A gavel rests on its sounding block with a several law books and a justice scale out of fucus in the background. A cool blue cast dominates the scene. (A gavel rests on its sounding block with a several law books and a justice scale out of fucus in t

An Ontario court has ruled that registered investors were charged more than $100 million in undisclosed currency conversion fees over 10 years by several Bank of Montreal subsidiaries.

In a class action suit against several BMO firms — BMO Nesbitt Burns, BMO InvestorLine, and BMO Trust — Justice Edward Belobaba of Ontario’s Superior Court of Justice found in favour of investors who converted foreign currencies in their RRSPs, TFSAs and RESPs.

The court found that the firms charged undisclosed markups on currency transactions in clients’ registered accounts between 2001 and 2011.

Investors were prohibited from holding foreign currencies in registered accounts until federal tax law changed in June 2001. But it was 2011 before the firms’ systems actually enabled investors to hold foreign currencies in their registered accounts.

So for 10 years, the firms charged markups on currency transactions that were not explicitly disclosed, the court found.

Belobaba wrote that while clients could have discovered these costs with some research, the actual markup (in either percentage terms or basis points) was not disclosed directly to clients. This prevented comparison shopping, the court noted.

“I note that the defendants had no difficulty providing written disclosure about the other fees that were being charged to the trust accounts — such as annual administration fees, trading commissions, and interest charges,” Belobaba wrote in the ruling. “It would have been dead simple to add information about the amounts of the markups on foreign currency conversions. But this was never done and, it appears, has still not been done.”

The court concluded that the firms breached their trust agreement with and their fiduciary duty to investors. It ruled that investors are entitled to the profits earned by the firms on the $102.9 million in undisclosed fees that were charged during the 10 years.

The final amount will be determined by a reference back to the court.

The court declined to impose punitive damages in the case, saying that there was “no evidence of any malicious, oppressive or high-handed conduct” by the firms.

“The decision underscores the importance of the BMO companies’ trust obligations, and shows the effectiveness of class actions in addressing such systematic breaches,” said Odette Soriano, partner with Paliare Roland Rosenberg Rothstein LLP, in a statement. Soriano’s firm represented the plaintiff investors.

“As the judge made clear, financial institutions must take their trust and fiduciary obligations very seriously, particularly in the context of self-payment. They will be held to account if they don’t,” she added.