Commercial bank fees and charges this year have increased by as much as 400 per cent over 2009, a new Survey of Bank Charges done by the Ministry of Industry and Commerce and the Consumer Affairs Commission (CAC) has found.

Concurrently, interest rates at the six commercial banks surveyed have declined between seven and 33 percent over the same period.

The survey, which was conducted between July 29 and September 17, 2010 and which effectively examined 68 separate fees and charges, showed some banks making upward adjustments to as many as 78 per cent of the surveyed fees and charges.

NCB had the highest number of increases with 45 out of 58 (78 per cent) followed by RBTT, which incresaed the rates on 40 out of 58 of its fees and charges. PCB had the least amount of changes, according to the survey, which showed it increasing 28 per cent of its fees.

FGB recorded the highest increase of all the charges, with the balance enquiry fee at its ABMs and its fee for declined transactions at the bank’s point-of-sale (POS) machines increasing 400 per cent from $6 to $30. Withdrawal fees at FGB’s ABM also increased 144 per cent to $33. However, this is still in line with the charges for a similar transaction at other banks, which charge within the range of $30. Only RBTT charges below this at $15. In general, ABM fees have increased across all banks with increases ranging from as low as one per cent to as much as 65 per cent at Scotiabank and 114 per cent at NCB.

Fees on personal services, including withdrawal and deposit in savings accounts, minimum balance violation and dormant account charges have also increased as much as 127 per cent. While the banks charge as much as $200 for in-bank withdrawals, only Scotiabank charges a fee to make deposits in savings accounts in-bank, that charge being $150.

The contentious minimum balance fees range from $124.06 at FCIB to $180 at NCB, which increased its minimum balance violation fee by 125 per cent over the $80 charged last year. Scotiabank charges $150 per month for balances below $5,000, while customers at NCB pay $180 for balances below $2,000. Estimates are that up to 60 per cent of the deposits in commercial banks are below $5,000.

Customers will also have to pay as much as 127 per cent more per year if the account falls dormant. Charges range between $155.32 at FCIB to $1000 at Scotiabank, while customers of NCB will pay $350 for the same infraction.

Charges for business services increased in all of the big three banks: One per cent at Scotiabank, up to 41 per cent at NCB and 60 per cent at RBTT. These charges include fees for deposit wallets- which bring in the lion’s share of fee income for this category- service charges and audit certificates. All banks surveyed, with the exception of Pan Caribbean for which no data was provided, charged fees within the range of just under $4000 to over $9000 for deposit wallets. Service charges converge around $60, with RBTT charging $40, the lowest even after a 60 per cent increase.

Following the Jamaica Debt Exchange (JDX), by which the Government of Jamaica (GOJ) effectively reduced the interest rates on its securities, signalling a rate reduction in the market, banks have been reluctant to reduce lending rates. They contend that the reduction in net interest income on GOJ securities following the JDX and the inevitable reduction in earnings from loans have affected their performance. Some banks have indicated that one method of replacing the lost income is through fees and commissions.

According to Minister of Investment and Commerce, Karl Samuda, who presented the results of the survey at a press conference held at the Ministry yesterday, this strategy seems consistent with the findings of the report, which indicate that bank fees have actually increased for the majority of transactions surveyed.

Scotiabank dropped minimum interest rates on personal loans from 19.75 per cent to 13.25 per cent or the largest reduction of the banks surveyed, while the other banks didn’t appear to differentiate minimum rates on personal loans from base lending rates on commercial loans. Scotia dropped its base lending rates on commercial loans from 21.5 per cent to 17.75 per cent along with National Commercial Bank (NCB), which lowered its base rate from 21.75 per cent to 17.75 per cent. RBTT, on the other hand held its base lending rate above 20 per cent, even though its reduced loan rates from 22 per cent to 20.5 per cent.

First Caribbean International Bank (FCIB) and Pan Caribbean Bank (PCB) had base rates of 18.25 per cent and 17.95 per cent, respectively, according to the survey.

“I think that the survey has been very, very worthwhile and it is clear that in some instances you have banks reducing their interest rates quite dramatically but having the charges increase sufficient to indicate that they are seeking to make up the lost ground as a result of the reduction in interest rates,” Samuda said. “The result of that of course will play out as we go into further examination of this data and as we hold discussion with the bankers and the bankers’ association to see in what way we can work together.”

Samuda said the data should assist consumers and businesses in making informed choices and bargaining for better rates from the financial institutions. He said the information could also be used by the banks to make better decisions regarding fees and charges.

“This will guide the consumers, this will guide the investors, this will empower them so that they can strengthen the relationship between the banking community, the investing community and the consuming community,” he said. A further review of the charges will be done to see how Jamaica compares to other countries within the Caribbean, including Barbados and Trinidad and Tobago which are also participants in a similar survey. “However the conditions are not identical,” Samuda said. “What we are seeking to do in Jamaica is to empower our consumers so that they know and understand what bank charges are about and the difference that exist.” “The next thing is to educate them about the best ways to go about getting the best deal and not simply accepting what is put to you.”

In response to suggestions that some banks will fare better than others once the information is released, Samuda said this is the nature of competition, which should strengthen, not weaken the financial sector.

“We are not moved by any suggestion that there will be any adverse repercussions as far as the banks are concerned. We are doing them a service. They should be happy to receive this in much the same way that many of our supermarkets have been happy to receive the surveys that we publish because it keeps them on the cutting edge, which is critical,” Samuda said.

“This survey was not done as a ‘Gestapo’ operation seeking to penalise people for doing business. What it is as is the mandate of the CAC is to unearth the facts as it relates to those things that affect our consumers on a day to day basis.”

The survey forms part of the Promotion of Consumer Protection in the Caribbean Project, which is co-funded by the Inter-American Bank (IDB) and Consumers International (CI).