WARNING: Transfer-out fees from Tangerine for registered accounts | Page 2 | Tangerine Bank | Discussion forum

In my opinion, these new fees have nothing to do with the need to cover their admin costs. ING operated without these fees for many years, and the operation of these kinds of accounts administratively has not changed as far as I know - the transfer forms are the same as they always were. It has everything to do with wanting to suck more profit out of clients, just because they can, or so they think.
Tangerine is already making tons of money out of these registered accounts because (a) they are an online bank and thus do not have the costs of maintaining branches; (b) they pay lower rates than most, if not all, other online banks. So there is no ethical need for them to grab even more money just because some people realize that they are not likely to ever get good rates there, and therefore decide to take their money somewhere else.
The institutions that are worth bothering with are the ones that have higher rates. People are far less likely to remove their accounts from banks with exemplary rates, and, thus, the "need" for transfer-out fees is significantly diminished, if it ever existed.
In any event, most institutions that do charge exit fees are willing to reimburse the client for exit fees paid elsewhere. So, it is a silly circular game that they are playing. If they all eliminated all their exit fees, then they would be in about the same place that they are now by charging them.
And, lastly, most people have GICs in these registered plans. You can't move them in and out willy-nilly. You have to wait for them to mature. So, I don't think it's very likely that the banks are dealing with such numbers of transfers-out that it is taxing their budget to do so. If they want people to keep the money with them, they should pay better rates. That is the way to retain your customers and keep them happy. As any business person knows, it costs a lot more to get a new customer than to keep an old one. It won't help their bottom line or their dividends if they are churning their customer base all the time.
Not only is this going to be unpopular with customers, it's a poor business decision in my books.

When I said that I thought most people had GICs in these accounts, I was referring to the kinds of registered accounts that are offered by institutions such as Tangerine. They offer savings, GICs and, in the case of Tangerine, a small group of mutual funds. Anyone who wanted to invest serious money in mutual funds would go somewhere else where there is more opportunity for diversification.

I am not sure what a 'smallish' account might be at a place like Tangerine, but for GiC and savings accounts, there is basically a limit of 100,000 anyway, due to CDIC coverage. People with more money will be more likely to eventually centralize their funds in a full service financial institution.
Tang has put megabucks into attracting new business. I would hazard a guess that most of that new business will be smaller accounts. People with more money probably were already aware of Tangerine anyway and aren't likely to migrate there when they have more money. Why would they? The rates are terrible. I would suggest that the Tangerine model depends on a certain degree of inexperience among its customers. Once people have more money and/or realize that they are not getting optimum returns, they will go elsewhere. The only thing Tang really has going for it, in my view, is the ease of their online platform and pretty good customer service. This will be attractive, especially to young people, until they have more money and look elsewhere. But it will not hold any of us indefinitely.

Thus, if you're putting megabucks into trying to get new customers, and most of them do not yet have huge assets, it would seem to me that you WOULD care if they were upset about fees.

I also think it's about time the banks recognized that the small amount of paper work that they do in relation to these accounts is part and parcel of the cost of doing business. They are already paid for this service through the spread between what they offer us (peanuts, especially in the case of Tang) and what they get from borrowers or wherever else they invest the money. If their problem is that customers are restless and are inordinately inclined to be moving their investments elsewhere, then the solution to that is to make Tang itself more attractive, so that people won't have the desire to pull their money out. This is how you truly build a business for the long term, and how you can stand out. The Big 5 pay crappy rates but they can get away with it because they are full service institutions and offer people a lot of different services. Tang is not in that league.

I still think they're basically doing it because they think they can get away with it. It's like government and taxes. They find all kinds of ways of introducing extra fees, and clawbacks and what-not in order to avoid admitting that they are effectively raising taxes. There is no question but that the banks could ALL absorb these costs. One need only look at their balance sheets and dividend records to realize that. But, no, they have CHOSEN to ding the customer as much as they think the market will bear. And that, as always, is the bottom line.

It's only if we object, and withdraw our money, that they will get the message. Oaken has proven a very viable alternative so far. They too may institute these fees in due course if AltaRed's premise is correct. But maybe they'll be smarter than that. There's always hope! And there's always a newer smarter institution coming down the pike. Tang was great when it was ING and when it was new.

Oaken is a wholly owned subsidiary of Home Capital Group Inc., a publicly held company that trades on the TSX under the symbol HCG. http://www.oaken.com/wps/porta.....aboutoaken

Oaken does not charge transfer-out fees.

In my view, they provide a forward-looking banking alternative which offers superior rates to customers without alienating them with unnecessary fees. Both share prices and dividends have been increasing. They were named by the Globe and Mail as a "small cap stock to watch" in July.

Personally, I'm not planning on buying shares in Oaken/Home. I only mentioned that it was listed on the TSE because AltaRed suggested that it might not be a publicly trade company since it is willing to forego transfer fees.

Oaken has CDIC insurance. CDIC can afford to reimburse us completely in the unlikely event that a small bank like Oaken were to go under, so I have no concerns. Small is beautiful! - at least until it gets taken over by something bigger.

Rick said

At the very least, the policy should be grandfathered so any funds locked in when there was no transfer fee would not be affected. Any funds deposited after Jan 1 2015 would then be subject to a transfer out fee. That would be the fair thing to do.

I think you're absolutely right about that, Rick. This would require a change in the regulations - see link in post #28 above. I think this is a huge part of what people find offensive, that rules are being changed unilaterally mid-stream. It offends any basic sense of fairness to change the rules during the course of an agreement. I suggest that the rules need to be strengthened. Contact your MP if you want to see the rules tightened.

In the meanwhile, can you get CDI to reimburse the $45, Rick? Many, if not most, will do this, making the whole fee-charging operation a bit of a circus, and creating more work which ought not to be necessary.