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TORONTO (Reuters) - Canadian Imperial Bank of Commerce (CM.TO) has agreed to a no-contest settlement with the Ontario Securities Commission that will see CIBC compensate customers a total of C$73.3 million ($54.8 million) for excess fees, the regulator announced on Friday.
The OSC said the settlement follows allegations by OSC staff that there were inadequacies in systems of controls and supervision at CIBC World Markets, CIBC Investor Services and CIBC Securities that resulted in clients paying excess fees that were not detected or corrected in a timely manner.
CIBC had told regulators it had discovered that some clients who qualified for lower management fees on certain funds were inadvertently charged higher fees, according to a statement of claim filed by Canada's largest securities regulator on Tuesday.
"Strong compliance systems are critical to investor protection and market confidence," said Jeff Kehoe, director of enforcement at the OSC. "We expect registrants to have effective controls in place to deal fairly with clients with regard to fees, and to correct non-compliant conduct in a timely manner."
In addition to the compensation, CIBC has agreed to make a payment of C$3 million to the OSC to help fund investor education and C$50,000 toward the cost of the investigation.
"We will begin reaching out to affected current and former clients to compensate them. We regret the inconvenience this has caused our clients and have taken corrective action by implementing additional controls to prevent it from occurring again," CIBC said in an emailed statement.
Under the deal, CIBC said it neither admitted nor denied the accuracy of the facts and conclusions of the OSC, but would compensate clients a total of C$73.3 million.
Other Canadian financial institutions have agreed to similar settlements. Fund manager CI Investments agreed to a C$156 million settlement in February. Toronto-Dominion Bank (TD.TO) agreed to pay C$13.5 million to customers in 2014. Bank of Nova Scotia (BNS.TO) agreed a C$20 million settlement in July.
Reporting by Matt Scuffham; Editing by Will Dunham