CAB Advisory on Bank Fees

The Caribbean Association of Banks (CAB) has noted the recent press activities in relation to bank fees. Therefore in keeping with its mandate of advocacy on behalf of its constituents, would like to advise as follows.

The issue of banking fees is not unique to Jamaica or any one country in the region; in fact the ECCB (Eastern Caribbean Central bank) also has a code of banking practice which among other things speaks to the proper disclosure of banking fees even though the code is not legally binding.

The Bankers’ Association of Trinidad and Tobago also has a Code of Banking Practice. It has the same provision as ECCB’s. The Central Bank in Trinidad and Tobago and Barbados monitors fees and if there are signs of non-competitive activity they step in. In Trinidad consumers have a Banking Ombudsman through whom complaints can be raised. In Barbados and Jamaica there is the Fair Trading Commission. And Jamaica also has the CAC (Consumer Affairs Commission).

The banks charge fees to recover the costs associated with various products and services and it would be risky to legislate limits or cap these fees in any way. All banks have the right to cover cost and make a return for its shareholders. Limiting the fees would make the regulation or regulator jointly responsible for any losses resulting from the bank not being able to cover its cost in the normal course of business. Any regulation which requires full disclosure is likely to be more beneficial than legislating fees in anyway, as the public would then be aware and able to make an informed choice. Allowing market forces to influence what fees are charged and the level of increase is the best regulator in relation to banks who may wish to charge excessive fees. The Trinidad and Tobago Ombudsman requires disclosure, in fact section 4 of the code of banking practice says “A Bank shall, before or at the time of providing a particular Banking Service to a Customer for the first time or otherwise on request by the Customer, make available to the Customer a schedule containing the Standard Fees and Charges which currently apply to the Banking Service.”

Many of the members of the CAB have instituted mechanisms to reduce the cost to their customers by providing electronic alternatives to access their products and services. We think this is a good practice and encourage our members to make these alternatives known to their customers through the most appropriate channels. In addition our members also provide fee information on their website, brochures and in the banking hall which is encouraged by the CAB.

Carlton Barclay
Chairman
Caribbean Association of Banks

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