Decision #26425-614Q204

File: 26425-614Q204

Compliance issue

Cashing federal government cheques free of charge
Bank Act, s. 458(4)(a)

A bank charged a consumer to cash a federal government cheque. 

Paragraph 458(4)(a) of the Bank Act provides that a bank shall not make a charge for cashing a cheque or other instrument drawn on the Receiver General or on the Receiver General’s account in the Bank of Canada, in any bank or other deposit-taking Canadian financial institution incorporated by or under an Act of Parliament or in any authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2), in respect of its business in Canada. 

Compliance measure(s) taken

Letter of Reprimand^{Footnote 1}  noting two violations against the bank.

Compliance considerations

Since a new employee who was not yet familiar with the bank’s cheque-cashing procedures committed the error, the violation was determined not to be systemic. Nevertheless, the bank failed to take reasonable measures to ensure that the new employee was sufficiently monitored to prevent a violation of this nature. The bank had no prior violations of this nature noted against it.

Corrective measures taken by financial institution

• Reimbursed the customer, even though the bank was unable to pinpoint the specific transaction.
• Provided immediate training to the new employee related to the cashing of Government of Canada cheques.

Outcomes

Consumers have a right to cash their federal government cheques without being charged.^{Footnote 2}  This ensures that all consumers, no matter what their financial situation or banking habits, are able to access their Government of Canada funds. In this case, the customer was reimbursed. The ability to cash federal government cheques for free is an important part of access to basic banking services for Canadian financial consumers.