Ottawa Moves to Ban Fees for Switching Your TFSA. Banks and Wealthsimple Want Your Savings

Moving your TFSA from a big bank to an app should not cost you a nice dinner out. Ottawa now agrees.

The federal government released draft regulations on Thursday that would stop banks from charging fees when clients move an investment account to another financial institution, CBC News reported. The ban covers RRSPs, TFSAs and RESPs as well as non-registered investment accounts at Canadian banks. Such fees typically run $150 per account, according to a regulatory impact analysis from the Department of Finance cited by CBC.

The same day, Wealthsimple rolled out an AI assistant called Penny. One announcement makes it cheaper to leave your bank. The other is a pitch for where you should go. Together, they sketch the real fight underway, which is over who gets to hold young Canadians' savings for the next 40 years.

What exactly would the transfer fee ban cover?

Only the flat administrative fee for moving the account. Product-level costs stay, including trading commissions, early-redemption penalties on GICs and mutual fund sales charges if investments are sold during the move, CBC reported. Fees tied to chequing and savings accounts are not affected.

Nothing changes yet. A Finance official told CBC a 30-day consultation will begin after Saturday, and the regulations would deliver on a promise from the 2025 federal budget. The government's own review found transfer fees range from $50 to $150 per account, with partial transfers costing $25 to $75, MobileSyrup reported.

One more limit worth knowing. The draft targets federally regulated banks. Wealthsimple CEO Michael Katchen, cheering the move on X, added that "now it's time for provincial governments and the rest of the financial industry to follow," per MobileSyrup. If your account sits with a credit union or another provincially regulated firm, check whether these rules will reach it.

Why is Wealthsimple so loud about exit fees?

Because it is on the receiving end. "This year alone, Canadians have been charged $73 million in exit fees to move their savings to Wealthsimple," Katchen wrote. That is Wealthsimple's own figure, and CBC noted the company has a vested interest in seeing the charges disappear.

"Every financial institution in Canada could decide today to stop charging these junk fees and end this tax on choice," Katchen said. "You don't need regulation to do the right thing."

The banks are more measured. The Canadian Bankers Association is reviewing the draft and will work with Ottawa on implementation, spokesperson Nathalie Bergeron told CBC. "We believe that reforms should support efficient account transfers across the broader marketplace," she said.

Consumer advocates have raised a fair counterpoint before. When the ban was first proposed last year, Jean-Paul Bureaud of investor advocacy group FAIR Canada told The Globe and Mail that "someone's going to have to pay for the work involved," and predicted institutions would try to recover the cost elsewhere. Planner Jason Pereira told the Globe that receiving advisors commonly covered the fee anyway to win business, so the sting fell hardest on people with small accounts.

What is Penny, and should you hand your money to an AI?

Penny is Wealthsimple's new assistant for everyday money tasks. According to MobileSyrup, it can send e-transfers and wires, flag duplicate credit card charges, offer spending insights, pay invoices and buy or sell stocks and ETFs. It also takes broad goals, such as "Max out my RRSP by March," and maps out the steps. Starting in early 2027, Wealthsimple says clients will be able to connect their ChatGPT or Claude accounts, choose the level of access, and face an extra check on critical actions.

That is a sharp contrast with the Big Six. RBC, TD, CIBC and BMO all said last week they would block third-party personal AI agents from directly accessing client accounts, CBC reported, citing security. "If AI is going to move beyond the frontier and into the broader economy, trust will matter as much as capability," RBC CEO Dave McKay wrote.

So one side is betting you want an AI that acts for you. The other is betting you want a wall around your account. Both are competing for the same customer.

Why does this matter more for younger Canadians?

Because inertia is expensive over decades. "We tend to be [in] life-long, committed relationships with our financial institutions," Li Zhang of CPA Canada told CBC. "What we needed at 15 [years old] is not what we need at 20, is not what we need at 40." She added that a fee like $150 makes "a huge difference" for Canadians struggling with affordability.

The rest of the system is shifting too. The Big Six hold more than 90% of the banking market, and Thursday's federal budget promises to give the banking regulator a secondary competition goal and speed up approvals for new banks, the Globe reported. Ottawa also plans to raise the deposit insurance limit to $250,000 from $100,000.

What should you do right now?

If you were already planning to switch, you do not have to wait for the rules. Ask the receiving institution whether it will cover the transfer fee. Pereira's point suggests many firms will when they want your business.

Always request a direct transfer started by the new institution. The Canada Revenue Agency says a direct TFSA transfer will not affect your contribution room and avoids tax implications, while withdrawing and redepositing yourself can. An in-kind transfer moves investments without selling them, which can help you avoid some of the selling costs the ban will not touch.

Before linking any AI tool to your money, read your bank's policy. TD told CBC that clients should never share log-in credentials, passwords or one-time passcodes with an AI agent. And if you have opinions on the draft rules, the 30-day consultation is your chance to say so.

This article is general information for educational purposes only and is not personal financial advice.