Canada’s largest commercial bank has reached a significant agreement that could put money back into the pockets of thousands of mutual fund investors. On July 16, 2026, Royal Bank of Canada announced a proposed $45 million settlement to resolve a class-action lawsuit alleging the financial institution charged unfair fees to customers who held RBC mutual funds through discount brokers.
The settlement, if approved by the courts, would bring an end to legal proceedings that began in 2018 when plaintiff Peter Ross filed suit against two RBC subsidiaries: RBC Global Asset Management Inc. and RBC Investor Services Trust. The case centers on so-called “trailing commissions” that were allegedly paid to discount brokers despite these brokers not providing any investment advice to customers.
Understanding Trailing Commissions and Why They Matter
Trailing commissions are ongoing fees paid to brokers as compensation for providing investment advice and service to mutual fund holders. However, the lawsuit contends that discount brokers operate under a fundamentally different model—they offer do-it-yourself investment platforms and are not permitted to provide investment advice to their clients.
“Since no advice is provided to investors who purchase mutual funds through discount brokers, these investors receive no value for the trailing commissions that reduce the value of their mutual fund investments,” stated law firm Siskinds LLP in their official release announcing the settlement.
The legal filing alleges that despite the self-directed nature of discount brokerage accounts, RBC continued to pay trailing commissions to these brokers and deducted these fees directly from customers’ mutual fund holdings. The affected period spans more than two decades, from December 28, 2003, through July 25, 2024.
Part of a Broader Pattern in Canadian Banking
This settlement is not an isolated case. Siskinds LLP has pursued similar lawsuits against other major Canadian commercial banks over comparable trailing commission practices. Most notably, TD Bank agreed to a $70 million settlement in December 2025 to resolve similar allegations. These cases represent a significant push for accountability in the Canadian financial services sector regarding fee transparency and fiduciary responsibilities.
The class action specifically alleges that RBC breached its duties as trustees and fiduciaries by paying trailing commissions that were described as:
- Excessive in nature
- Inflated beyond reasonable compensation
- Unearned by the discount brokers receiving them
It is important to note that RBC has denied and continues to deny all allegations in the lawsuit. The bank’s agreement to the settlement does not constitute an admission of liability, wrongdoing, or fault. By reaching this agreement, RBC aims to resolve the litigation without the expense and uncertainty of a trial.
Who Qualifies for Compensation
If the Ontario Superior Court approves the settlement during its scheduled review on September 8, 2026, affected investors may be entitled to receive compensation. The class definition is quite broad, potentially encompassing a large number of Canadian investors.
To qualify as a class member, individuals must meet the following criteria:
- Held units of an RBC Mutual Fund or PH&N Mutual Fund through a discount broker
- The holdings occurred between December 28, 2003, and July 25, 2024
- Residency or domicile location does not affect eligibility
- Must not be among excluded persons, which includes defendants and those who formally opt out
Those who meet these class definitions are automatically included in the settlement and may be entitled to a portion of the $45 million payout. The exact distribution formula and claim process will be determined following court approval.
What This Means for Canadian Investors
This settlement represents an important development for consumer protection in Canada’s financial sector. For members of the Latin community in Canada who may hold mutual funds through discount brokers, this case serves as a reminder to carefully review investment fees and understand exactly what services those fees are meant to cover.
Investors who believe they may qualify for compensation should monitor announcements from the court and the law firm handling the case. Additional details about the claims process are expected to be released following the September 2026 court review. In the meantime, affected individuals should gather any documentation related to their RBC or PH&N mutual fund holdings through discount brokers during the relevant period.
