Peter Espeut | Unreasonable transaction fees

History is important! History creates customary rights!

For decades I and thousands of other Jamaican ratepayers attended the offices of the National Water Commission (NWC) and the Jamaica Public Service Company Ltd (JPS) to pay our utility bills. Both these utility companies maintained offices across Jamaica for the convenience of their customers to pay their bills, and there was no service charge for doing so.

Enter the bill payment agencies. The utility companies negotiated agreements with the bill payment agencies for their convenience by which the latter become their agents for the purpose of collecting bill payments on their behalf. This allowed the utility companies to save hundreds of millions of dollars annually by closing many of their commercial offices across the island. This amounted to windfall profits for these utility companies.

This initiative was sold to the public as being for our convenience, which I suppose it was, to a certain extent; one now could go to just one location monthly and pay many bills, thereby saving time. But the arrangement really was for the convenience (and profit) of the utility companies.

One assumed that the utility companies would pay their agents a substantial commission for collecting bill payments on their behalf, covering the collection costs and generating a tidy profit for the bill payment agencies; after all, it is the utility companies’ responsibility to provide a convenient mechanism for customers to pay for the services they provide, and the bill payment system saved the utility companies untold hundreds of billions over time.

But lo and behold! One day the bill payment companies decided to charge the ratepayers a transaction fee for each bill they paid. The public complained, and the response of the utility companies (and the government) was that ratepayers could avoid the transaction fees by paying their bills at the commercial offices of the utility companies. The argument had now switched: we must pay for the convenience. Remember: by this time for their convenience – utility companies had already closed many of their offices.

BORNE BY UTILITY COMPANIES

I wrote about it at the time, and returned to it several times over the years. It is my view that – ethically and morally – ratepayers should not have to pay any transaction fees for paying their bills; those costs must be borne by the utility companies out of their windfall profits.

And the government should have stepped in to protect the interests of the public, but they did not, choosing instead to protect the interests of the bill payment agencies and the utility companies. Not surprising with our history of patronage politics.

Now to the banks and their plethora of new banking fees.

My father took me to the Bank of Nova Scotia in Liguanea when it first opened in Liguanea Plaza (across the street from its present location) to open my first savings account. It was some time before Independence, and I still remember my account number: 1545. I got a little blue bank book, and every few weeks I would go to the branch on my way home from school and put in my few shillings, and watch my money grow as the tellers hand-wrote in my passbook the interest and current balance. I also remember the interest rate: it was six per cent per annum – compounded.

My accounts are still with the same branch, even though I have changed residential address several times over the 60-odd intervening years. But of course there have been many changes – unilaterally imposed by the bank. Passbooks are now obsolete; if I want to get a bank statement I have to pay a fee. The rate of interest on savings is just above zero.

I used to get a monthly statement of my current account mailed to me; no more! If I want to know my transaction history to balance my chequebook I must pay a fee. The same with my credit cards. They save by not sending statements, and earn by charging fees.

And the bank would prefer that I don’t come into the branch to do my transactions; they want me to do online banking. I appreciate that it is an option, but it must not be mandatory. It is my view that I have a customary right to go to my branch to conduct my business, which I have been doing before the present bank staff were born; and I should not be penalised for doing so.

INCREASE PROFITS

But to increase their profits, banks have decided unilaterally to change their business model; they are closing branches, and installing automated banking machines (ABMs) across the island at which customers can withdraw their funds, and in some cases even lodge money. Customers are being harassed (they might say persuaded) to do their banking online rather than visiting the branch in person. As a disincentive, customers are/were charged a fee for doing business at the branch, claiming that we are causing the bank to have to pay staff to attend to us.

Well!

Then, they started to charge us a fee for using the ABM! You are charged for going into the branch, and for not doing so.

And now with criminals targeting ABMs, service at many of them has been suspended.

Every year the banks declare unprecedented levels of profits. I am sure that no one is surprised.

I have written about this many times over the 30-plus years of this weekly column. In my view, the government has a duty to protect the banking public from unconscionable fee-gouging by banks. They don’t see it that way; the banks must be free to operate as they see fit. I guess the banking public does not carry sufficient weight in our system of patronage politics.

Kudos to MP Fitz Jackson for single-handedly waging a battle on our behalf – inside and outside of Parliament – against unreasonable bank charges. Other MPs and more members of the public should support him. I am not sure he even has the full-throated support of his party.

But will things change?

Last Wednesday (January 3), this newspaper ran a story with the headline: “Barbados central bank halts fees charged by banks for electronic transactions”. Barbados seems to be taking the leadership in so many areas in our region.

Will we follow them on this? Will any Jamaican government seek the interests of the public over party donors? What do you think?

Peter Espeut is a sociologist and development scientist. Send feedback to columns@gleanerjm.com