BOJ slammed for role in banking abuse

Bank of Jamaica (BOJ) Governor Richard Byles faced intense criticism during Wednesday’s meeting of the Public Administration and Appropriations Committee (PAAC) and was accused of being “complicit” in the banking sector’s alleged rip-off of customers.

The assault came from PAAC member Fitz Jackson, who has led a years-long campaign of public chastening of banks, whose appetite for user fees he has described as rapacious.

Jackson pilloried the BOJ, in its role as regulator, for remaining silent despite increased scrutiny and public concerns over questionable banking practices, which he said were tantamount to abuse.

Furthermore, he said that the BOJ, through its regulations, had compromised competition in the sector because of a lack of portability with accounts.

The issues came to the fore after the committee was told that there was low take-up of know your customer (KYC) accounts that are considered low risk.

Finance Minister Dr Nigel Clarke, in opening the Budget Debate in Parliament in March, had announced that the Government would provide free money to Jamaicans who utilise KYC accounts.

He said that that type of account targeted vulnerable people and served to boost financial inclusion.

Clarke disclosed that $2,500 would be deposited in each of the first 100,000 accounts to be opened after April 1, 2022.

But Jackson, member of parliament for St Catherine Southern, said that there was overwhelming frustration among consumers with the operations of local banks.

He said that at the height of the debate surrounding banking fees, he met with all chief executive officers of local banks who admitted that customers were not able to move their accounts without encountering challenges.

Jackson said that this has ultimately stifled competition within the sector and eroded customer satisfaction.

“For the past many years, the BOJ - before you, Governor, and since you - has not done anything to ameliorate that situation, and the problem prevails,” he said.

Jackson said arguments suggesting that the regulation of banks would be dangerous were “dishonest”, noting that it was the BOJ regulation of the sector that ensured its stability throughout the COVID-19 pandemic.

“It cuts me hard when I hear the deafening silence of the BOJ when the crap out there is mentioned that regulation would undermine the banking system. It’s regulation to protect the banking system that has preserved it.

Responding, Byles said that the Banking Act did not afford the central bank all the tools needed to manage how local banks relate with their customers.

He said that a consumer protection act is being drafted to “give real teeth” to the BOJ to monitor, manage, and administer “some of the worst aspects” of the relationship between banks and customers.

On the matter of KYCs, Byles said that the BOJ was exploring portability, but he cautioned that moving customer information from one bank to another could prove difficult.

He explained that KYC data fell within the purview of banks, which have the right to request new data for verification purposes because of the risk of exposure to money laundering and terrorist financing.

“If I get caught with anti-money laundering and my corresponding banking relationship is severed, I and I alone has the responsibility,” said Byles in explaining the risks.

“So, it is not good enough that you can take your KYC from one bank to another. The other bank also has to be in a position to rely on it (data),” he added.

kimone.francis@gleanerjm.com