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Toronto-Dominion Bank (TD) has been fined $400,000 by federal banking regulators, which found that it failed to properly disclose account fees over several years, resulting in senior clients paying millions in excess bank fees.

The Financial Consumer Agency of Canada (FCAC) fined TD Bank after concluding that the firm violated provisions of federal banking legislation that require the disclosure of deposit account fees.

Specifically, FCAC staff alleged that disclosure-related violations occurred between 2012 and 2018, after the bank discontinued its free account plan for seniors but didn’t properly disclose how senior customers could access a new “senior’s rebate” offered instead. As a result, some eligible customers weren’t automatically charged the lower account rate for seniors.

In total, the issue affected approximately 500,000 customers over six years, resulting in excess charges of approximately $31 million, according to the decision from FCAC commissioner Judith Robertson.

The bank voluntarily reimbursed clients once the issue was discovered, and it self-reported the violation to the FCAC in 2018.

According to the regulator’s decision, while the bank accepted that the alleged violation occurred, it questioned the penalty proposed by the regulator’s staff, and it argued that it should not be publicly identified in connection with the enforcement action.

“TD submits that this non-compliance with the disclosure requirements was the result of a difference in interpretation made in good faith rather than indicating negligence or intent,” the decision said, noting that the bank asked for the proposed penalty to be half the amount requested by FCAC staff.

However, the FCAC concluded that, while the bank didn’t intend to mislead its customers or intentionally charge them more than necessary, the bank was negligent in that the issue was ultimately uncovered through a client complaint rather than through the bank’s own oversight processes.

“This, and the lack of the identification of a potential breach of the disclosure requirements for the period from 2012 to 2017, are an indication of a degree of negligence on the part of TD in fulfilling its regulatory obligations,” the decision said.

“It is regrettable that TD did not respond differently when it had evidence that the disclosure document was not effective as early as 2013. The lack of take up of the reduced charges by eligible seniors was a signal that something was not working as expected,” the FCAC noted. “A proper examination of this unintended outcome could have surfaced the non-compliant disclosure and triggered a more effective response on the part of the bank.”

Ultimately, the FCAC upheld the penalty sought by its staff, citing “the length of time this issue was outstanding, the number of customers affected, the dollar amounts involved, the degree of negligence identified above, and [TD’s] violation history,” which was deemed an aggravating factor in the case.

It also decided to publicly name the bank, calling the step “an appropriate measure and a suitable specific deterrent.”

“Although TD’s affected customers have already been informed and received reimbursement, they have not been made aware that this was as a result of a regulatory compliance issue,” it said. “Publication is therefore consistent with FCAC’s purpose to protect and educate consumers and to promote compliance by banks.”