The posted rate isn't some magical number. Its the posted rate at the bank. It is included in your mortgage documents. My renewal documents show posted rate - discount = your rate. Then in the payment penalty section show exactly how it is calculated using the posted rate. None of this is hidden.
It also makes sense to use a posted value rather than the actual rate as the costs for termination for the bank will be fixed as the variance in rate between different clients is the cost of the difference in risk between two clients. SO whether a person has a 2% discount or a 3% discount the cost of early termination to the bank is the same.
https://www.rbcroyalbank.com/cgi-bin...ator.cgi/start
Banks mortgage calculators ask you and explain what the posted rate is/was.
You know what the posted rate is when you sign the document. The customer CAN and SHOULD know before they sign up. The Posted rate of banks is BOC rate plus X. I will concede that if the difference between the posted rate and the BOC rate changes over the lifetime of your product you might have an avenue for complaint.
The difference between an open short term mortgage and a fixed mortgage is 1-2% or so. So the customer is getting 10k per year in interest savings as a result of their decision to have a fixed rate mortgage.
The outcomes of this law suit would be a move to fixed rate penalties which screws over consumers in general as interest rate based calcs will be considered "Too Complicated" to figure out. So the banks needing to protect themselves will just have higher rates in general or higher penalties to switch.
And to add the lawsuit is not that the difference between the posted rate and the interest rate leads to too high penalties due to IRD. Its that IRD leads to too high penalties compared to 3 months interest and is "hard" to calculate.