THE consumer rights watchdog group, Consumer Affairs Commission (CAC), is encouraging customers of commercial banks in Jamaica to review the loan rates being offered to them to ensure that the full benefits of interest rate reductions in the market are being passed on to them.

“As part of the overall thrust of the commercial banks to increase benefits by lowering interest rates on various loan portfolios we found it necessary to inform consumers that they have a responsibility to inquire what these announcements mean in relation to their financial institutions and whether there is an impact on their obligations to the named institution,” the CAC said in a written response to the Business Observer.

The CAC said, however, that it had not done a survey or had any scientific information supporting the failure of financial institutions to pass on rate changes, but said it has been receiving ‘ad hoc feedback’ from customers who inquire at the CAC about the interest rate changes and how their accounts are affected. The CAC noted that customers should inquire of the financial institutions themselves and take note of changes in the interest rates charged on loans and other transactions.

Since the Jamaica Debt Exchange (JDX) which was carried out by the Government of Jamaica (GOJ) in February last year, interest rates have trended downward from highs of 24 per cent to under 10 per cent at some institutions for some loans to specific entities. Central Bank rates have however dropped to under seven per cent since then and there have been calls by the Minister of Finance for the financial institutions to reduce their prime rates even lower. The CAC said consumers should be vigilant to see whether these changes have been effected to their loan balances.

The commercial banks, which are now guided by a Code of Conduct for Banking Services, should report these changes to the customers. However, The Code of Conduct was drafted by the CAC and its NGO partner, the National Consumers League (NCL) is not obligatory and merely reflect ‘good customer service’. The Code of Conduct for Banking Services in Jamaica is based on a minimum standard established by the North American-based headquarters of the three major commercial banks in Jamaica. In those jurisdictions the banks’ service delivery is guaranteed through a Banking Code which is far more stringent than the Banking Code drafted by the CAC/NCL, the CAC stated.