Royal Bank is backing away from a plan to charge customers transaction fees for loans, mortgage payments and debit transactions on some kinds of accounts.

The new rules, which were to go into effect June 1, met with complaints and outrage from customers.

The so-called "pay-to-pay" fees would have applied to:

  • RBC Royal Bank mortgage and loan payments from RBC personal banking or savings accounts.
  • RBC Royal Bank investment contributions from RBC banking accounts.
  • RBC Royal Bank credit card payments from RBC savings accounts.
RBC Royal Bank Acquisition 20150122

Royal Bank says customers will not have to pay fees for paying down their mortgage or loans. Consumers had criticized the proposed fees as 'pay-to-pay' charges. (Jeff McIntosh/Canadian Press)

RBC said it changed its policies because it is listening to customers.

"We are listening to our clients and will not include transactions like mortgage and loan payments as debit transactions," the bank said in a statement.

"The impact of not proceeding with these as countable debits will be modest, as most of our clients are already in accounts with unlimited transactions. We encourage our clients to call us or meet with us at their local branch and ensure they are in the right package for their needs," the statement read.

The change means mortgage and loan payments, investment contributions and credit card payments will not count toward a customer's monthly transaction limit.

The bank had proposed fees for customers for mortgage and loan payments on top of the interest rate it already charges.

"It looked like double-dipping when I saw that we could be paying on top of our interest a fee for making our mortgage payments," RBC customer Gordon Murray told CBC's Go Public. 

Customers who have accounts with unlimited debit transactions would not have been affected.

All of Canada's big banks have announced hikes to transaction and account charges, but Royal Bank stood out for charging customers to make payments to itself.

The NDP has a petition calling for an end to so-called "pay-to-pay" fees by Canada's big banks. The federal government banned pay-to-pay fees from telecom companies.  

"We have been long calling for an outright ban on pay-to-pay fees," said Toronto NDP MP Andrew Cash. "The government continues to fall back on its poor argument that we've got a voluntary code of conduct here and that should suffice."

The code of conduct needs to be mandatory, rather than voluntary, and disallow "these kinds of ripoffs that actually add up to millions of dollars a year," Cash said.

With files from The Canadian Press