Reining in the banks
Finance minister, BOJ Governor unified on financial services protection for consumers

CONSUMERS will soon get greater protection and have a medium to press banks on improving customer service with the impending passage of the financial services protection Bill.

Richard Byles, governor of the Bank of Jamaica (BOJ), told Parliament's standing finance committee on Tuesday that the draft has been sent to the Ministry of Finance, which must now refine the Bill and take it to Parliament.

Byles was answering questions about service standards in banks from Robert Montague, the Member of Parliament for St Mary Western and Phillip Paulwell who represents Kingston Eastern and Port Royal.

"We have a Consumer Affairs Commission, but not specifically for the financial services industry," Dr Nigel Clarke, minister of finance, chipped in.

Montague was seething against the suggestion that the current Banking Services Act outlines a code of conduct that requires banks to provide certain basic information and set some standards in terms of dealing with customer complaint. "The code is to protect the banks and not the consumer," he hit back.

BOJ Governor Richard Byles told the Standing Finance Committee that the draft of the Financial Services Consumer Protection Bill is now with the Finance Ministry ahead of being taken to parliament. The bill will seek to among other things, bring greater protection to consumers dealing with financial services companies.

Clarke told the House committee that the Bill will empower the BOJ to enforce standards. He did not give a definitive timeline when it will reach the House, but said it will "come to Parliament in the next several months".

"The financial services protection Bill that this House will see a vitally important Bill that I hope the House will treat with expeditiously, because it is in that Bill that more rules and regulations will be set for how banks will operate. It will be an effective form of oversight," said Byles in response.

Just last Thursday, Clarke told an audience on a Twitter space that the the Bill is now being finalised to improve consumer protection in the financial services sector.

Member of Parliament for St Catherine Southern Fitz Jackson introduced a Bill in 2017 which was struck down on a vote in February 2019 relating to fees for depositors' transactions. It would have prohibited banks from charging these fees on deposits, withdrawals and inquiring on transactions against individual depositor accounts. While he has re-tabled the motion, it hasn't been debated in Parliament as yet.

CLARKE....The real issue here is consumer finance protection which has been absent from Jamaica for a long time..

Dr Clarke noted that the newly proposed Bill would have 50 substantive clauses compared to the five or 10 pages being proposed by Jackson. He noted that this would be a game changer and would swing the pendulum in favour of the consumers who would be able to hold their banks accountable.

"The real issue here is consumer finance protection which has been absent from Jamaica for a long time. Now, you'll recall we passed a Bill in the House of Parliament that provides consumer finance protection to customers of microcredit institutions because that's where the problem was most egregious. We are now turning our attention to providing consumer protection for financial services customers more broadly," Dr Clarke said on the Twitter space last Thursday.

Dr Clarke hosted the space in an attempt to diffuse the 'confusion' caused in Parliament by Hanna on how NCB Financial Group Limited made in excess of $73 billion in net income in 2019. He responded to Hanna in a Twitter thread and gave her an explanation between consolidated accounts for NCBFG and National Commercial Bank Jamaica Limited (NCBJ) which made approximately $13 billion after removing dividend income from its subsidiaries, a difference of more than $60 billion. It also served as a forum for the finance minister to speak with the public and get feedback on the issues they have with banking in Jamaica.

An image of the cover of the draft Financial Services Consumer Protection Act which is to come to parliament in the next few months..

Currently, the BOJ does not regulate interest rates or fees charged by deposit-taking institutions (DTIs) which is currently set by the market. The BOJ only has the power under the 2014 Banking Services Act (BSA) to prescribe the maximum or minimum interest rates which may be charged or paid by commercial banks and other DTIs. The BOJ does have an office of consumer complaints which addresses certain complaints under the 2016 BSA Code of Conduct. However, it keenly relates to minimum standards of good banking practices for banks and not necessarily to complaints surrounding breaches with customers.

One Twitter user detailed how a commercial bank issued two credit cards without their permission or signing of any documents in 2019 which showed up on his credit report. While he was able to get one taken off quickly, the bank wanted him to write to the credit card centre or go in branch to have it removed. The situation occurred again this year where their good credit card was permanently restricted, and an unknown card was live and not in his possession. In the USA, that is illegal as covered by the Truth in Lending Act with the Consumer Financial Protection Bureau acting as the government agency to ensure that consumer financial products are fair, transparent and competitive.

The Bank of Jamaica currently operates with a Banking Services Act which outlines a code of conduct that requires banks to provide certain basic information and set some standards in terms of dealing with customer complaint. However, that Act falls short in offering full consumer protection or requiring minimum guaranteed standards for service delivery. The new bill aims to address those shortfalls.

"There will be an avenue for complaints to be heard. Today, if you make a complaint, the regulatory authority, the BOJ, is not empowered by law to do anything as far as consumer protection is concerned. They are empowered by law if somebody breaks a regulation, but those regulations tend to be macroprudential regulations and not how you treat customers. People will be able to lodge complaints to a central authority, have those complaints addressed and have punitive action against financial institutions if on investigation of those complaints that action is justified. Today, that is not possible," Clarke expounded on the lack of avenues for consumer complaints.

In his address to Parliament on Tuesday, BOJ Governor Richard Byles explained that there is not enough competition in the financial space with the two leading commercial banks, NCBJ and the Bank of Nova Scotia (Jamaica) Limited, controlling over 70 per cent of the business. There are 11 DTIs in Jamaica with eight commercial banks. While the number of commercial banks has increased over the last decade, the new banks never grow to be competitive enough to compete with the larger commercial banks.

"If you had portability and you could go to a bank and say, 'I want to open an account at this other bank, please send

BY DAVID ROSE Observer business writer

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