MONTHS after indicating that it will draft service standards for deposit-taking institutions (DTIs) to implement for their automated banking machines (ABMs), the Bank of Jamaica (BOJ) Tuesday issued eight such standards and warned banks that though failure to put them into effect will not bring monetary fines, they could be the target of enhanced scrutiny.

The guidelines are amongst the most far-reaching for how banks treat consumers and are aimed at addressing long-standing concerns consumers have raised with regard to ABMs and their downtime or lack of adequate cash.

On the matter of the availability of cash at ABMs, the central bank said in the new standards that it firstly wants to see at least 90 per cent of ABMs working all the time. And those that are operational must be working at least 95 per cent of the time. In addition, machines located in urban or resort areas must not be out of cash for more than 60 consecutive minutes, while the time out of cash for ABMs located in rural areas should be no more than 180 minutes or three hours.

Further to that, the BOJ said banks must implement board-approved ABM cash-risk-management policy and procedures that will aid in assessing the demand for cash and ensure that cash levels are adjusted accordingly to prevent shortages. The policy should also require periodic reviews of ABM restocking schedules so that cash levels do not fall below determined minimum thresholds.

Banks are also required not to leave anything to chance and must have appropriate alert technology to notify them when each machine reaches the minimum cash it is designed to stock, and when it is out of cash. They must also have contingency plans to address unexpected events, such as sudden spikes in demand or technical failures.

Under the new guidelines, the maintenance of the ABMs is to be done routinely to reduce service disruptions, with a real-time notification system to be implemented to alert the DTIs when a machine is out of service.

The guidelines also require banks to notify customers when a machine malfunctions for a prolonged period of time. Additionally, ABM downtime should not be for more than three consecutive hours, and customers within a specified geographical radius should be provided with information on nearby ABMs and the banking services they offer.

Addressing the vexed issue of ABM fees and charges, the central bank said under the guidelines, consumers will have a right to transparent information about products/services and their prices. In this case, it said banks should transparently and comprehensively disclose ABM fees and charges to customers, including displaying them prominently at ABM locations. The BOJ said it will also commission assessments of ABM-related fees to determine their reasonableness and relevance.

“The assessment will help to ensure that fees are aligned with costs associated with the provision of the service/services, while balancing considerations of affordability by consumers,” the BOJ said in the release while adding that all fees must be stated in Jamaican dollars only “to avoid ambiguity and ensure consistency in the disclosure of fees”.

The disclosure of these fees, it said, will help customers to know the full costs associated with ABM services and be able to compare costs across providers.

The BOJ, which has been shy to regulate bank fees and charges in the past, now said it will do so.

“Before increasing ABM fees, DTIs are required to write to BOJ to provide justification and request the non-objection of the regulator. Fees can be increased if (1) the regulator indicates, in writing, a non-objection to the proposed change in fees or (2) the regulator does not object within 30 days of the date on which the application for a non-objection is made. Having received a non-objection, the DTI should give at least 45 days’ notice to the public of its intention to adjust the fees,” BOJ said.

It also took on the deployment of machines, saying that all DTIs are to provide the regulator with two months’ notice of intention to remove an ABM, with justification for its removal, and a plan of action outlining reasonable alternative access for customers, as well as the method of public notification.

For consumers contesting any issue at an ABM, there is some reprieve.

“ABMs [are] to have audit trail and log capabilities comprehensive enough to facilitate investigations, reconciliation and dispute resolution. DTIs [are] to ensure the display of customer support information for direct access by customers who have experienced loss of card or funds resulting from the use of ABMs. Clear service-level standards are also expected from DTIs in such cases,” the central bank said.

The disabled community has not been left out, either. Under the new standards, ramps are to be installed at ABM locations to improve access for disabled persons, subject to relevant legislation, and infrastructure and technology are to be in place at ABMs to improve customer experience for the elderly and disabled, subject to relevant legislation.

The guidelines also address fraud minimisation.

“Customers are to be protected from loss of assets during their use of banking services. DTIs are required to conduct annual assessments of ABMs to determine whether enhanced policies, procedures, protocols or technology are needed to remedy emergent security/fraud risks, and if the assessment shows the need for new technology, the DTI must submit to BOJ an action plan outlining the process by which the new technology will be implemented,” BOJ said. Additionally, it said DTIs are to include in their cash-risk-management policy, appropriate measures to limit the possibility of various types of fraud.

Regarding the safety and security of customers the guidelines said, “ABMs are to be situated in a manner and in locations that ensure a satisfactory level of security for users, including maintaining the confidentiality of their transactions, and DTIs are to ensure that cash management service providers utilise appropriate security measures.”

The BOJ also said DTIs are to provide financial education programmes to increase customers’ knowledge about the proper use of ABMs and the associated risks, and DTIs are to inform customers how to recognise ABMs that have been tampered with to facilitate fraud.

The new standards were issued on Tuesday and DTIs have a nine-month transition period to bring themselves into conformity with the guidelines, given the far-reaching nature of the service-level standards, the BOJ said.

“Compliance will be assessed through BOJ’s review and publication of monthly reports from the DTIs. No monetary sanctions will be applied as a result of breaches of the guidelines; however, non-adherence may give rise to supervisory concerns around safety and soundness with the attendant supervisory consequences. Monthly reports on the performance of each DTI’s fleet of ABMs will be published with a two-month lag. These reports will include the geographical distribution of ABMs, the number of machines that were installed, the proportion of ABMs that were operational for the reporting period, the uptime for operational machines over the period and the recovery time for malfunctioning machines.”

The central bank said the new framework will be supported by appropriate legislation under the Twin Peaks system of financial sector regulation which is being developed. The standards also form part of the practising of the Twin Peaks regime ahead of the passage of supporting legislation.

Member of Parliament Fitz Jackson had moved a motion through Parliament on January 30 to have the Economy and Production Committee of the House of Representatives meet with the BOJ regarding the issues consumers are facing with financial institutions, in particular DTIs and their ABMs. Some of the issues highlighted included the closure of bank branches, discouraging use of banking halls and encouraging ABM usage, difficulties for account holders to recover funds, and malfunctioning ABMs.

The committee is set to have its first meeting on Thursday and Jackson is elated about the BOJ’s action in establishing standards for ABMs.

“I am indeed pleased that the BOJ has acted on the decision of Parliament through that motion to establish some standards. When I get a chance to go through it, then I can make an assessment as to how adequate I believe it is, because I’ve never seen whatever draft they came up with,” Jackson told the Jamaica Observer Tuesday night.

Jackson has been adamant in seeking to add further regulations to banks and fees over the years, with limited success. He is currently involved in a court case with the Bank of Nova Scotia Jamaica Limited over certain fees charged in the past. That case is to be decided on October 1 by Justice Crescencia Brown-Beckford.

Jackson also wants to see some pecuniary penalties and the range of penalties that will be applied to the DTIs for breaches of these standards.

— Additional reporting by David Rose