HAVING exhausted every possible means within Parliament to prevent banks from illegally extracting funds from their customers and the public at large, Member of Parliament for St Catherine Southern Fitz Jackson said his suit against the Bank of Nova Scotia Jamaica Limited (Scotiabank) was a last-ditch effort to deter banks from engaging in the practice.

Jackson, on July 19, filed a suit against Scotiabank in the Commercial Division of the Supreme Court for charging him a fee of $385 to encash a cheque valued $2,500 in May 2019. As part of his claim against the bank, he is also requesting that the court declare that the bank breached its fiduciary responsibility as a licensed and regulated financial institution to honour a negotiable instrument, as per the Bills of Exchange Act.

This move would see the Supreme Court of Jamaica setting a legal precedent that would prevent banks from charging fees to encash cheques, according to Anthony Williams, one of Jackson’s attorneys.

“One of the relief sought is a declaratory order,” he said during a press conference on Tuesday at Spanish Court Hotel in New Kingston, St Andrew.

“So once the court makes that declaratory order then it would certainly have far-reaching implications for other banks because the order will not simply apply to the defendant; it would apply to financial institutions in general…in circumstances of this nature. Once the order is made, other banks will have to comply,” Williams explained.

The lawyer then proceeded to highlight that the Bills of Exchange Act is clear and “sets out in very simple language” what is required of banks.

According to Section 3 of the Bills of Exchange Act, “A bill of exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a certain sum in money to or to the order of a specified person, or to bearer.

“An instrument which does not comply with these conditions, or which orders any act to be done in addition to the payment of money, is not a bill of exchange,” it continues.

Other requirements for a bill of exchange, as outlined in the Act, are that it indicates an account from which payment of funds should be debited, it is dated, it specifies the amount to be paid, and it indicates the place on which the bill is drawn or is payable.

Given the provisions set out by the legislation, Williams argues that Jackson’s suit against Scotiabank has legs on which to stand. In fact, he emphasised that the claims of the suit hinge on the words “unconditional order” and “payable on demand”.

“Based on our reading and understanding of the Bills of Exchange Act, we’re not seeing any provision in the legislation which gives the financial institution the authority to impose a fee,” the attorney outlined.

For his part, Jackson, who is a six-time representative of the St Catherine Southern constituency, said going to the court was a “last resort” to protect the interest of the Jamaican people.

Having consulted his legal team on the issue of the encashment fee, and coming to the conclusion that it is in fact a breach of the law, the MP said he “was left with no other choice than to turn to the courts for an answer”.

The issue of exorbitant and illegitimate banking fees was first brought to Parliament by Jackson in 2013 through a private members motion that highlighted several charges imposed by deposit-taking institutions, particularly commercial banks. At that time the motion requested a study on fees in Jamaica, the Caribbean, and other international jurisdictions.

Jackson, who was then a Government MP, recalled that “A subsequent set of recommendations, resulting from extensive consultations with all deposit-taking institutions and various stakeholder groups, was submitted through the bipartisan Economy and Production Committee chaired by Mr Karl Samuda of the then Opposition to the full House, and that set of recommendations was approved.

“Those recommendations provided a Minimum Service Package (MSP) that would allow the face value of depositors’ funds to be protected from erosion by fees being imposed by banks, and for other protections provided therein,” he continued.

Even after a change of Government in 2016 and Jackson became an Opposition MP, he encapsulated the recommendations of the study in a Bill which he tabled in late 2017 and debated on in the Lower House in 2018. However, while the Opposition People’s National Party MPs supported the Bill en bloc, the governing Jamaica Labour Party “used its majority and defeated the Bill”, Jackson stated.

With regards to encashment fees, the MP shared that he has asked the governor of the Bank of Jamaica, Richard Byles, to investigate the legality of the charge and to verify if it breaches the Bills of Exchange Act.

“The governor promised to do so and advise. To date, no response is forthcoming, and this is after many interim reminders that have been sent to the governor of the Bank of Jamaica by the Houses of Parliament. I further reminded the governor of his outstanding responses in a PAAC meeting on May 4, 2022 in Parliament. Since then to now, no response,” Jackson disclosed.

“Subsequent to that failure to respond, I tabled some questions to the Minister of Finance [Dr Nigel Clarke] on the same subject — whether the cheque encashment fees were in breach of the Bills of Exchange Act. In his response the minister began to tell me what the industry says and explained why the fees were being charged, and unequivocally stated that [the charges were] not in breach of the Bills of Exchange Act,” he added.

Even after pressing the finance minister in Parliament if he had consulted and/or received advice from the Attorney General’s Chamber on the legitimacy of encashment fees, Jackson said the minister declined to answer.

“Against that background I made the statement then that I believe he has now become the official spokesman for the banks. It is important to note that when questions are tabled to a minister in Parliament, the question is not made to the particular minister — in the case of the minister of finance — it is to the Cabinet and the Government. So the response of Minister Clarke was the formal response of Prime Minister Holness’s Administration,” Jackson explained.

“With both the governor of the BOJ and minister of finance failing to do what they ought to do in protecting the interest of the country and the public at large, it is now left to the courts to determine whether or not charging an encashment fee is in breach. In that regard, we look forward to the court’s judgement,” he added.

When asked why he proceeded with legal action rather than wait on the tabling of amendments to the Banking Services Act, Jackson pointed out that mention of the legislation first took place in February 2016 when Audley Shaw was minister of finance.

As such, he said a failure to act now or cease from his campaign would make him complicit with the Bank of Jamaica, the minister of finance, and the prime minister in allowing what he believes is an illegal act to continue.

When Jamaica Observer checked with Scotiabank if it had legal grounds on which it charges encashment fees, the bank responded: “Customers who do not wish to pay fees for cheque encashment can deposit cheques received to their accounts at no cost.”

It also recommended that individuals can request deposit cheques to their accounts or request an electronic transfer.

Back in February, Scotia Group Jamaica CEO Audrey Tugwell Henry told Sunday Finance, “In terms of the issue of a bank’s service fee, we’re like other businesses. We’re faced with ongoing increases to do business and in Jamaica, in particular, banks have a very high operating cost for doing business.”