SANTA CRUZ, St Elizabeth — Charging that Jamaica's largest commercial banks are giving the free-market system a “bad name” and behaving like a cartel, Justice Minister Delroy Chuck said here Thursday that the Government could be forced to pass laws limiting banking fees and charges.
Chuck told justices of the peace at a commissioning ceremony that legislation to limit bank earnings ran afoul of the Jamaica Labour Party (JLP) Government's outlook in defence of the free market.
However, the justice minister said, while it was “the last thing we would want to do”, if the banks organise themselves “into a cartel and set fees”, then the Government has to intervene.
Said Chuck: “…Because we run a free-market system it means competition must take over. The banks are the best example of a free market, but in Jamaica they give the free-market system a bad name … they seem to be operating like a cartel… so you get the same sort of costs [and terms] whichever bank you go…”
At the commissioning ceremony, and in a follow-up interview, Chuck said the situation was particularly offensive because of the extreme hardships many Jamaicans were facing at a time when banks were giving very poor service and making billions of dollars in profits.
A clearly indignant Chuck told his audience that “while banks are increasing fees they are providing the worst service in the history of banking in this country… Every bank you pass you see lines outside and, while the service is depreciating, instead of hiring more staff, they are laying off staff, instead of [opening] more banks they are closing banks. I can't understand how the banks in Jamaica can behave like this. They are making billions of dollars in [service fees] and the service is the worst…”
Chuck's comments followed those of Prime Minister Andrew Holness and Finance Minister Nigel Clarke earlier this week chastising banks for their approach.
Holness told business leaders that “it would be iniquitous to increase banking fees and other prices on consumers at this time”.
And Clarke suggested that bankers were “tone-deaf” to the circumstances of their customers, especially the most vulnerable.
The finance minister questioned the rationale of banks charging customers to use automated teller machines (ATMs) when they had introduced that method “to graduate customers from inside the banking hall…”
The ruling JLP, through its deputy general secretary and mayor of Port Maria Richard Creary, has also described increased bank fees as “insensitive” and urged the Government to work with the banks in preventing such.
Lobbying to limit bank fees and charges is not new. High-ranking Opposition People's National Party Member of Parliament Fitz Jackson has led a long-standing campaign urging that Parliament amend the Banking Act to allow regulation of such fees.
In 2018, the Holness Government, using its then narrow majority in the House of Representatives, rejected a Bill brought to Parliament by Jackson.
On Thursday, in his interview with the Jamaica Observer, Chuck noted that “Fitz Jackson has proposed legislation, [but] we resisted it because we believe opportunity should be given to the banks to respond to moral suasion, but at the end of the day, you never know…”
He declined to speculate on what form any legislation could possibly take. But he said, “We hope it doesn't happen, but if it's needed then we will consider it…”
Chuck, meanwhile, voiced extreme annoyance with what he seemed to suggest was wide-ranging exploitative behaviour by commercial banks.
“I think it's really sad that you put your money in the bank and you have to pay to get it out. That doesn't make sense. The other thing, banks buy foreign currency at one dollar and sell it back at $1.50. That doesn't make sense. The same with interest rates: You have money in the bank they pay you less than three per cent, but you are charged excessive interest rate to [borrow]. This is really showing that the bank is only giving the free market a bad name [and] there are many people who feel the bank is exploiting their customers,” he told the Observer.
Earlier, Chuck told justices of the peace of his personal experience of having to pay a bank charge of $2,551 for a “two-line” note to the Integrity Commission providing his banking status.
He told the JPs that he recognised voluntary service becomes more difficult in a context of the kind of example, which he said was being set by banks.
Forty-one new justices of the peace were commissioned at Thursday's function, with Chuck and other speakers urging selfless service of the “highest integrity” to their communities.