts. MacDonald claimed he was charged a fee when he bought Tyco International Ltd. shares in U.S. currency in 2003. He was billed a second time when he sold the shares two months later after the proceeds were converted back to Canadian dollars, the complaint said.
``The foreign exchange fee is not and has never been disclosed to MacDonald and the other class members,'' his lawyers said in the complaint. ``The foreign exchange fee is and was intentionally hidden and kept secret from the class members, in breach of the defendants' contractual and fiduciary duties.''
Spokeswoman Joanne Hayes said in an e-mailed statement that Bank of Montreal will defend the suit. It has 20 days to file a statement of defense.
Visa, MasterCard Claims
Last month, Visa International Inc., MasterCard Inc. and banks including Citigroup Inc. said they agreed to pay $336 million to their customers to settle antitrust lawsuits over currency conversion fees charged on foreign transactions.
MasterCard said it will pay $72.5 million as its share of the settlement. Bank of America Corp., JPMorgan Chase & Co's Bank One Corp. and Chase Manhattan Bank and Washington Mutual Inc. are also defendants in the case.
The suits involved claims the credit card companies failed to disclose fees of up to three percent on purchases made in foreign currencies, said Merrill Davidoff, a lawyer for the consumers.
The case is Between James Richard MacDonald and BMO Trust Co., Ontario Superior Court of Justice (Toronto), Case No.: 06- CV-316213CF.
