If you’ve bought life insurance from RBC, you could be a part of a proposed class-action lawsuit accusing the bank of charging customers hidden fees.
In May, plaintiff Geiss Holdings Ltd. filed a notice of civil claim with the Supreme Court of British Columbia against RBC Life Insurance Company.
“The claim is that RBC has been ‘double dipping’ by taking investors’ money and charging the customers twice for its management,” reads a news release from Rosenberg Law, the law firm representing the plaintiff.
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According to the law firm, the financial institution allegedly does this by selling life insurance through its RBC Insurance arm.
Those who buy the insurance become policyholders whose premiums are invested by the insurance arm. In return, the policyholders get life insurance, and at the same time, the invested premiums pay interest to the policyholders.
The class action claims that the bank’s insurance arm charges a management fee to manage the invested premiums, which it discloses is 1.65% and is the fee that policyholders have agreed to.
“Unbeknownst to the policyholders, RBC is charging not only the 1.65%, but an additional hidden fee,” stated Rosenberg Law. “RBC places the money in another RBC fund which charges an additional fee of 1.84%. So, the policyholders are secretly being charged twice.”
The law firm says that when the plaintiff investigated this practice and “discovered the true state of affairs,” he realized that he and all the other policyholders were allegedly being charged the extra 1.84% of the amount that was reinvested in another fund every year.
“1.84% doesn’t sound like much, but the fund is worth $1.6 billion, so the extra amount that RBC is charging is over $100 million if one goes back 10 years,” explained the law firm.
Could you be a part of this proposed class action against RBC?
The proposed class action is calling on the financial institution’s insurance arm to provide annual audited financial statements to the policyholders. It also seeks general, special, aggravated and punitive damages.
Rosenberg Law says the class action has yet to be certified, which could take a year or two.
Once it is certified, any Canadian who is a holder of RBC Security Fund policies sold and managed by RBC Life Insurance Company will automatically be included.
For more information on the lawsuit, click here.
This isn’t the only legal action filed against the bank recently. If you invest in RBC or PH&N Mutual Funds, you could cash in on this class-action lawsuit.