Canadians who purchased certain investments with Manulife Securities Inc. and Manulife Securities Investments Inc. between 2005 and 2016 may be entitled to refunds totalling $11.7 million in excess fees.

The Ontario Securities Commission has approved a settlement agreement in which Manulife will contact and reimburse customers who were overcharged.

While the amount customers are entitled to will vary depending on their investments, it works out to an average refund of $1,242.04 for each client.

Manulife dealers reported the overbilling to the commission in June 2015, when they discovered "certain clients paying, directly or indirectly, excess fees that were not detected or corrected by the Manulife dealers in a timely manner," according to documents released by the commission.

Investors with fee-based accounts and those who invested in MER differential funds were overcharged.

Manulife will manage refunds

For the 5,483 clients who invested in fee-based accounts between June 2005 and 2016, Manulife has agreed to repay $6 million for the excess fees, sales tax, and five per cent interest per year.

Another 3,937 clients who invested in MER differential funds between July 2007 and last Oct. 16 will be repaid $5.7 million.

Dealers are responsible for contacting clients who are entitled to a refund of $200 or more.

If they discover the investor has died and is owed more than $400, dealers must make every effort to contact the person responsible for their estate.

Any money not returned by June 30, 2019, will be donated to United Way Financial Literacy programs.

The companies have also agreed to pay an additional $520,000 to the Ontario Securities Commission.

No evidence of dishonesty

Commission documents say Manulife dealers have "conducted an extensive review of its other business operated in Canada" to determine whether there were any other instances of overcharging.

They also say Manulife dealers have taken corrective action "including implementing additional controls and supervision to address and prevent the reoccurrence."

The documents say there is no allegation or evidence of dishonest conduct by the Manulife dealers.

More oversight of investment firms needed

Stan Buell with the Small Investor Protection Association told CBC News this is just one more reason why there needs to be more oversight of investment firms.

"The regulators indicate to the public that they are, in fact, regulating, whereas it really is self-regulation in the industry," he said in a phone interview.

Buell said regulators can only enforce the legislation and regulations that are in place.

"If something isn't covered specifically by the rules, then [regulators] are powerless to do anything about it," he said.

Buell said billions of dollars in fees are charged to small investors every year. This case points to a need for greater transparency around the fees charged by investment companies, he said, even though new rules around disclosure took effect earlier this month.

How much do you pay in fees?

New rules require companies to disclose commission fees and fees for advice. However, other charges, such as management, trading costs, legal and administrative fees do not have to be divulged.

"It's very difficult to find out exactly how much you're paying in the way of fees," Buell said, adding if people compare their yearly return on investment in mutual funds to GICs and bonds they might be surprised.

"A lot of people will find they're making less on their mutual funds than they would make on GICs," he said.

The Ontario Securities Commission, citing studies over the last 13 years, said Canadians who invest in mutual funds pay some of the highest fees in the world.